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Stek follow-on cartel damages update

Lawyers:
Ruben Elkerbout
Mattijs Baneke

In a recent landmark judgment, the District Court of Gelderland awarded (in Dutch only) a EUR 14.1 million (excluding interests) compensation for damages in a civil damages procedure that followed from the Gas Insulated Switchgear cartel. The District Court held that the overcharge that resulted from the cartel could be claimed as damages by the claimant (‘TenneT’), while rejecting the defendant’s (‘Alstom’) passing-on defence. This judgment is a clear indication that Dutch courts are willing and able to award effective compensation to parties that bring private actions against cartel members, which should raise the Netherlands’s reputation as a favourable jurisdiction to bring such actions.

Follow-on proceedings

On 24 January 2007 the European Commission issued a decision against ten undertakings that were involved in cartel in the Gas Insulted Switchgear (‘GIS’) industry. In 2010, TenneT, the Dutch transmission system operator, instituted separate actions for damages against two of the cartel members, ABB et al. (‘ABB’) and Alstom, before the District Court of Gelderland. In both cases TenneT claims that it has suffered damages as a result of the cartel infringements by ABB / Alstom, since it (in actual fact its legal predecessor) overpaid for GIS-based power stations as a result of the cartel. In both cases the District Court ruled that ABB / Alstom are liable for compensation of the damages suffered by TenneT, since their participation in a cartel has been established by a final (irrevocable) decision of the European Commission. In the ABB case, this was confirmed by the Court of Appeal Arnhem-Leeuwarden in its judgment on appeal of 2 September 2014. Determining the amount of damage compensation, however, is a more complicated matter.

Determination of damages

In the ABB case, TenneT requested for a calculation of the damages in a separate damages procedure, which is common practice in the Netherlands. In the Alstom case, however, TenneT has claimed a specific amount of damages, which claim has been assessed by the District Court in its judgment. The basic principle for compensation of damages under Dutch law is that the injured party should be compensated for the damages suffered as a result of the unlawful conduct of the injuring party. Consequently, the amount of damages should be determined by comparing the actual situation with the situation that the injured party would (likely) have been in, had the infringement not occurred. In this respect, the District Court considered that TenneT cannot reasonably be expected to provide the exact price that it should have paid for the GIS component (i.e. excluding the price increase caused by the cartel), for the determination of the damages. Instead, the District Court accepted a reasoned estimate by an economic consulting firm, which resulted in an average price increase of EUR 14,1 million.

Passing-on defence

Since a party only has to be compensated for the actual damages that it has suffered, passing-on defences are in principle allowed in the Netherlands. This was confirmed by the Court of Appeal. In the Alstom case, Alstom’s passing-on defence was rejected by the District Court, which considered it highly unlikely that TenneT’s clients, being the end users of electricity, would bring any claims for damages against Alstom. Therefore, the possibility of Alstom having to pay (double) compensation for damages to both TenneT and the end users was considered very small by the District Court. Moreover, the District Court held that the end users were very likely to benefit from the compensation paid to TenneT, which is owned by the Dutch State. Finally, in view of these circumstances the District Court decided that potential overcompensation for TenneT would not be unreasonable. The alternative that Alstom would benefit from an unlawful profit due to its participation in a cartel was considered a less desirable outcome.

Conclusion

The judgment of the District Court in the Alstom case demonstrates that parties that have suffered damages from cartel infringements can successfully (and in this case relatively simple) claim compensation before the Dutch courts. Although the judgment of the District Court could be set aside in appeal, it is expected to raise the Netherlands’s reputation as a favourable jurisdiction to institute follow-on litigation for cartel damages.

Want to know more?

For more information about private actions for cartel damages in the Netherlands or other competition law subjects, don’t hesitate to contact Ruben Elkerbout or Mattijs Baneke.

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