Remedies

Compensation

What forms of compensation are available and on what basis are they allowed?

EU law pursues the principle of full compensation. Full compensation places a person in the position in which that person would have been had the infringement of competition law not occurred (article 3(2) EU Damages Directive and European Court of Justice (ECJ) judgments in Courage/Crehan (C-453/99 of 2001) and Manfredi (C-295/04 of 2006)).

Forms of damages in cartel damages cases include:

  • overcharges paid by customers of cartel members or undercharges in case of a buyers’ cartel;
  • umbrella damages (ie, overcharges paid by customers of cartel outsiders (ECJ judgment Kone (C-557/12 of 2014)); and
  • overhang damages (ie, higher prices paid after the end of the cartel. In abuse of dominance cases claimants typically claim lost profits, for instance, if a company was foreclosed from the market by the dominant undertaking.

 

The EU Damages Directive (article 17) sets binding standards for all national regimes concerning the quantification of harm. In addition, the EC has published non-binding guidelines for national courts on how to quantify damages caused by competition law infringements (Communication on quantifying harm in antitrust damages actions, 2013). A Practical Guide accompanying the report explains various economic and econometric methods of estimating damages. Even though the Practical Guide is not binding, it is frequently referred to by parties in national proceedings.

Despite these common, Europe-wide legal standards for the quantification of damages, substantial differences remain between the legal frameworks at national level as well as the practical approaches taken by national courts:

  • In Germany, there have been a number of judgments awarding damages (eight in total regarding cartel damages). The median rate of damages awarded in Germany is 6.5 per cent according to the statistics, with the amounts of damages awarded ranging from 5 per cent to 33.5 per cent. Notable recent precedents are three judgments of the Regional Court of Dortmund concerning the rails cartel in which the court estimated cartel overcharges of 15 per cent and 10 per cent, without consulting an economic expert or applying the established econometric methods. In 2021, the Higher Regional Court of Celle, in a decision concerning the chipboard cartel, equally proceeded to estimating damages without involving an economic expert and awarded damages of 12 per cent based on a simplistic comparison of average prices during and after the cartel. The Regional Court of Munich, in contrast, refused to estimate the cartel overcharge without instructing an economic expert in a decision of February 2021 related to the Trucks case. Finally, lump sum damages clauses in supply contracts are permissible according to a ruling of the German Federal Court of Justice of February 2021. The court held that lump sum damages clauses of up to 15 per cent can be acceptable, but also clarified that the defendant may prove that the damage actually caused was lower than that or that no damage occurred at all.
  • In the Netherlands, decisions awarding damages are rare. In TenneT/ABB, the District Court of Gelderland in 2017 awarded damages of €23 million plus interest to TenneT. It was the first decision to award cartel damages in the Netherlands. The decision has been appealed by the defendant to the Court of Appeal of Arnhem-Leeuwarden, which has appointed an independent expert to assess the damages amount as well as a potential pass-on. Dutch courts often stagger proceedings and adopt interim judgments on fundamental issues of a claim. For instance, the District Court of Amsterdam adopted an interim judgment in 2021, according to which the truck cartel principally caused damages. The court will now assess the amount of damages separately. Another example is a ruling on the applicable law by the Court of Appeal of Amsterdam in a case concerning the air freight cartel.
  • In the United Kingdom, damages have only been awarded in one case so far: BritNed v ABB. BritNed claimed damages including interest in excess of €200 million based on the EC’s decision in the Power Cable case. In February 2018, the High Court awarded BritNed only a part of the damages sought (€11.7 million plus interest). Following ABB’s appeal, the Court of Appeal in December 2019 further reduced the damages amount awarded and ordered BritNed to repay approximately €5 million to ABB.
  • In contrast, the Spanish courts have regularly awarded damages. Most of the judgments relate to the trucks cartel. According to statistics, there are more than 100 judgments by first instance courts and appellate courts in Spain relating to the trucks cartel. These have awarded damages of between 5 per cent and 15 per cent of the purchase price plus interest.
Other remedies

What other forms of remedy are available? What must a claimant prove to obtain an interim remedy?

According to the ECJ in Factortame I (C-213/89 of 1990), national courts have the power to grant interim relief in matters concerning rights derived directly from EU law (such as articles 101 and 102 of the Treaty on the Functioning of the European Union), even if national procedural rules do not allow it. In this case, an English court found an infringement of EU law, but noted that English law did not allow interim relief. It therefore referred the question to the ECJ, which held that national courts may base interim measures directly on European law because the protection of rights under EU law required the immediate availability of a remedy.

The specific procedural requirements for seeking and obtaining interim relief, such as the standard of proof, are a matter of national procedural rules.

Punitive damages

Are punitive or exemplary damages available?

No. The EU Damages Directive is based on the principle of full compensation and explicitly states that damages regimes must not lead to overcompensation, whether by means of punitive or exemplary damages (article 3(3)).

