On 21 May 2015, the European Court of Justice ruled on a series of questions from a German court about the application of the EU jurisdiction and judgments Regulation, Regulation 44/2001, in the case of cross-border multi-party competition damages claims. This was the first time that the Court had ruled specifically on the application of the "Brussels" Regulation in this area, and the judgment is therefore of great practical importance.
In March 2009, CDC brought a damages claim against six companies fined by the European Commission in 2006 for their involvement in a cartel among suppliers of hydrogen peroxide and perborate used in pulp and paper processing. Article 1 of the Brussels Regulation requires a defendant to be sued in the courts where it is domiciled. CDC accordingly brought the claim in the German courts, because Evonik Degussa, one of the defendants, was domiciled there. Relying on Article 6(1) of the Regulation, it brought proceedings against the other five defendants in the German courts, although none of them were domiciled there, on the basis that these claims were closely connected with the claim against the "anchor defendant" Evonik Degussa and that there was a risk of irreconcilable judgments if the claims were brought in different jurisdictions..
In September 2009, CDC withdrew its action against Evonik Degussa, following a settlement. The other defendants argued that CDC and Evonik Degussa had in fact settled before the German proceedings were brought, but had then delayed the formal conclusion and announcement of the settlement so as to ensure that the German court would have jurisdiction over the other non-German defendants too. They therefore argued that CDC was not entitled to rely on Article 6(1). They also argued that jurisdiction clauses in various supply contracts overrode CDC's choice of the German courts.
The Court considered that there is a risk of irreconcilable judgments where there are separate actions before the courts of more than one Member State, so Article 6(1) permits a claim against several members of the same cartel domiciled in different Member States to be brought in the courts of a Member State where one of them is domiciled. Members of a cartel should expect to be sued in one of those courts.
The court then turned to the question of whether CDC's withdrawal of its action against Evonik Degussa, the anchor defendant, also meant that it could not proceed against the other defendants, not domiciled in Germany but sued in the German courts under Article 6(1) because of their close connection with Evonik Degussa. The ECJ noted that the rule in Article 6(1) cannot be used for the sole purpose of removing a defendant from the jurisdiction of the courts of the Member State in which they are domiciled. However, there is no need to establish that the claims were not brought with that purpose. The court can find that Article 6(1) has been circumvented only where there is firm evidence that the claimant artificially sought to rely on Article 6(1). In this case, that meant that the defendants would need to provide firm evidence that, at the time the proceedings were brought, DCD and Evonick Degussa had colluded in order to claim the benefit of Article 6(1). Merely negotiating a settlement does not prove collusion, but it would be different if there were evidence that a settlement had been agreed before the start of proceedings but had then been concealed in order to give the impression that Article 6(1) applied.
The other basis on which the German courts could have jurisdiction was under Article 5(3) of the Regulation, which permits claims to be brought in the courts of the place where the harmful event occurred. The ECJ held that in the case of a single and continuous infringement of Article 101, where cartel members participated in several Member States at different times and in different places (a typical long-running complex cartel), the harmful event occurred individually for each victim and it may bring its claim before the courts of the place in which the cartel was entered into, the place where one agreement that was the sole cause of the victim's alleged loss or the place where its registered office is located. However, the ECJ noted that jurisdiction under Article 5(3) is limited to the loss suffered by the undertaking whose registered office is in its jurisdiction, and that CDC, which had aggregated claims by purchasers in a number of jurisdictions, would need to bring separate claims before each of the national courts concerned. This is of course the major disadvantage of claims under Article 5(3), and a key reason why claimants go to such efforts to find an anchor defendant so as to be able to rely on Article 6.
Finally, the ECJ ruled that jurisdiction clauses in purchase agreements between the parties will override the rules in Article 6(1) and 5(3) only where they refer specifically to claims for liability resulting from competition law infringements – the usual form of jurisdiction clause that refers merely to disputes arising from contractual relationships will not suffice.
The CDC judgment is an important one for private competition enforcement. Claimants go to considerable efforts to bring their claims before "preferred" jurisdictions (with the UK, Germany and the Netherlands currently among the front runners). Article 5(3) jurisdiction has disadvantages, as the CDC judgment itself demonstrated. So the combination of one or more anchor defendants and Article 6(1) is often used to achieve this objective. At the same time, the defendants will often seek to eliminate the anchor defendant, thereby removing the entire basis of the jurisdiction of the claimant's chosen court. The CDC judgment establishes that loss of the anchor defendant does not necessarily result in loss of the connection to the jurisdiction. It is not clear, however, to what extent the defeat of the claim against the anchor defendant on substantive grounds at an early stage of the proceedings would have a similar effect.