Kilpailu ja kuluttajavirasto: stop all the clocks, cut off the cartel

On 14 January 2021, the European Court of Justice delivered a preliminary ruling (case C-450/19) setting out guidance on when an anticompetitive agreement on submitting prices in the context of a call for tenders is considered to come to an end. This ruling has important implications for the application of limitation periods for fines imposed by competition authorities.

The request for a preliminary ruling was submitted to the Court in the context of proceedings brought by the Finnish Competition and Consumer Authority ("KKV"), challenging the lawfulness of a decision issued by the Finnish Market Court, in which the court rejected the KKV's application of 31 October 2014 imposing a fine on the Eltel group. The Market Court denied the KKV's application as the conduct at issue was deemed to have occurred outside the five-year limitation period applicable under EU and Finnish competition rules. 

According to the KKV, Eltel had secured a contract for the construction of a high-voltage transmission line in Finland as a result of an agreement with its competitor, Empower, on the terms of tenders submitted to Fingrid, the contracting authority responsible for the development of the Finnish high-voltage electricity transmission network.

The Finnish Supreme Administrative Court, hearing the case on appeal, sought clarification from the Court of Justice on the date Eltel's participation in the bid-rigging cartel should be considered to have come to an end. Four potentially relevant dates were considered by the court: 

• the date Eltel submitted its tender - 4 June 2007;
• the date the contract was concluded - 19 June 2007;
• the date the works were completed - 12 November 2009; and
• the date the last instalment under the contract was paid to Eltel - 7 January 2010.

According to the Court's case law, an undertaking's participation in an anticompetitive agreement is deemed to last for as long that agreement produces its effects, regardless of the date on which that agreement formally came to an end.

The KKV argued that the harmful effects of the cartel lasted until the final instalment was paid to Eltel, and that the cartel could have had harmful economic repercussions downstream, in particular in the form of higher electricity distribution tariffs paid by Fingrid's customers.

In its ruling, the Court of Justice drew a distinction between the restrictive effects of the cartel on competition - which deprived the contracting authority of the opportunity to obtain the agreed goods, works or services under competitive conditions - and the wider adverse economic effects on other market players flowing from the contract. Only the first category of effects are relevant in determining the duration of an undertaking's participation in an anticompetitive agreement.

As Fingrid had been definitively deprived of the opportunity to obtain the goods, works or services under normal market conditions on the date the terms of the contract with Eltel had been definitively determined, Eltel's participation in the bid-rigging cartel was deemed to have come to an end on 19 June 2007, the date on which the contract was signed. 

This case provides valuable guidance on the duration of an infringement in circumstances in which a cartel participant has entered into a contract with a third party producing obligations long after the date of signing.

In its guidance, the Court has sought to maintain a clear distinction between effects relevant for the purposes of calculating penalties for infringing competition law and downstream effects relevant to actions for damages before national courts.

This is the second preliminary ruling delivered in January 2021 by the Court of Justice's second chamber in relation to the implementation of limitation periods by Member States in EU competition cases. In Whiteland Import/Export the Court of Justice held that an overly narrow approach to the interruption of limitation periods may block the application of EU competition rules in a way that is potentially contrary to the EU principle of effectiveness.

With thanks to Zac Davies of Ashurst for his contribution.