In a February 27 2014 judgment the Paris Court of Appeal made it easier for victims of anti-competitive practices bringing an action for damages to prove the prejudice that they have suffered.
Poultry producer the Doux Group bought feed containing lysine from Ceva Santé Animale, Ajinomoto Eurolysine's exclusive distributor and supplied it to chicken farmers. However, a European Commission decision revealed that Ajinomoto and other undertakings were involved in a cartel on lysine prices and sales volumes, resulting in prices being pushed up higher than what they would have been otherwise.
Doux complained that the purchase price of the lysine was higher because of the cartel, causing it a loss of margin and reducing its competitiveness. It sued Ceva Santé and Ajinomoto to obtain damages for the prejudice suffered.
A first court of appeal judgment was overturned by the Supreme Court, ruling that the court had failed to ascertain whether the higher prices asserted by Doux had actually been passed on to its customers. The court of appeal to which the case was referred back was of the opinion that there were two methods of demonstrating that the increase had not been passed on:
- the empirical method, whereby it was not passed on; or
- the theoretical method, whereby it could not have been passed on.
The court then recognised that Doux, a supplier of poultry essentially to large retailers, could not have passed on the higher prices by imposing a price increase on its distributors because the lysine was not a major component of the product's price which could have justified a price increase when the commercial negotiations were being conducted. In addition, many factors are taken into account when fixing poultry prices, including the bargaining power of the large retailers, which generally block price increases.
The judges deduced that as Doux could not have passed on the additional costs to the distributors, it had actually suffered prejudice because of the cartel. It was awarded damages of close to €1.5 million because of the higher prices and for having had to cover them with its own funds.
However, if a price increase is passed on, the perpetrators of an anti-competitive practice cannot automatically escape being sued for damages. Those on the receiving end of the price increase - in other words, large retailers or consumers - can take them to court, particularly now that class actions are available to consumers.
For further information on this topic please contact Emmanuelle van den Broucke or Sara Pomar at Dentons by telephone (+33 1 4268 4800), fax (+33 1 4268 1545) or email (firstname.lastname@example.org or email@example.com). The Dentons website can be accessed at www.dentons.com.