The East Netherlands District Court has ruled that ABB must compensate Dutch electricity grid operator TenneT for damages that it suffered as a result of the gas-insulated switchgear (GIS) cartel. In 2007 the European Commission fined 11 groups of companies more than €750 million for participating in a cartel for GIS projects. ABB received full immunity from fines under the commission's leniency programme, but will nevertheless need to pay up now. The exact amount of damages to be paid to TenneT will be determined in separate proceedings. This is the first substantive ruling on cartel damages in the Netherlands.
Following the commission's decision, TenneT claimed damages for the 1993 purchase of a GIS installation from ABB following a tender procedure in which ABB offered the best price. The court found that even though the commission decision did not explicitly mention the Dutch GIS projects, it did establish that ABB participated in a worldwide cartel which had a particular impact on the European Economic Area and thus, according to the court, on the Netherlands. In combination with the fact that ABB failed to substantiate why the cartel would not apply to the Dutch project, this made it safe to assume that the price paid by TenneT for the GIS installation was affected by the cartel.
The court rejected ABB's argument that TenneT's damages claim had lapsed. ABB argued that the statutory five-year limitation period for damages claims started on May 14 2004, one day after the European Commission's press release announcing the launch of an investigation into the GIS sector and ABB's subsequent press release stating that an internal compliance audit had revealed that certain ABB employees were involved in anti-competitive activities. Therefore, TenneT's damages claim of June 24 2010 was too late. The court disagreed, holding that the limitations period commences once the victim has knowledge of the damage and the parties liable for it. The press releases provided TenneT with insufficient knowledge to conclude that it was a cartel victim.
Furthermore, the court considered it highly likely that TenneT had sustained actual damage as the object and effect of a cartel is, almost by definition, to cause customers to pay more for a product than they would under competitive market conditions. Although the exact amount of damages must still be established in follow-up proceedings, the court indicated that a comparison between offers made by ABB during and after the cartel – resulting in a 54% price overcharge, according to a report submitted by TenneT – would make a suitable calculation method. The court rejected ABB's argument that TenneT suffered no loss because it passed on the overcharge to its customers. According to the court, the potential benefits gained by a cartel victim may in some cases be offset against the damage sustained if:
- there is a sufficient causal link between the benefits and the harmful event; and
- it is reasonable to deduct these benefits from the damages to be paid by the cartel participant.
In the court's view, the second condition would not be fulfilled in the case at hand, provided that TenneT used ABB's compensation for the benefit of its customers by reducing its energy prices.
The TenneT ruling can still be appealed and the exact amount of damages must be determined in separate damages assessment proceedings. Nevertheless, the ruling provides useful pointers for cartel damages claims in the Netherlands.
For further information on this topic please contact Jolling De Pree, Erik H Pijnacker Hordijk or Jaap de Keijzer at De Brauw Blackstone Westbroek by telephone (+31 70 328 53 28), fax (+31 70 328 53 25) or email (email@example.com, firstname.lastname@example.org email@example.com).
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