Cartel members may be liable for pricing of companies outside cartel

On 5 June 2014, the Court of Justice ruled that EU competition law excludes the application of a Member State's domestic legislation that categorically excludes the possibility of cartel members being held liable for losses suffered by customers who purchased from competitors who were not members of the cartel.

The ECJ's judgment followed a preliminary reference from the Austrian Supreme Court, in the context of a damages action brought by ÖBB Infrastruktur against the companies that had been part of the Austrian elevators and escalators cartel. Whilst ÖBB Infrastruktur had purchased escalators and elevators from suppliers not involved in the cartel, it argued that the price it had paid was higher as a result of the cartel than it would have been had the cartel not existed, its supplier having adapted its prices to the cartel's price level (known as "umbrella pricing"). Austrian law does not recognise liability in these circumstances, on the basis that there is an insufficient causal link.

The ECJ, whilst recognising that it is for national law to define the concept of a causal link when assessing damages for a breach of Article 101 TFEU, concluded that the effective application of EU competition law excludes a domestic law which categorically excludes, for legal reasons, any civil liability of cartel members for loss resulting from a third party setting its prices higher than would be expected under fully competitive conditions.

The judgment confirms that, in principle, claimants may seek damages from cartelists for losses resulting from the commercial behaviour of non-cartel members. In its judgement, however, the ECJ stipulated that the claimant must establish that the circumstances of the case, in particular the market conditions, are in fact liable to result in umbrella pricing by third parties acting independently, and that those circumstances "could not be ignored" by the cartel members. This appears to impose a potentially heavy evidentiary burden on claimants in these circumstances, and the prospect of a claim succeeding will be dependent on the particular circumstances of each case.

Please click on the links below for the other articles in the June 2014 competition newsletter:

• Commission clears Hutchinson's acquisition of O2 Ireland
• Australia and China sign MOU on competition law cooperation
• UK courts confirm the finality of unappealed competition decisions
• CMA consults on draft NHS merger review guidance