On 5 June 2014, the Court of Justice rendered a landmark judgment in the case of Kone and Others (C-557/12). In its judgment, the Court held that victims of 'umbrella pricing' (alleged higher prices charged by non-cartel members as a result of the cartel) under certain circumstances can obtain compensation from members of the cartel. The judgment is in line with Advocate-General Kokott's opinion of 30 January 2014 (See our newsletter article). However, the Court applies a slightly different reasoning to reach that conclusion.
In the main proceedings before the Austrian court, ÖBB-Infrastructure claimed compensation from inter aliaKone for the effects of umbrella pricing on the Austrian elevator and escalator market. ÖBB-Infrastructure pointed out that as a result of the cartel, elevators and escalators producers not party to it were able to set their prices higher than under competitive conditions. The Austrian Supreme Court considered that umbrella claims do not meet the causality link and relationship of unlawfulness criteria required under Austrian civil law. However, the Supreme Court questioned whether this denial of the right to compensation was compatible with EU law, in particular with the principle of effectiveness. Therefore, it made a reference to the Court of Justice for a preliminary ruling on the question of whether under EU law (Article 101 TFEU) the loss resulting from the effect of umbrella pricing may give rise to compensation.
Contrary to the opinion of Kokott, the Court considered that it is for the domestic legal system of the Member States to lay down the detailed rules governing the application of the concept of the 'causal link', provided that the principles of equivalence and effectiveness are observed. The Court decided that the victims of umbrella pricing may request compensation from members of the cartel for loss suffered as a result of their actions, even though there are no contractual links between them. To determine whether compensation should be awarded, the national courts should consider whether the cartel at issue was, in the circumstances of the case and the specific aspects of the relevant market, liable for the effect of umbrella pricing applied by third parties acting independently and whether those circumstances and aspects could not have been ignored by the members of the cartel.
Furthermore, the Court considered that umbrella claims do not constitute punitive damages since in cases of non-contractual liability the amount of the damages that can be claimed does not depend on the profit achieved by the person whose misconduct caused the loss.
The Court therefore concluded that Article 101 TFEU precludes the interpretation and application of domestic legislation which categorically excludes, for legal reasons, any civil liability of members of a cartel for a loss resulting from the effects of umbrella pricing.