Several damage actions for breach of competition law  have been brought before civil courts in the Netherlands  against Dutch as well as foreign defendants. The  available case law has recently been supplemented with  an interesting judgment in appeal in the case of TenneT,  the Dutch national grid operator, versus several entities  of Swiss company ABB. This case follows the cartel  fines imposed by the European Commission on several  manufacturers of gas-insulated switchgear, including  ABB. This judgment is most notable because it confirms  the availability to defendants in such litigation of the  so called passing on defence and gives guidance as to  how to apply this defence. 

TenneT was initially successful in its cartel damages  claim. In September 2013, the District Court in first  instance ruled that ABB had to compensate TenneT for  the damages it sustained as a result of ABB’s collusive  behavior. The court considered it highly likely that  TenneT had suffered damages, as the cartel by its  nature and object was aimed at raising the prices for  customers like TenneT. With regard to the amount of  damages (to be established in separate proceedings), the  District Court considered that, based on a comparison  between offers made to TenneT by ABB during and after the cartel, the overcharge could have been as high  as 54 percent. ABB had argued that TenneT did not  suffer any loss because it passed on the overcharge to its  customers. This argument was rejected by the District  Court, considering that TenneT’s customers would in turn  be compensated in the form of reduced electricity prices. 

ABB appealed the judgment of the District Court.  The judgment of the Arnhem-Leeuwarden Appeal Court  of September 2014 deals with several questions, including  liability of an ABB entity that was not an addressee  of the Commission decision (accepted on principles of  Dutch law), the start of the limitation period (in this case  not before the date of the Commission decision) and the  passing-on defense (allowed). 

With regard to the passing on defense, the Appeal Court  reasoned as follows. Damages should bring the aggrieved  party to the situation it would have been had it not suffered  loss as a result of the unlawful act (the counterfactual).  Taking away cartel profits is not the prime consideration  in a decision on damages. The starting point to determine  the counterfactual is the moment the damages are  sustained – in this case the moment of purchase of the  equipment – but later events can be taken into account. If TenneT had passed on the overcharge, there would no  longer have been a loss for TenneT, since this loss would  have been compensated by higher revenues instead of by  a damages award. 

The Appeal Court considered that allowing the passing on defense is in line with case law of the European Court of Justice and the draft EU Directive on antitrust damages  actions. The Appeal Court argued that this was moreover  necessary to ensure that indirect purchasers had a  legitimate course of action in cases  where the overcharge  had been passed on and to prevent double recovery by  claimants against defendants. Unfortunately, the Appeal  Court did not rule on the division of the burden of proof  when the question is whether damages have been passed  on and to what extent they have been passed on. 

The passing on of damages results in the relocation of  damages down the supply chain. Customers of TenneT  are likely to claim compensation from ABB of the  damages that TenneT was able to pass on to its customers.  Direct and indirect purchasers in other cases have found  solutions to consolidate their damages claims. For  example, in the cartel damages litigation initiated by  DB before the Dutch courts against manufacturors of  pre-stressed steel, purchasers of claimant DB have  assigned their claims to DB.