Thursday, 5 June 2014

Otis continued - CJEU judgment in Case C-557/12 Kone and others

Price agreements may not only affect the participants to a cartel, but may also drive up prices of other competitors in the same market. In today's judgment in the case of Kone and others the Court of Justice of the EU holds that national legislation should not prevent undertakings in the latter category to claim damages from cartel members in order to compensate loss resulting from the fact that such undertakings set their prices higher than they would otherwise have done under competitive conditions.

The Kone judgment is a follow-up to the fine the European Commission imposed on Kone, Otis, Schindler and ThyssenKrupp in 2007 for their participation in cartels involving the installation and maintenance of elevators and escalators in Belgium, the Netherlands, Germany and Luxembourg. In case C-199/11 Otis, the CJEU established that also the EU, as a customer of the participating companies, is not precluded from claiming damages under civil law. In today's decision, the Court further clarifies who fall within the circle of parties able to claim damages for losses sustained as a result of anti-competitive behaviour:

'32 It is true, as pointed out in paragraph 24 of the present judgment, that it is, in principle, for the domestic legal system of each Member State to lay down the detailed rules governing the application of the concept of the ‘causal link’. However, it is clear from the case-law of the Court, referred to in paragraph 26 of the present judgment, that that national legislation must ensure that European Union competition law is fully effective (see, to that effect, VEBIC EU:C:2010:739, paragraph 63). Those rules must therefore specifically take into account the objective pursued by Article 101 TFEU, which aims to guarantee effective and undistorted competition in the internal market, and, accordingly, prices set on the basis of free competition. In those circumstances, the Court has held, as noted in paragraph 22 of the present judgment, that national legislation must recognise the right of any individual to claim compensation for loss sustained.

33 The full effectiveness of Article 101 TFEU would be put at risk if the right of any individual to claim compensation for harm suffered were subjected by national law, categorically and regardless of the particular circumstances of the case, to the existence of a direct causal link while excluding that right because the individual concerned had no contractual links with a member of the cartel, but with an undertaking not party thereto, whose pricing policy, however, is a result of the cartel that contributed to the distortion of price formation mechanisms governing competitive markets.'

See also the CJEU's press release on this case.

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