On June 26, 2012, Advocate-General Villalón issued his opinion in a rather unusual case pending before the Court of Justice of the European Union (CJEU). In his view, which has not yet been considered by any court, the European Commission (the "Commission") may fine cartel members for their anti-competitive conduct in EU Member States and then bring a damage action on behalf of the EU for injury to EU institutions as purchasers of the products involved.
By way of background, in February 2007 the Commission imposed administrative fines exceeding €990 million (approximately $1.1 billion) on a number of companies for operating cartels in the markets for the installation and maintenance of escalators and elevators in Belgium, Germany, Luxembourg and the Netherlands.
In June 2008, the Commission itself, as a private party, commenced an action before the Brussels Commercial Court seeking damages in excess of €7 million (approximately $9 million). In essence, the Commission alleged that, as a result of the cartel, certain EU institutions had paid inflated prices for the installation and maintenance of escalators and elevators in their buildings in Belgium and Luxembourg.
The Brussels court subsequently referred to the CJEU the question of whether the Commission is entitled to sue cartel participants for damages in the national courts of the EU Member States in circumstances where the Commission itself had already investigated and fined the companies for the underlying cartel conduct. In this context, an important feature of the EU's legislative framework is that Commission decisions in such cases represent conclusive evidence of the infringement from the standpoint of the legal capabilities of the EU Member States. Thus, national courts are, in effect, precluded from reviewing the underlying validity of such decisions.
Potential Impact of the Advocate-General's View
Advocate-General Villalón's view is that the Commission is in fact entitled to bring such damage actions on behalf of the EU. In his opinion, the fact that national courts cannot overturn Commission infringement decisions does not impinge upon the fundamental rights of defense of parties subject to such decisions. The EU legal order provides that addressees of Commission infringement decisions have rights of appeal to the General Court and, ultimately, to the CJEU. The role of the national court is not to decide whether the infringement decision is valid (as that falls within the exclusive jurisdiction of the EU appellate courts) but to establish causation and rule on the quantum of losses suffered by the claimant as a result of the anti-competitive conduct evidenced by the Commission decision. In U.S. terms, it would be as if the Federal Trade Commission could impose fines for alleged cartel behavior and then sue for damages suffered by federal agencies.
The Advocate-General's opinion is not the final word. The CJEU is not bound to follow his view, but that said, the Court tends to follow the opinion of the Advocate-General in the majority of cases.
This case must be seen against the backdrop of increasing efforts over the years by the Commission and national competition authorities of the EU Member States to encourage victims of anticompetitive behavior to seek redress in the national courts. Various initiatives are being undertaken by EU and national regulators to increase deterrence and the level of enforcement of EU competition law by way of private damages actions before the national courts.
Despite these efforts, the results have been patchy at best. Due to the large number of real and perceived obstacles in the legal systems of the EU Member States, very few "stand-alone" competition cases (i.e., cases without regulator involvement) have gotten off the ground. The results have been more favorable for plaintiffs in so-called "follow-on" actions (such as the Commission's case discussed herein) when private claimants rely on infringement decisions issued by the Commission or national regulators.
This case, however, is somewhat curious in that it raises an apparent constitutional conundrum. The Commission's decision to seek damages for the losses it allegedly suffered as a result of the cartel conduct may indicate that it is willing to lead by example in this area. In addition to financial redress, ultimately for EU taxpayers, the Commission may be hoping to raise awareness and, therefore, encourage future damages actions by victims of anti-competitive conduct. Whether or not this is a worthwhile effort, there is a limit as to how far the Commission can lead from the front. Eyebrows would certainly be raised if the Commission were to decide, for example, to favor prosecution of cartels only in markets where it is a customer and, therefore, a potential victim. It is not its position at the "front" that is going to make a real difference. It is what the Commission can achieve in the background to improve access to justice for victims of anti-competitive conduct that ultimately will have a more profound impact.