Competition: Court of Justice of European Union rules on jurisdiction issues in cartel damages actions

On 21 May 2015, the Court of Justice of the European Union ("CJEU") handed down its preliminary ruling on a reference from the Dortmund Regional Court of Germany ("Dortmund Regional Court") concerning the right of victims of unlawful cartels to claim compensation before the courts where one of the participants of the infringement is domiciled. In May 2006, the Commission found that several companies supplying hydrogen peroxide and sodium perborate had participated in an illegal cartel involving price-fixing, market-sharing and exchange of sensitive information. The Commission then imposed fines on seven of the cartel participants. In March 2009, Cartel Damage Claims Hydrogen Peroxide SA ("CDC"), a Belgian company to which several companies operating in the industrial pulp and paper processing industry transferred their rights to damages suffered due to the cartel, brought an action for damages before the Dortmund Regional Court against six of the cartel participants established in various Member States. CDC claimed that the Dortmund Regional Court had jurisdiction to rule in respect of all the defendants because one of them, Evonik Degussa GmbH ("Evonik Degussa"), had its registered office in Germany.

In September 2009, CDC withdrew its action against Evonik Degussa, following an out-of-court settlement. Subsequently, the other defendants challenged the international jurisdiction of the Dortmund Regional Court on the grounds that the supply contracts concluded with the companies wronged contained jurisdiction clauses which designated the courts having jurisdiction in the event of disputes arising from those contracts. The Dortmund Regional Court referred to the CJEU a number of questions concerning the interpretation of Brussels I Regulation.

In its judgment, the CJEU firstly noted that the requirements for holding cartel participants liable in tort are determined by the national law of each Member State and, in order to avoid a risk of irreconcilable national judgments, the Brussels I Regulation provides for an action to be brought before the courts of one Member State against several defendants domiciled in various Member States. According to the CJEU, the withdrawal of an action against the sole co-defendant domiciled in the same Member State as the court does not, in principle, affect the court's jurisdiction to hear and determine actions brought against the other co-defendants. However, this conclusion does not apply if the court finds that the provision of the Brussels I Regulation is abused in order to artificially establish the jurisdiction of the court. Cartel victims can alternatively bring their actions against several companies either before the courts of the place where the cartel was concluded, the place where one specific agreement which implies the existence of the cartel was concluded, or before the courts of the place where the loss arose. However, according to the CJEU, the place must be identified for each alleged cartel victim individually and it is in general located at the victim's registered office. Finally, the CJEU concluded the that the court seized of a matter is bound by a jurisdiction clause which derogates from the application of the specific provisions of the Brussels I Regulation concerning the case of several defendants and their liability in tort, delict or quasi-delict. However, such jurisdiction clauses must refer to disputes concerning liability incurred as a result of an infringement of competition law. Source: Court of Justice of the European Press Release 21/5/2015

Competition: Advocate General Wahl delivers opinion on AC-Treuhand's appeal against General Court judgment on heat stabilizers cartel

On 21 May 2015, Advocate General Wahl ("AG Wahl") handed down his opinion on an appeal by AC-Treuhand AG ("AC-Treuhand") against the General Court ("GC") judgment that dismissed AC-Treuhand's action challenging the Commission's heat stabilizers cartel decision. In November 2011, the Commission announced that it had fined 24 companies, including AC-Treuhand, for operating two illegal cartels on the market for plastic additives used as heat stabilizers. AC-Treuhand, a Swiss consultancy firm which had organized a series of meetings between the cartelists and collected, stored and distributed information, was fined EUR 0.34 million as a facilitator to the cartel, although it was not active on the heat stabilizers market. Subsequently, AC-Treuhand brought an action before the GC claiming that, inter alia, the Commission had infringed Article 101 of the Treaty on the Functioning of the European Union ("TFEU") and the principle that offences and penalties must be defined by law. According to AC-Treuhand, this was because Article 101 TFEU applies only to companies that have entered into an agreement or engaged in concerted practices restricting competition. In February 2014, the GC dismissed AC-Treuhand's appeal in its entirety. AC Treuhand brought a further action before the Court of Justice of European Union ("CJEU") seeking to annul the GC's judgment.

