The subject of our last blog was the “calm before the storm” in cartel damage claims. The lull in Dutch judgments and developments is now clearly in the past. In 2018, significant follow-on steps were taken in a number of proceedings. There were also a number of important legislative initiatives, such as the creation of the Netherlands Commercial Court (“NCC”) and the adoption of the Class Action Financial Settlement Act by the Lower House of Dutch Parliament.
Before addressing the most prominent events in the Netherlands, we will first pay attention to a recent legal opinion of retiring Advocate General Wahl in the Skanska Industrial Solutions case. If the Court of Justice of the European Union (“ECJ”) subscribes to Wahl’s opinion, that may have a major impact on the rules governing cartel damage actions.
Skanska Industrial Solutions
In his legal opinion in the Skanska Industrial Solutions case, Advocate General Wahl addressed the question who are liable under civil law for damage caused by a cartel. Is only the legal entity that committed the infringement liable, or can other legal entities be held liable as well?
The Finnish Supreme Court was confronted with that question in follow-on proceedings instituted by the municipality of Vantaa. That municipality based its claim on a judgment passed by the Supreme Administrative Court of Finland, which fined seven companies in 2009 for participating in a cartel on the asphalt market. But when the municipality of Vantaa wished to recover its loss, it became apparent that some of the legal entities that had taken part in the cartel had already been wound up. The assets of those legal entities had been taken over by their parent companies, which subsequently continued the economic activities of the wound-up legal entities.
As in the Netherlands, legal entities in Finland are liable under civil law only for torts that they themselves have committed. Piercing of the corporate veil takes place only in exceptional situations. That is not the case in public competition law enforcement if an infringement is committed by a “legal entity” or an “economic entity”. Briefly stated, those terms coincide with the term “group”.
In three preliminary questions, the Finnish Supreme Court asked the ECJ whether the parent companies of the infringers could also be held (jointly and severally) liable for the damage caused by the cartel. In his legal opinion, Advocate General Wahl argued that the ECJ must answer that question in the affirmative. Because the infringement was committed by the economic entity, the economic entity must, in his opinion, also be liable for the damage consequently incurred. If the assets and therefore the economic activities are transferred to another legal entity, that legal entity is subsequently also liable for the damage.
It is interesting that Wahl based that conclusion on the argument that European law directly sets the conditions out regarding civil-law liability for cartel damage, even though most lawyers actually assume that cartel damage claims must be assessed on the basis of national law.
But an even more interesting question is which legal entities within the economic entity are liable if the ECJ subscribes to Wahl’s opinion: only the legal entity that performed the economic activities to which the cartel agreements related? Or maybe the parent company that was also fined? Or all the legal entities that form part of the entity that committed the infringement? One thing is certain: if the ECJ subscribes to Wahl’s opinion, it will have a great many questions to answer.
Calculation of the damage
A number of Dutch follow-on actions have now reached such an advanced stage that the quantification of the damage incurred can be addressed.
The most advanced of these legal actions is TenneT/Alstom. In 2017, the Gelderland district court passed judgment against Alstom, which had participated in the gas insulated switchgear cartel, to pay grid operator TenneT damages in the total amount of €68 million. Alstom appealed that judgment before the Court of Appeal of Arnhem-Leeuwarden. It is apparent from a recent interlocutory judgment that the Court of Appeal of Arnhem-Leeuwarden agrees with the Court of Gelderland that Alstom is liable for the loss incurred by TenneT and is now assessing the scope of that loss.
It remains to be seen whether the Court of Appeal of Arnhem-Leeuwarden will answer this question in the same manner as it did in May 2018 in a related follow-on action, namely Tennet/ABB. In that case the Court of Appeal stated that it intended to order an expert examination into the calculation of the loss and the passing-on defence. If the Court of Appeal actually does so, that will be the first (known) Dutch follow-on action in which independent experts assist the court in quantifying the loss.
A final legal action that involved calculation of loss is that between Van Gelder and Shell and Kuwait. That follow-on action is based on the Commission decision on the Dutch bitumen cartel, in which Shell and Kuwait took part, according to the European Commission. The Rotterdam district Court found that they were therefore jointly and severally liable for the direct and indirect loss incurred by the Van Gelder Group.
