Friday 22 May 2015

Court of Justice ruling on jurisdiction in cartel damages case clarifies claimants’ options


The Court of Justice has ruled that victims of a cartel can claim damages against all the members of the cartel in the national court where one of the cartelists is registered.  The landmark decision is a victory for claimants and reflects the wider EU policy agenda to stimulate private enforcement of competition law in the member states.  

The case concerns a reference from the German court on the application of the Brussels I Regulation (Regulation 44/2001) in a damages action brought by victims of a cartel.  The Court held that Article 6(1) (which allows actions to be brought in the member state of one "anchor" defendant) can apply to a follow-on action for damages.  Here the case was based on a European Commission decision finding a breach of Article 101 TFEU.  The action was brought jointly against a number of defendants based in several member states who participated in the cartel in different geographies and over different periods. The Court considered that there would be a risk of irreconcilable judgements if the cases were heard separately.  The Court also held that Article 6(1) will continue to apply if the victim of the cartel subsequently withdraws its action against the anchor defendant.
 
The Court also considered the application of Article 5(3) which allows a company to be sued in the member state in which the "harmful event occurred".  This provision allows a party that claims to have suffered harm as a result of a cartel to bring a claim before the courts of the place where either the cartel was definitively concluded or one agreement in particular was concluded, which the sole causal event giving rise to the loss allegedly suffered, or where its own registered office is located.  The location must be established for each cartel victim individually. 

The Court held that the national court will be bound by a jurisdiction clause in cartel cases if the cartel victim consented to the clause with full knowledge of the cartel and the harm caused.  It is unclear how this principle will apply in practice owing to the covert nature of cartels.  It seems unlikely that a purchaser would agree to such terms in relation to a cartel known to it.

The decision should pave the way for new venues in which to bring an action for damages in cartel cases including, in principle, where the cartel meetings took place.  Determining where to file an action for cartel damages is always a question of strategy depending on which forum is likely to provide the most effective redress.  Ever since Provimi v Aventis the courts in England and Wales have recognised the concept of an anchor defendant and this is one of the factors which have contributed to the attractiveness of this jurisdiction for claimants seeking to bring a follow-on claim.  As a result proceedings can be brought in England against multiple defendants on the basis of an English anchor defendant which is a subsidiary of one of the addressees of a Commission decision, in circumstances where the subsidiary neither played a direct role in the cartel nor even had any knowledge of it.

The Court’s ruling will increase the range of potential jurisdictions in which to bring a claim by clarifying the rules on jurisdiction in cartel damages cases that are governed by Brussels I Regulation.  However, in practice and for the foreseeable future it is probable that those jurisdictions that up to now have been at the vanguard of reform – being England and Wales, Germany and the Netherlands – will continue to prove the more attractive options relative to those with less of a track record.

Case C352/13 Cartel Damage Claims (CDC) Hydrogen Peroxide SA v Akzo Nobel and others (ECLI:EU:C:2015:335)

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