This article examines the availability of “umbrella pricing” theories to claimants seeking compensation for damages from cartel members in civil damage actions, and the effect that this could have on large players in relatively concentrated markets.


The term umbrella pricing is used to describe pricing by businesses which are not themselves part of a cartel,   but – benefiting from the knock-on effect that the  cartel has on prices throughout the market – set their own prices  higher than they would otherwise have been able to in a competitive market.

Ruling of the ECJ

Kone AG and Others v. ÖBB Infrastruktur (1) broke new ground in allowing victims of cartel / price-fixing behavior to seek compensation against cartel participants for loss caused by so-called “umbrella pricing".

Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition.

In the Kone judgment, the ECJ ruled that Article 101 precludes the application of national law that “categorically excludes, for legal reasons, any civil liability of undertakings belonging to a cartel for loss resulting from the fact that an undertaking, not party to the cartel, having regard to the practices of the cartel, set its prices higher than would otherwise have been expected under competitive conditions.”

The underlying case in Austria involved a claimant, the Austrian railway, that had bought lifts and escalators from both cartelists and non-cartelists, but the ECJ’s broad reasoning and conclusion would arguably apply to claims by someone who bought affected products only from non-cartelists (and none from cartelists).

Under well-established ECJ case law (in particular, Courage and Crehan (2) and Manfredi (3)), the provisions on competition in the  TFEU, in particular Articles 101 and 102, produce direct effects between economic operators, and any person is entitled to compensation for harm caused by an infringement of those provisions.

The ECJ in Kone noted that the effectiveness of EU competition law would be jeopardized if domestic rules on civil liability, in particular on the notion of causality, make it practically impossible or exceedingly difficult for cartel victims to exercise their rights to compensation.


The ECJ focused on the possible negative effects of the cartel conduct, as opposed to merely the illegal conduct as such. Umbrella pricing was seen by the Court as a collateral outcome of “the cartel that contributed to the distortion of price formation mechanism governing competitive markets,” which the TFEU provisions are intended to prevent. Therefore, the ECJ concluded that the causal link between the loss suffered by the claimant and the cartel infringement could not be broken as a result of the claimant purchasing goods or services from an undertaking not party to the cartel where:

  • The circumstances of the case and the specific market aspects were liable to have the effect of umbrella pricing by the non-participating undertaking(s); and
  • The members of the cartel could not ignore such circumstances and aspects.

In assessing the importance of this judgment, it should be noted that some issues remain to be clarified. For instance, it remains to be seen how the umbrella effect should be quantified and, importantly, what correlation or nexus, if any, there should be between the cartel conduct and the pricing decisions taken by non-cartelists. It is also unclear whether it requires a finding by the national judge that the cartel members could not have ignored that their collusive behavior was liable to cause market-wide prices to go up.

No doubt defendants in cartel cases will seek to force plaintiffs seeking to obtain umbrella damages in national courts to overcome significant hurdles in terms of the burden of proof. This revolves around the doubt which can be placed over the element of causation. While there may well be a theoretical link between the cartel and the umbrella prices, this link will often be very remote and the problem remains for plaintiffs to demonstrate the existence of a sufficiently direct causal link.

Issues with causation may also arise where there is a cartel that only accounts for a small proportion of a market, as it will be difficult – if not impossible – for plaintiffs to prove that the cartel prices had any appreciable effect on the prices set by businesses outside the cartel.


This latest decision continues a strong trend toward bolstering civil damages redress for violations of EU competition law. More than ever, it pays for business to assess their market and recognize any possible competition-enforcement risks. In order to determine whether or not one is running a competition law risk, expert advice should be sought at an early stage, but certain elements should cause alarms to sound in the ears of compliance and legal officers.

In particular, there are some sectors where cartels have been found to be more likely to occur, for example where:

  • there are few competitors in the market;
  • products are similar so the scope for competition on quality or service is limited;
  • communications channels exist between competitors; and/or
  • there is excess capacity in the industry.

Severe penalties can be imposed on individuals and businesses involved in cartels, and the recent Kone judgment shows that the costs of being found to be involved in a cartel are becoming increasingly high.

(1) Case C-557/12, (2) Case C-453/99, (3) Case C-295/04.