In practice, the question of overcompensation often becomes relevant in the context of the pass-on of damages. Simultaneous claims from different market levels can lead to overcompensation. The EU Damages Directive (article 15 and Recital 39) aims to protect defendants from multiple liability towards claimants from different levels of the supply chain and limits claims at each market level to the actual loss. In certain cases, even though goods have been sold over various market levels, simultaneous claims at different market levels can be excluded for practical purposes, for instance where indirect customers only suffered ‘micro-damages’ and are unlikely to assert them. The German Federal Court of Justice held in a judgment of 23 September 2020 that in such cases a deviation from the principle of full compensation can be justified and an award of the full amount made to the direct customer, even if it might have been able to pass on parts of its losses to indirect customers.

Interest

Is there provision for interest on damages awards and from when does it accrue?

The ECJ dealt with the right to interest in the matter Manfredi (C-295/04 of 2006). The court referred to the principle of full compensation and held that the payment of interest constitutes an ‘essential component’ of such compensation. The EU Damages Directive further specifies this right and stipulates that interest is due from the time when the harm occurred until the time when compensation is paid (article 3(2) and Recital 12 of the EU Damages Directive).

National regimes differ significantly, but interest is usually a very significant factor. Since damages claims often relate to cartels that took place 10 or more years before, large sums of interest accrue and often make up more than half of the damages amount:

  • One of the most generous regimes is that of the Netherlands, where the interest rate amounts to seven percentage points above the European Central Bank (ECB) base rate. Moreover, in a departure from most other European jurisdictions, compound interest is owed.
  • In Germany, the interest rate is also relatively high, at five percentage points above the ECB base rate. Compensatory interest is available as a separate head of loss.
  • In England, judges have relatively wide discretion and, in practice, often award interest at a rate of one to four percentage points above the Bank of England base rate. In the case BritNed v ABB, compound interest was claimed but rejected by the English High Court.
Consideration of fines

Are the fines imposed by competition authorities taken into account when setting damages?

European law requires full compensation. Therefore, claimants are entitled to full compensation, even in cases in which the cartelist has already paid a substantial fine. By the same token, substantial fines do not necessarily imply high damages; even though the impact of the cartel may play a certain role when setting the fine, the methodology used to determine fines follows different principles and criteria.

Legal costs

Who bears the legal costs? Can legal costs be recovered, and if so, on what basis?

There are no rules under EU law on legal costs in national civil proceedings; this is determined by national law. If the ECJ issues a preliminary ruling at the request of a national court, it is for the referring court to decide on the costs of the proceedings before the ECJ (article 102 Rules of Procedure of the Court of Justice).

Joint and several liability

Is liability imposed on a joint and several basis?

According to article 11(1) EU Damages Directive, cartelists are jointly and severally liable for the full harm caused by the infringement to which they are a party. The claimant thus has the right to claim full compensation for the damages caused by the infringement from any infringer. Only immunity recipients enjoy certain privileges.

Contribution and indemnity

Is there a possibility for contribution and indemnity among defendants? How must such claims be asserted?

The EU Damages Directive (article 11(5)) provides for the possibility of contribution among defendants. A defendant liable for damages caused by other members of a cartel may recover the corresponding amounts from them. These European rules are supplemented by national laws that regulate the details of how contribution can be claimed:

  • Under German and Spanish law, for instance, contribution claims must be asserted subsequent to a judgment in the damages proceedings. To ensure that the findings of the court in the damages proceedings are binding on the court dealing with the subsequent contribution claim, defendants typically serve third-party notices in the damages proceedings and invite other cartelists to join them as third-party defendants.
  • In the Netherlands and the United Kingdom, contribution claims can either be introduced in the damages proceedings or raised subsequent to a judgment awarding damages.

 

Contribution shall, according to article 11(5) EU Damages Directive, be allocated among the cartelists according to their ‘relative responsibility’. The EU Damages Directive does not provide a definition and thus leaves this to national laws. In Germany, the Federal Court of Justice, in a ruling on the calcium carbide cartel, mentioned a number of possible criteria for determining the relative responsibility: the share of supplies affected by the cartel, the cartelists’ market shares, the role of the respective cartelist in the cartel, the cartel-related profit or simply a pro rata allocation. In the United Kingdom, Netherlands and Spain, there is no case law on this point. However, similar criteria are under discussion in legal literature.

Finally, the EU Damages Directive regulates the effect of a partial settlement on any subsequent damages actions. According to article 19(1), the claim of the settling injured party is reduced by the settling co-infringer’s share. In addition, article 19(2) provides that non-settling co-infringers cannot claim contribution from the settling co-infringer. This concept is based on the German concept of the beschränkte Gesamtwirkung (limited overall effect).

Passing on

Is the ‘passing-on’ defence allowed?

