Last summer, we posed the question in one of our blogs whether it was a coincidence that civil courts appeared to grant a lot of competition law claims, also in stand-alone cases (cases in which no preceding infringement decision has been rendered by the European Commission or the Netherlands Authority for Consumers and Markets (“ACM”)). Now, one year later, we are able to answer that question: successful stand-alone cases definitely appear to be the trend.
Moreover, there are many developments in the field of follow-on cases (cases based on an infringement decision issued by a competition authority). In March of this year, a court again awarded a large amount in damages. This time ABB was ordered to pay damages in excess of €68 million, because it participated in the gas insulated switchgear (“GIS”) cartel.
Turnaround in case law: reliance on competition law increasingly successful
Until recently, courts rejected many competition law claims, because they considered no appreciable restriction of competition took place (see also our blog on non-compete clauses). A recent judgment of the Dutch Supreme Court is likely to change this: in the Agib case the Supreme Court ruled that a party that is able to demonstrate that an agreement has the object of restricting competition is no longer required to demonstrate that that restriction is appreciable. Restrictions by object are deemed to have such a negative impact on competition that their effects need not be investigated. This applies, for instance, to customer allocation and price-fixing agreements.
This rule is not entirely new. In the Expedia case the European Court of Justice already interpreted Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) in that sense. However, it was not yet clear whether the Expedia judgment was also relevant to the interpretation of Article 6 of the Dutch Competition Act. The fact that the Supreme Court has now finally answered that question in the affirmative may make the Agib judgment the most significant competition-law judgment of the year (see also our blog on the recent developments in the field of the cartel prohibition).
The influence of the Agib judgment is already apparent in case law. With reference to that judgment, the Arnhem-Leeuwarden Court of Appeal found that a non-compete clause in a share purchase agreement was in breach of competition law. The case centred on a non-compete clause under which the seller was prohibited from competing with the buyer for a period of five years. That period was longer than that provided for under the Commission Notice on Ancillary Restraints and, according to the Court of Appeal, was therefore not permitted. An interesting aspect of this judgment is that the Court of Appeal implied that the non-compete clause may have been permissible if the parties had contractually provided for the possibility of temporal scope of the clause being reduced to a shorter period. Careful wording of non-compete clauses in acquisition contracts therefore remains essential.
But not all stand-alone cases related to breaches of the cartel prohibition: private disputes regarding alleged infringements of the state aid prohibition are also increasingly brought before the court. For instance, Gendia, a provider of various genetic tests, requested a suspension of the NIPT Subsidy Scheme in interim relief proceedings against the State. Other interim relief proceedings related to a mortgage loan that the State had granted Stichting Film Instituut Nederland to enable it to buy the EYE building in Amsterdam. In both proceedings the claimants were unsuccessful: in the interim relief judge’s opinion they had not sufficiently demonstrated an infringement of Article 107 TFEU. For other developments in the field of state aid law we refer to our recent blog on this subject.
Record damages in TenneT/ABB
With regard to follow-on cases, the most remarkable judgment is that of the District Court Gelderland in TenneT/ABB. In that judgment the court ordered ABB to pay claimant TenneT a record amount of damages in excess of €68 million. The Court accepted TenneT’s argument that it had paid an overcharge of 58% for a GIS system it had purchased from ABB during the infringement period. ABB had tried to contest TenneT’s economic analysis by submitting its own economic report which showed that its profit figures during the infringement were not higher than afterwards. ABB argued that this proved that it had not overcharged TenneT. But the court did not consider that relevant. In the court’s opinion ABB could have refuted TenneT’s arguments only by providing information on “its own raw material and production costs”. That finding demonstrates that it does not suffice for defendants to merely contest arguments presented by claimants; they must be very transparent about their pricing policy.
Another interesting aspect of this judgment is the court’s assessment of ABB’s passing-on defence. Briefly stated, the concept of passing-on refers to the situation where a (direct) buyer of cartelised products has not incurred any loss because that buyer increased the prices that it charged its own customers. ABB had argued that TenneT had done the same, since TenneT’s rates were regulated, which also meant that it could pass on all the costs of the GIS station in question to its customers, the electricity users.
The court nevertheless rejected ABB’s passing-on defence. Since the court considered it unlikely that electricity users themselves would be able to file a (successful) action for damages against ABB, it considered it unreasonable to deduct the amount passed on from the damages claimed by TenneT. The court furthermore found that the damages paid by ABB would ultimately benefit those users anyway, since TenneT is a wholly-owned state enterprise.
Successes for both claimants and defendants in other follow-on cases
Other successes were achieved by the claimants in the Sodium Chlorate and Air Cargo follow‑on cases. Unlike TenneT, the claimants in those proceedings are not individual buyers, but rather “litigation vehicles”. A litigation vehicle usually seeks recourse in one and the same legal action in respect of the claims of several (large) buyers. Those buyers have usually assigned their claims to the litigation vehicle. The District Court Amsterdam found in both cases that this “assignment model” is lawful. More specifically, the court found that the assignments were not in breach of the determinability requirement, public morals or the prohibition on fiduciary transfer of ownership.
In the Air Cargo proceedings, litigation will ensue on the question which laws apply to the claims. In theory, those claims could be governed by a wide range of foreign legal systems. The Amsterdam District Court requested the Supreme Court to issue a preliminary ruling on this point. The court wished to know, for instance, whether it could apply only Dutch law. An affirmative answer from the Supreme Court would make follow-up proceedings much simpler and easier; in that case Dutch courts would no longer have to rule on complicated questions of foreign law.
In the Sodium Chlorate case, the district court rendered a ruling that was less favourable for claimant CDC. The court found that CDC had waited too long before taking legal action and therefore found that a number of CDC’s claims had expired. CDC was, however, successful in another follow-on case: the Paraffin Wax proceedings is said to have ended in a settlement.
Interesting developments in antitrust damage cases will follow in the near future
Our overall conclusion is definitely that interesting developments in antitrust damages cases will continue to follow. Many new follow-on proceedings were instituted last year, most of which related to the truck cartel. Legal proceedings on that subject have now been instituted in the Netherlands, Ireland, the United Kingdom and Germany. If the accusations regarding possible concerted practices of car manufacturers are true, the focus of upcoming multimillion claims will be clear.
We consider it likely that claimants in follow-on proceedings will frequently litigate in the Dutch courts in the future as well. In an earlier blog we already reported on two recent bills that will make the Netherlands even more attractive for cartel damage claims. A recent bill serves to make it easier to claim damages in class actions. There are also plans to establish a Dutch court that specialises in international commercial disputes: the Netherlands Commercial Court.