In his opinion, AG Wahl found that AC-Treuhand's appeal should be upheld on the grounds that the GC had erred in agreeing with the Commission that AC-Treuhand had directly participated in the cartel due to its administrative role and conduct of the cartel meetings. AG Wahl first noted that in order to be liable  under Article 101 TFEU, a company must exercise competitive constraint against other cartel participants under normal market conditions and this constraint must be worth removing or reducing by way of illegal practices. That being said, AG Wahl continued that AC-Treuhand could not be regarded as an undertaking active on the relevant market or neighboring markets as defined in the Commission's cartel decision. Rather, the company acted in its capacity as a consultancy firm. Hence, AG Wahl held that AC-Treuhand had not exercised competitive constraint towards the other cartel participants, and thus its behavior could not be considered a restriction of competition in breach of Article 101 TFEU. AG Wahl also assessed whether AC-Treuhand could be regarded as having performed an accessory role in assisting the cartel participants to carry out their anti-competitive activity. However, because the Commission never raised such argument, AG Wahl concluded that under the current EU competition rules the GC's judgment should be annulled as far as it concerns AC Treuhand. Source: Case C-194/14 P AC-Treuhand AG v European Commission, Opinion of Advocate General 21/5 2015 (in Finnish)

Competition: Advocate General Kokott delivers opinion regarding Article 102 and rebate schemes 

On 21 May 2015, Advocate General Kokott ("AG Kokott") delivered her opinion regarding the preliminary ruling requested by the Danish Maritime and Commercial Court on the assessment of rebate schemes under Article 102 of the Treaty on the Functioning of the European Union ("TFEU"). In June 2009, the Danish Competition Council concluded that the universal post service provider in Denmark, Post Danmark A/S ("Post Danmark"), had abused its dominant position by operating a rebate scheme for direct advertising mail in breach of Article 102 TFEU and the Danish competition legislation. Thus, the Danish Competition Council prohibited Post Danmark from operating that scheme. In May 2010, the Competition Appeals Tribunal upheld the Competition Council's decision. 

Subsequently, Post Danmark brought an action before the Danish Maritime and Commercial Court, which stayed proceedings and referred several questions to the Court of Justice of the European Union ("CJEU"). The Danish court sought to ascertain whether there is a legal requirement to perform an as-efficient-competitor ("AEC") test in order to confirm the existence of an abuse of a dominant position, and whether an appreciability threshold can be used when assessing the possible exclusionary effects of a rebate scheme.

In her opinion, AG Kokott stated that a rebate scheme operated by a dominant undertaking constitutes an abuse within the meaning of Article 102 TFEU where an overall assessment of the case shows that the rebates are capable of producing an economically unjustified exclusionary effect. In that regard, it is important to take in account the criteria and rules governing the grant of the rebate, the conditions of competition prevailing on the relevant market and the position of the dominant undertaking on the market. As regards the AEC test, AG Kokott noted that Article 102 TFEU does not require that the abusive nature of a rebate scheme be proven by means of a price/cost analysis where that nature is immediately shown by such an overall assessment. AG Kokott nevertheless added that authorities and courts are at liberty to use such analyses in their overall assessments, unless it would be impossible for another undertaking to be as efficient as the dominant undertaking due to the structure of the market. Finally, AG Kokott considered that, aside from the requirement that a rebate scheme operated by a dominant undertaking must have an actual or potential adverse effect on trade between Member States, the exclusionary effect produced by the scheme does not need to exceed any appreciability threshold in order to be classified as an abuse of dominant position; instead, it suffices that the presence of such an effect is more likely than its absence. Source: Case C-23/14 Post Danmark A/S, Opinion of Advocate General 21/5/2015 

Competition: General Court rules on relationship between standard procedure and settlement procedure in context of cartel on phosphates 

On 20 May 2015, the General Court ("GC") handed down its judgment dismissing an appeal by the Roullier group ("Roullier Group") against the Commission's decision in the animal feed phosphates cartel. This ruling marks the very first decision on the relationship between a standard and a settlement procedure. In 2010, the Commission imposed fines amounting to EUR 75 647 000 on six groups of producers for participating in a price-fixing and market-sharing cartel on the market for animal feed phosphates for more than 30 years. The Roullier Group was fined EUR 59 850 000 for having participated in the cartel between 1993 and 2004.

