On 5 June 2014, the Court of Justice of the European Union ("ECJ") handed down its judgment in Case C-557/12 Kone AG and Others V ÖBB-Infrastruktur AG, finding that participants in a cartel may be held liable for damage caused outside the cartel.
In 2007, the European Commission imposed fines totaling € 992 million on Kone, Otis, Schindler and ThyssenKrupp for their participation in price-fixing on the market for the installation and maintenance of elevators and escalators in Belgium, Germany, Luxembourg and the Netherlands.
In 2008, the Austrian authorities also imposed fines on several undertakings (including Kone, Otis and Schindler) for their participation in a similar cartel in Austria.
ÖBB-Infrastruktur AG ("ÖBB"), a subsidiary of Austrian Federal Railways, had purchased elevators and escalators from suppliers that were not involved in the cartel. It brought proceedings before the Austrian courts, seeking € 1,839,239.74 in compensation from the Austrian undertakings which had participated in the cartel for losses sustained as a result of its suppliers having raised their prices as a result of the cartel (umbrella pricing).
The Austrian Supreme Court referred a preliminary question to the ECJ, asking whether the Austrian cartel members could be found liable for the losses allegedly sustained by ÖBB. Under Austrian law, such compensation was not possible due to the absence of a contractual relationship between ÖBB and the members of the cartel.
According to the ECJ, the effectiveness of the prohibition on cartel activity would be jeopardised if applicants were unable to seek compensation for loss caused by an infringement of competition law. The Court went on to hold that any person is entitled to claim compensation for loss suffered where there is a causal link between the cartel and the loss allegedly suffered.
The ECJ reasoned that a cartel may lead non-participating companies to raise their prices in order to adapt them to the market price and that the cartel members should be aware of this. Therefore, to hold pricing as a purely autonomous decision reached by individual undertakings would be to ignore the fact that such decisions are often made by reference to the market price, which may have been distorted by the cartel.
Therefore, the Court found that where it has been established that a cartel is, in the circumstances of the case and, in particular, the specific aspects of the relevant market, liable to result in non-participating competitors raising their prices, the victims of the price increases must be able to claim compensation from the cartel members for losses sustained as a result of the cartel.
The Austrian law which required a contractual relationship between the damaged party and the members of the cartel was deemed to be incompatible with EU law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.