In recent years, Finnish courts have handled a number of landmark cases dealing with competition damages. The trials have involved the state, municipalities, companies and individuals claiming compensation for harm that they allege to have suffered due to a cartel, predatory pricing or other competition infringements. What makes the cases interesting is that the courts have had to resolve questions that are not directly answered by law.
Did the Infringement Cause Harm?
One of the crucial questions in competition damages cases is whether the competition infringement actually caused harm to the claimants. In Finland’s largest competition damages trial to date, Metsähallitus (an entity managing state-owned forests) claimed damages in the original amount of approximately EUR 283 million from the forest industry companies Stora Enso, UPM-Kymmene and Metsäliitto Cooperative based on the Market Court’s ruling on a competition infringement in the roundwood market. In addition to extensive factual evidence, the parties submitted a significant volume of economic expert reports on the impact of the infringement. The Helsinki District Court and the Helsinki Court of Appeal dismissed Metsähallitus’ claims because the competition infringement had not been shown to have had an effect on the prices of roundwood agreed between the parties. The Court of Appeal’s judgement remains final as the Supreme Court did not grant Metsähallitus leave of appeal.
Earlier in 2017, the Helsinki District Court had dismissed damages claims in the original amount of more than EUR 50 million brought by private forest owners and municipalities regarding the same competition infringement on the roundwood market. The decisions by the District Court are final.
The legislation on the burden of proof regarding the occurrence of damages changed partially in December 2016 with the entry into force of the Act on Competition Damages. The Act is based on an EU Directive and it places the burden of proof regarding the occurrence of harm in cartels on the defendant. In other words, cartels are presumed to have caused harm unless the participants show the contrary.
Who Pays and How Much?
If harm has occurred, the next step for the court to assess is the amount of damages. This summer, the Helsinki District Court gave a decision in a damages case based on predatory pricing. Finland’s largest dairy operator was alleged to have inflicted harm on its competitors by pricing below its variable costs. This was Finland’s first significant damages trial related to an abuse of a dominant market position and one of the very few in Europe. Four claims out of six were settled before the main hearing. As regards the remaining two, the damages awarded by the District Court were less than a third of the original claim, which amounted to EUR 30 million. The decision is final.
Often, the court will also have to determine how liability for damages is divided between members of the competition infringement. In June, the Supreme Court handed down its first rulings regarding damages claims based on the so-called asphalt cartel. The Finnish government and 40 municipalities claimed damages that originally amounted to a total of EUR 120 million from asphalt companies on the basis of a cartel. The Supreme Court clarified, among other things, the joint and several liability of cartel participants in a situation where the liability for damages has become time-barred for some of them. In the cases before the Supreme Court, three companies were jointly and severally liable for damages. However, for two of them, the liability had become time-barred. The Supreme Court deemed that this had caused the joint and several liability to lapse. Notwithstanding this, in one of the cases the third company was liable for the full amount of damages due to the fact that it had been the contracting party of the claimant. In another case, the same company was only liable for one third of the damages, because it had not been a contracting party of the claimant but it had otherwise played a central role in the cartel.
The asphalt cartel damages cases have also brought up the issue of the transfer of liability in corporate acquisitions before the Supreme Court. The Supreme Court referred this question to the Court of Justice of the European Union for a preliminary ruling. The CJEU gave its ruling in the spring. It found that the purchaser of a cartel company is liable for damages if it continues the company’s activity, even if it had dissolved the acquired company. This ruling will be taken into account in the Supreme Court’s final decision.