The Commission resorted to the standard procedure against the Roullier Group because, unlike the other groups involved in the infringement, the Roullier Group did not wish to enter into a settlement with the Commission after having been informed of the approximate amount of the fine that the Commission  intended to impose upon it. Subsequently, the Roullier Group brought an action before the GC seeking to annul the Commission's decision on the grounds that the Commission had applied a fine that was higher than the maximum figure of the range envisaged during the settlement negotiations.

The GC dismissed the Roullier Group's appeal and upheld the fine imposed by the Commission. According to the GC, the Commission had not penalized the Roullier Group because of its withdrawal from the settlement procedure; instead the Commission had applied the same method for calculating the fines for the Roullier Group as for the other groups participating in the settlement procedure. The difference between the amounts of the fines resulted from the reductions that the Commission had applied in the settlement proposal but which it was not required to apply in the standard procedure. The Commission had also considered new information, which required the Commission to redefine the period taken into account and to readjust the amount of the fine imposed. The GC further concluded that the Commission is not bound by a range of fines determined as part of the settlement procedure, because the calculation of such range is an instrument solely related to that procedure and, in order to establish the liabilities of the undertakings concerned in the standard procedure, the Commission must take into account new arguments or evidence brought to its attention. Consequently, the GC concluded that the Commission had conducted a proper analysis and assessment of the anti-competitive practices of the Roullier Group, and thus, had not erred in calculating the amount of the fine. Source: Court of Justice of the European Union Press Release 20/5/2015

Competition (Finland): Supreme Court grants leave to appeal to three forestry companies in raw wood cartel damages case

On 22 May 2015, the Finnish Supreme Court ("Supreme Court") granted leave to appeal to three Finnish forestry companies, Metsäliitto Cooperative ("Metsäliitto"), Stora Enso Oyj ("Stora Enso") and UPM-Kymmene Oyj ("UPM-Kymmene") in the raw wood cartel damages case. In 2009, the Market Court imposed fines totaling EUR 51 million on Metsäliitto and Stora Enso for illegal price cooperation and information exchange in the market for purchase of raw wood between 1997 and 2004. UPM-Kymmene received full immunity from fines for its cooperation with the Finnish Competition Authority (today the Finnish Competition and Consumer Authority, “FCCA”) under the Finnish leniency program.

Following the Market Court judgment, a total of 656 corporations and private forest owners brought actions for damages before the Helsinki District Court ("District Court") against the three referenced forestry companies. The District Court dismissed the first 13 actions by finding that the cartel victims’ right to compensation had expired under the applicable statute of limitations. The corporations and forest owners brought actions before the Helsinki Court of Appeal ("Court of Appeal") which referred all 13 cases back to the District Court for review on the merits in November 2014. According to the Court of Appeal, the District Court had wrongly dismissed the actions for damages instituted in December 2011 and May 2012 on the grounds that the cartel victims' right to compensation had expired.

UPM-Kymmene, Stora Enso and Metsäliitto applied to the Supreme Court for leave to appeal all 13 Court of Appeal judgments. According to the three forestry companies, the judgment of the Court of Appeal had been unclear in particular with respect to the date when the statute of limitation periods under the Finnish Competition Act and the Finnish Tort Liability Act had commenced. The Supreme Court granted leave to appeal one of the Court of Appeal's judgments but decided to stay the proceedings concerning the other applications until it has handed down its judgement in the case concerned. Source: Supreme Court Press Release 22/5/2015 (in Finnish) 

In addition, kindly note the following merger control decisions by the Commission which are published on the website of the Commission’s Directorate-General for Competition:

  • Commission approves acquisition of joint control of FanDuel by Comcast and several investments funds
  • Commission approves merger of PRE and Axis in insurance sector
  • Commission approves acquisition of Greenyard Foods by Deprez Holding
  • Commission approves acquisition of Echo by Griffin and LVS II Lux
  • Commission approves acquisition of corrugated paper manufacturer Duropack by DS Smith
  • Commission finds extension of Knorr Bremse's minority shareholding in Vossloh falls outside EU merger control