The regime established by the EU Damages Directive pursues the idea of full compensation at all market levels. Correspondingly, under article 13 EU Damages Directive, the passing-on defence is available to defendants to reduce or eliminate the plaintiff’s damages claim by showing that the plaintiff passed on (parts of) the overcharge to its customers. Mirroring this, indirect purchasers have the right to claim damages from the defendant by showing that they suffered (parts of) the overcharge due to a pass-on by intermediate upstream suppliers. The EU Damages Directive even grants indirect purchasers a rebuttable presumption that a pass-on occurred.

Cartelists may thus face damages claims from different market levels. Article 15 EU Damages Directive foresees certain procedural safeguards to protect the defendant from multiple liabilities towards claimants from different market levels.

To assist national courts in estimating the amount of a pass-on, on 9 August 2019 the EC published comprehensive guidelines (Passing-on Guidelines). However, the approaches of national courts differ:

  • Spanish courts seem particularly restrictive, as the passing on defence has not yet been accepted by any court.
  • English courts, in contrast, consider pass-on to be a valid defence (Supreme Court in Sainsbury’s Supermarkets Ltd v Visa Europe Services LLC, 2020). While the burden of proving a pass-on generally lies with the defendant, once the defendant has substantiated a pass-on, the plaintiff must disclose how it has dealt with increased costs due to cartelised prices.
  • The framework in Germany was established by the ORWI decision of the Federal Court of Justice of 2011 and refined in newer decisions of 2020 and 2021. Overall, the Federal Court of Justice takes a restrictive stance towards the pass-on defence. In a decision of 2020 relative to the rails cartel, the Federal Court of Justice barred a pass-on defence by cartelists per se. Even though the claimants could have passed on parts of potential damages to the next market level, namely public transport passengers, the latter would be highly unlikely to claim such damages. Allowing a pass-on defence would therefore unduly benefit the cartelists in the court's opinion. In a decision of 2021 relative to the trucks cartel, the Federal Court of Justice principally allowed a pass-on defence, but set high standards. The defendant must substantiate a potential pass-on for each 'aftermarket' separately (eg, market for construction services where trucks are deployed). The court also noted that, in principle, double payments by the cartelists due to damages claims from different market levels must be avoided, but at the same time indicated that a pass-on defence could be restricted if, at the indirect market level, only minor claims are anticipated.
  • In the Netherlands, the passing-on defence has been explicitly recognised by the Supreme Court (TenneT/ABB, 2016). Nevertheless, in the first judgment in the Netherlands awarding cartel damages, the District Court of Gelderland rejected the argument. It referred to the fact that customers on the next market level might not claim damages because the damages amounts at this level were too small (scattered damages). The judgment has been appealed.
Other defences

Do any other defences exist that permit companies or individuals to defend themselves against competition law liability?

In addition to the defences such as relating to the limitation of claims, the quantification of damages or the ‘pass on’, a number of further defences exist. In all cases in which there is no binding infringement decision (standalone claims), defendants may contest the alleged conduct. In follow-on damages cases, defendants typically defend themselves by showing that parts or all of the products do not fall within the product scope, geographic scope and period of the infringement, which means that they were not affected. Often, defendants also object to the plaintiff’s standing to bring a claim or the defendant’s liability. Whether the court has jurisdiction is also a regular issue. Additional defences are available depending on the circumstances of the individual case.

Alternative dispute resolution

Is alternative dispute resolution available?

The EU Damages Directive notes that alternative dispute resolutions are desirable and mentions out‑of‑court settlements, arbitration or mediation as possible mechanisms (Recital 48). The directive contains provisions that are aimed at facilitating such mechanisms, including the suspension of court proceedings for the duration of any consensual dispute resolution process (article 18). Correspondingly, in the case Microsoft Mobile/Sony, the English High Court in 2017 stayed follow‑on damages proceedings relating to the lithium-ion batteries cartel to give effect to an arbitration clause.

Out-of-court settlements are common in cartel damages cases. Arbitration and mediation, in contrast, are used less often. This is, among other things, due to the fact that cartel damages claims typically involve a large number of defendants. Unless all of them submit to the dispute resolution process, which is highly unlikely, practical problems will arise. For instance, in proceedings before state courts, the parties to the action may serve third-party notices to ensure that the ruling is binding on non-involved parties (eg, in the context of subsequent contribution claims); this is not possible in arbitration proceedings.

Following the ECJ’s ruling in Eco Swiss (C-126/97 of 1999), the arbitrability of competition law is accepted in most countries. The ECJ provided guidance on the enforceability of jurisdiction clauses in CDC/Hydrogen Peroxide (C 352/13 of 2015) and might adopt a similar approach concerning arbitration clauses. The ECJ held that jurisdiction clauses only apply to cartel damages claims if the clauses specifically refer to them. National case law on arbitration clauses is divided: courts in some countries, including the English High Court in Microsoft Mobile v Sony Europe (2017), have adopted a more liberal approach and ruled that common arbitration clauses also cover antitrust damages claims. Courts in other countries, such as in the Netherlands, are more restrictive and exclude antitrust damages claims unless they are expressly referred to in the arbitration clause.