Court rejects passing-on defence and itself assesses cartel damage

In a noteworthy judgment of 10 June 2015, the Court of Gelderland ordered Alstom to pay TenneT EUR 14.1 million in damages on the grounds of the role it had played in the gas-insulated switchgear cartel. Interesting aspects of the judgment are the rejection of the passing-on defence and the manner in which the damage was assessed by the civil court.

The reason for the judgment was the European Commission’s decision of 24 January 2007 in which it fined Alstom and ABB, among others, for their participation in the gas-insulated switchgear cartel. TenneT claimed to have incurred damage as a result of that cartel and for that reason instituted civil proceedings against both Alstom and ABB. Although the two cases were closely related from a material perspective, the cases were not joined but were handled separately. Due to different procedural strategies, the TenneT/Alstom proceedings have now reached a more advanced stage than the TenneT/ABB case. In our earlier blogs (here and here) we have already addressed judgments that preceded those two cases.


The judgment of the Court of Gelderland in the TenneT/Alstom case relates to the scope of the recoverable loss incurred by TenneT. The court’s judgment is relevant on two points, namely the amount of the overcharge resulting from the cartel and the passing-on defence.

With regard to the overcharge the court first of all found that the burden of evidence was on TenneT. TenneT produced that evidence by comparing a quotation of ABB from 1999 (drawn up during the cartel) with the rates under an agreement between TenneT and ABB from 2005 (therefore after the end of the cartel). Alstom disputes that those documents are comparable. In light of TenneT’s lack of knowledge, however, the court found in an earlier interlocutory judgment that the principle of effectiveness means that Alstom can be required to provide information on the calculation of its prices. TenneT’s lack of knowledge and the procedural position taken by Alstom, which, despite the earlier interlocutory judgment, has not provided any information on its pricing method, were reason for the court to base its assessment of the amount of the overcharge on the documents submitted by TenneT. In the court’s opinion Alstom has insufficiently substantiated its counterargument that the difference in price is due to a drop in the production costs. The court subsequently found that TenneT’s total overcharge amounted to EUR 14.1 million.

Alstom then argued that TenneT could not claim reimbursement of all or part of that damage because it passed on the higher price (resulting from the (alleged) cartel) to its customers. The rationale of this passing-on defence is to prevent a penalty being imposed on TenneT for loss that it has passed on to a third party. It is also intended to prevent Alstom being ordered several times to reimburse the same loss, for instance in response to a possible claim for damages from the indirect customers (consumers). The passing-on defence is based on Section 6:100 of the Dutch Civil Code, which relates to the mandatory deduction of collateral benefits. However, the court found that Alstom had not complied with the burden of proof that it was under to prove that TenneT had indeed passed on all or part of the overcharge.

The court then weighed the interests of TenneT and Alstom, in particular the risk of possible overcompensation of TenneT and the consequences of the damages payable by Alstom being too high or too low. The court thereby took into account the possibility for consumers (who, as TenneT’s customers, ultimately overpaid electricity costs) to enforce their entitlement to damages. The court thereby found that the chances of a consumer successfully suing Alstom were virtually zero and thereby drew attention to the possibility (if the indirect customers (consumers) nevertheless wished to recover their loss from Alstom) for Alstom “in that case to refer those customers to TenneT et al. and/or to implead TenneT et al.” The court furthermore considered it plausible that the compensation to be awarded to TenneT would in its turn partly “benefit [the indirect customers/consumer], partly by being passed on in the future energy prices and partly via the treasury” (since the Dutch State is the sole shareholder in TenneT). In those circumstances the court did not consider it unreasonable for TenneT to be overcompensated “in a sense”. The alternative, i.e. “making it possible for Alstom et al. to retain the profit unlawfully obtained” would be unreasonable in the court’s opinion and would even constitute unjust enrichment. For that reason the court disallowed the passing-on defence presented by Alstom.

The question is what consequences this judgment will have for other follow-on cartel damage proceedings, since the judgment shows a very critical and reticent application of the passing-on defence. At the same time the judgment is highly casuistic and the exceptional circumstance that TenneT is a wholly-owned subsidiary of the Dutch State played an important part. Moreover, TenneT and Alstom still have the possibility of appealing the court’s judgment. The outcome of such appeal proceedings will depend in part on the Supreme Court’s judgment in the TenneT/ABB case addressed below. In that case the Supreme Court was requested to pass judgment in principle on the passing-on defence. Our provisional conclusion is nevertheless that the court’s judgment in TenneT/Alstom and the relative expeditious manner in which it arrived at a significant order for damages confirms the appeal of the Netherlands for conducting follow-on cartel damage proceedings.


The passing-on defence plays an important role also in the TenneT/ABB case. The court initially rejected the passing-on defence presented by ABB. ABB was successful on appeal, however, and the Arnhem-Leeuwarden Court of Appeal accepted that defence in its judgment of 2 September 2014.

The Court of Appeal’s judgment is entirely in keeping with the Directive (adopted in November 2014) on actions for damages for infringements of competition law. That Directive provides that cartel members who are sued for compensation of the damage caused by them can rely on the passing-on defence. That is not allowed in all countries, incidentally. Cartel members cannot yet rely on the passing-on defence in Germany; in the United States, at a federal level, this defence is also not accepted.

The reason why the passing-on defence is not universally accepted is that it requires a thorough economic analysis. That would complicate the proceedings, thereby reducing the effectiveness of enforcement under private law. To avoid double orders for damages, actions for damages cannot be instituted by indirect customers (consumers) in the United States. US law therefore differs from Dutch law also in that respect.

In the Netherlands the last word on the passing-on defence has not yet been spoken, since TenneT has filed an appeal with the Supreme Court against the judgment passed by the Arnhem-Leeuwarden Court of Appeal. Alstom is apparently also aware of the (possible) consequences of the Dutch Supreme Court judgment in TenneT/ABB for its own case, addressed above. For that reason Alstom has requested leave to join the proceedings before the Supreme Court. Alstom has substantiated that claim by arguing that the outcome of the Supreme Court proceedings may be decisive to the outcome of the TenneT/Alstom case. However, the Supreme Court found that the fear of an unfavourable precedent is insufficient to constitute such an interest that the request to join the proceedings must be allowed. The Supreme Court therefore disallowed the claim. Alstom will nevertheless most likely be awaiting the Supreme Court judgment in the TenneT/ABB principal proceedings with a great deal of interest, particularly in light of the consequences it may have with regard to the damages payable by Alstom.

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