On 12 December 2019, the Court of Justice of the European Union ('CJEU') delivered an important clarification concerning the types of damage that can be claimed in a cartel damages action.
The facts of the case
On 21 February 2007, the European Commission imposed fines totalling EUR 992 million on various undertakings for their participation, since at least the 1980s, in cartels for the installation and maintenance of elevators and escalators (case COMP/E-1/38.823). The cartels were active in Belgium, Germany, Luxembourg and the Netherlands. A number of subsidiaries from the Otis, Schindler, Kone and ThyssenKrupp groups participated in the cartels. The cartels were aimed at securing higher prices for the aforementioned products and services than would have been achievable under competitive conditions, which resulted in an infringement of EU competition law.
During the infringement period, the public body Land Oberösterreich granted promotional loans for the financing of building projects, in the amount of a certain percentage of the total construction costs. The beneficiaries of those loans therefore had the opportunity to obtain external funding at a favourable price through the application of a lower loan interest rate than the standard market rate.
In the case brought before the Supreme Court of Austria, Land Oberösterreich claimed that the cartel had increased the costs in connection with the installation of elevators as part of the overall construction costs paid by the beneficiaries of the promotional loans. Consequently, Land Oberösterreich was obliged to grant loans in higher amounts. If the cartel had not existed, Land Oberösterreich would have granted smaller loans and could have invested the difference at the average interest rate for federal loans which would have been more profitable. Land Oberösterreich therefore claimed to have suffered damage and sought compensation from the cartelists before the Austrian national courts.
However, according to the Austrian Supreme Court, the national law principles governing compensation for purely material losses restricted compensation for losses that did not have a sufficient connection with the objective of protection pursued by the EU cartel prohibition. Therefore, compensation for losses suffered by persons who did not operate as suppliers or as customers in the market affected by the cartel was likely to be excluded. The Supreme Court of Austria referred the issue to the CJEU for a preliminary ruling on whether a specific connection between the allegedly suffered damage and the 'objective of protection' pursued by the EU cartel prohibition was required and whether parties who were not active as suppliers or customers in the relevant product and geographic market affected by the cartel may also claim compensation for indirect losses.
The CJEU clarified that, under the EU cartel prohibition of Article 101 (1) TFEU, restricting compensation solely to customers and suppliers in the market affected by the cartel would seriously undermine effective protection against an infringement of EU competition law. Any loss which has a causal connection with an infringement of the EU cartel prohibition must be capable of giving rise to compensation to ensure the effective application of Article 101 TFEU. Therefore, persons may seek compensation for the losses they suffered as a result of the fact that the amount of those promotional loans was higher than what it would have been without the cartel, meaning those persons were unable to use that difference more profitably. The national court must determine whether Land Oberösterreich actually had the possibility to make more profitable investments and whether Land Oberösterreich has established the existence of a causal connection between the indirect losses and the cartel.
The CJEU provided important guidance on seeking compensation for indirect losses. In practice, the judgment will likely encourage parties who allegedly suffered indirect losses as a result of a cartel to seek compensation from alleged cartelists before the civil courts of EU Member States. The full text of the judgment can be found here.