In its judgment, the court found that, in principle, it would specifically assess rather than estimate the loss. It did not consider it relevant for the time being that collecting the data required for that purpose may be a costly affair for Van Gelder. In accordance with the principles set out in the Damages Directive, the court then instructed Van Gelder to further substantiate its loss. It had to explain in that regard, for instance, that the GWW construction industry cartel, in which Van Gelder took part according to the NMa, did not have any effect on the loss incurred by Van Gelder by missing out on contracts. At the same time as Van Gelder, Shell and Kuwait must in their turn also substantiate their defences against the calculation of the loss.
In a follow-on action arising from the lift cartel, the Court of Appeal of Arnhem-Leeuwarden did not address the calculation of the loss. It rejected the claim filed by the East West Debt claim vehicle on the grounds that it had insufficiently substantiated its argument that the hospitals and healthcare institutions that had purchased the lifts actually incurred loss. More specifically, the Court of Appeal held it against EWD that it had failed to submit the invoices and agreements of the lifts on which its claim was based.
Dutch courts are known to be relatively likely to assume jurisdiction in follow-on cases. On 9 May 2018, however, the Amsterdam district Court passed a judgment that was an exception to that rule.
The judgment related to proceedings in response to the decision of the Greek competition authority to fine Athenian Brewery (“AB”), a Greek subsidiary of Heineken, for abuse of its dominant position on the Greek beer market. A competitor of AB, Macedonian Thrace Brewery (“MTB”), then summoned both Heineken and AB to appear before the Amsterdam district Court to recover the loss that MTB had allegedly incurred because AB had excluded it from the market.
The Amsterdam district Court found that it had jurisdiction only in the case against Heineken, which has its registered office in Amsterdam. But, in the court’s opinion, Heineken could not serve as an anchor defendant in the case against AB because the claims against them were not based on “the same situation of law and fact”, as the ECJ requires in its Freeport judgment. In the court’s opinion, there was no evidence that Heineken was directly involved in or had knowledge of the infringement. Article 8(1) of the Recast Brussel I Regulation therefore offers no grounds for international jurisdiction of the Dutch court, in the Amsterdam Court’s opinion.
The ECJ also had two opportunities in 2018 to rule on the interpretation of various provisions of the Recast Brussels I Regulation and its predecessor, the Brussel I Regulation. The first is its judgment in FlyLAL – Lithuanian Airlines on the interpretation of the term “the place where the harmful event occurred”. With regard to an action based on tort, the court of the place where the harmful event occurred also has jurisdiction to decide on the dispute. In its FlyLAL judgment, the ECJ identified several connecting factors for international jurisdiction. In its opinion, the harmful event in any event occurs in the place where an anti-competitive agreement is entered into. The court of the place of the market affected by that agreement or by the anti-competitive conduct also has jurisdiction.
The second judgment is that in the Apple Sales International case. In that abuse case, the ECJ found that a supplier may hold its distributor to a choice of forum clause if the abuse relates to the contractual relationship between the supplier and the distributor. It is not a requirement that the choice of forum clause expressly refers to disputes regarding liability on the grounds of breach of competition law. In the ECJ’s opinion, it is also not relevant if the arbitration clause is invoked in a stand-alone or a follow-on case.
The Class Action Financial Settlement Act and the creation of the NCC
In earlier blogs we already addressed the proposed Class Action Financial Settlement Act (see here and here). This bill introduces an opt-out regime for class actions filed under Section 3:305a of the Dutch Civil Code. This is subject to the condition that the action is sufficiently closely linked to Dutch jurisdiction. The bill was adopted by the Lower House on 29 January 2019, but has yet to be adopted by the Upper House. If accelerated treatment before the Upper House is possible, the Act will enter into force on 1 July 2019.
Finally, the Netherlands Commercial Court (“NCC”) was created on 1 January 2019. The intention is for the NCC to handle complex cross-border cases in the English language and also to pass judgment in English. We believe that the NCC will be pre-eminently suited to handle certain international competition cases. We hope to report in our next blog whether that is also the case in practice.
More information on the NCC can be found in this (English-language) interview with Maverick partner Martijn van de Hel.
More information on dawn raids by ACM and the European Commission can be found at invalacm.nl.