For practitioners around Europe, the Gas Insulated Switchgear Cartel (GIS cartel) has been well known since 2007, when the European Commission (EC) imposed fines on 11 groups of companies for their involvement in this cartel. In April 2014, the European Court of Justice (ECJ) gave its final judgement on the appeal of Alstrom c.s., confirming the main findings of the EC.
In the Netherlands, the national electricity network operator, TenneT, took legal action against ABB and Alstrom to recover damages incurred by its legal predecessor Sep. On 24 September 2014, the District Court Gelderland decided that Alstrom is liable for the damages resulting from the GIS cartel. In this (partial) judgement, the court was not yet able to calculate the final amount of damages, and the parties to the dispute were invited to comment on a number of issues, including Alstrom’s defence that the amount of damages should be lowered because TenneT had passed on the overcharge to its customers.
After the parties expressed their opinions, the court has now given its final judgement (ECLI:NL:RBGEL:2015:3713). This is the first case in which a Dutch court has come to a final decision on a passing-on defence raised by a cartelist.
In line with earlier Dutch case law, the district court ruled that an infringer of the cartel prohibition may successfully raise a passing-on defence. In this judgment, the district court provides further clarity as to the way in which this defence is to be assessed.
First, the court made clear which statutory provision of Dutch law (that was in place during the infringement) the passing-on defence can be based on. The Dutch court placed the passing-on defence in the context of the provision of mandatory deduction of collateral benefits (Article 6:100 Dutch Civil Code). This article states that if an action has not only caused damages, but also benefits, such benefits may be taken into account for assessing the damages, in so far as this is reasonable. This element of reasonableness plays an important part in the district court’s judgement, as discussed below.
Second, the court held that on the basis of Dutch case law and the Directive on antitrust damages actions, the burden of proof that price increases have been passed on rests with the party relying on the defence (i.e. the infringer and defendant). The district court found that, in this case, Alstrom had not sufficiently argued that it was reasonable to deduct any benefits/passed-on costs from the damages incurred by TenneT.
The district court considered that on the basis of article 6:100 DCC, it must in principle be avoided that the infringer of the cartel prohibition compensates more than one party in the production chain for the same damages. Therefore, normally it can be considered reasonable to deduct passed-on damages from the compensation. However, the district court went on to consider that even if part of the damage has been passed on, there will not be a situation of double compensation if the TenneT’s customers will not claim damages. Because, in this case, TenneT’s customers are mainly consumers and it must, according to the district court, be considered very unlikely that those consumers will claim any damages with respect to the GIS cartel (or succeed in such a claim), the district court considered that Alstrom’s passing-on defence should in this case be rejected. It added that even if consumers would claim any damages from Alstrom in future proceedings, Alstrom can then refer those consumers to TenneT, or it can bring a contribution action against TenneT to avoid having to pay double compensation.
In its assessment of the reasonableness of the passing-on defence in this particular case, the district court also took into account that TenneT is fully owned by the Dutch State and that consumers are likely to benefit from the damages paid to TenneT, either in the form of lower electricity transport rates or in the form of lower taxes. In these circumstances, according to the district court, even if TenneT to some extent would be overcompensated, this should not be considered unreasonable. At any rate, the court concluded, such an outcome should be considered more reasonable than an outcome where Alstrom would be able to keep its illegal cartel profits, if it could benefit from the passing-on defence.
The decision of the District Court Gelderland is a landmark decision in respect of the passing-on defence. While the court accepts the passing-on defence in principle, it does seem to favour a very restrictive application of this defence, by holding that the defendant must convince the court that it is reasonable to deduct any passed-on costs from the damages claimed. Although the present judgement may be tainted to some extent by TenneT’s position as a state-owned company and the fact that damages for consumers were very fragmented, the test of reasonableness favoured by the district court seems to provide the courts with a significant degree of discretion. It remains to be seen how Dutch courts will apply this test in future proceedings.