AG De La Tour on Volvo and others (C‑30/20): Article 7(2) of Brussels I establishes international and domestic jurisdiction in cases of tort harms and anticompetitive practices

Case C-30/20 (AG’s Opinion here) concerns the interpretation of Article 7(2) of Regulation (EU) No 1215/2012 (Brussels I), which states that a person can be sued in the place where the harmful event occurred (regarding tort, delict or quasi-delict harms).

Between 2004 and 2009, RH (the claimant) purchased five trucks from Volvo for its road transport business. In 2016, the Commission found that there was a cartel between fifteen truck manufacturers, including AB Volvo, Volvo Lastvagnar AB and Volvo Group Trucks Central Europe GmbH concerning medium trucks and heavy trucks (in the period between 1997-2011). RH sued the Volvo group in Spain, even though three of the four sued companies are based outside of Spain. The Volvo companies contested the international jurisdiction of Spanish courts, and argued that Article 7 refers to the place where the ‘event giving rise to the damage occurred’, which would be the place where the cartel was formed. The referring court questioned whether Article 7 of Brussels I refers solely to international jurisdiction or also to domestic jurisdiction, especially considering existing national case law determining that this rule does not determine the territorial domestic jurisdiction of a court in private competition actions. In this sense, the referring court asked the CJEU whether Article 7(2) of Brussels I should be interpreted as imposing only international jurisdiction in matters relating to tort, delict or quasi-delict, and whether the domestic court with jurisdiction should be determined by national civil procedure rules, or if, on the other hand, Article 7(2) also determines domestic territorial jurisdiction without the need to refer to domestic regulation.

AG De La Tour considered that Article 7(2) does not only impose international jurisdiction, but also determines domestic jurisdiction. The Advocate General analyzed the literal, systematic and teleological element of interpretation. When comparing Article 4(1) of the Brussels I Regulation with Article 7(2), the Advocate General stated that, while the former refers to ‘the courts’ of the Member State where the persons sued are domiciled, the latter refers to ‘the courts for the place’. This difference in wording seems to point towards different jurisdiction scopes. Additionally, since Article 7(2) is a special jurisdiction rule, AG De La Tour reminded that these rules are meant to protect a weak party, and, in that sense, these special rules have a nature of derogation. Finally, these special rules are meant to allow the party to choose the courts of a Member State based on the place with which the dispute has a particular connection, as well as to facilitate the sound administration of justice.

In addition, AG De La Tour considered that this analysis should be supplemented by further details as to the place where the alleged damage occurred, as well as to the specific designation of the court having special jurisdiction. In this sense, the Advocate General differentiated the current case from related cases (such as Tibor-Trans, where the CJEU determined that ‘where the market affected by the anticompetitive conduct is in the Member State on whose territory the alleged damage is purported to have occurred, that Member State must be regarded as the place where the damage occurred for the purposes of applying Article 7(2)’). The Advocate General concludes that, in the relevant related cases, the justification of the connecting factor adopted by the CJEU indicates that the ‘distinctive feature of competition litigation was taken into consideration in concrete terms’ (para 66). 

AG De La Tour also stated that the determination of the place where the damage occurred operated by the CJEU in Tibor Trans is not sufficient to specify the exact location of the court having territorial jurisdiction, which constitutes a source of legal uncertainty (para 70). The AG considered, therefore, that the CJEU should complement the answer given in Tibor Trans, particularly by taking into account ‘the number of proceedings which could be brought due to the extent of the cartel at issue’. In particular, the Advocate General noted that it is necessary to consider that, especially in the vehicle sales and transport sector, the place where the market (affected by the cartel) leads to additional costs is not necessarily the place where the goods were purchased (para 79).

For these reasons, the Advocate General calls for the CJEU to clarify the criteria for identifying the relevant court when interpreting the expression ‘place where the harmful event occurred’ (Article 7(2) Brussels I Regulation), and for the CJEU to draw a parallel with case Verein für Konsumenteninformation, where the CJEU held that ‘the place where the damage occurred is that where the vehicle in question was purchased’. The Advocate General also highlighted that it is important to assess the meaning of ‘purchase’ because, in the context of these proceedings, RH concluded leasing agreements, under which it became the owner of the trucks. This assessment should be done from an economic perspective, because the claim for compensation is based on competition law (para 86). AG De La Tour then interprets it as meaning ‘the place where [the] transaction was concluded’, understood in a wide sense as the place where the agreement was reached (and not where the price was paid) (para 88). Therefore, according to the Advocate General, the criterion of ‘the place where the transaction was concluded’ is sufficient to identify the court ‘objectively best placed to analyse the constituent elements of the defendant’s liability’. In this case, that means the place where the trucks were purchased by RH.

However, the Advocate General also highlighted that, to protect the objective of providing easier access to evidence, two criteria for establishing the location of damage can coexist (para 108). In that case, AG De La Tour also proposes that ‘if the place where the damage occurred does not correspond to that where the injured party carries on business, the action may be brought before the court in whose jurisdiction the injured party is established’ (para 110).

Finally, the Advocate General also considered that, despite the fact that Article 7(2) of the Brussels I Regulation determines territorial jurisdiction at both an international and domestic level, the CJEU should interpret it as allowing Member States to centralize the jurisdiction in certain specialized courts (para 130).

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.

Institutional design, markets and consumers - CJEU judgment in Case C-68/12 Slovenská sporitel’ňa

To what extent can EU competition law contribute to the protection of consumer interests? Today's judgment in the Slovenská sporiteľňa case shows that the Court of Justice of the EU takes a cautious approach towards the possible extension of competition law measures beyond market-related concerns. The Court holds that:

'Article 101 TFEU [which establishes the nullity of agreements violating EU competition law; CM] must be interpreted as meaning that the fact that an undertaking that is adversely affected by an agreement whose object is the restriction of competition was allegedly operating illegally on the relevant market at the time when the agreement was concluded is of no relevance to the question whether the agreement constitutes an infringement of that provision. (...)'

This ruling is based on the consideration that:

'18 Article 101 TFEU is intended to protect not only the interests of competitors or consumers but also the structure of the market and thus competition as such (Joined Cases C‑501/06 P, C‑513/06 P, C‑515/06 P and C‑519/06 P GlaxoSmithKline Services and Others v Commission and Others [2009] ECR I‑9291, paragraph 63).
19 In that regard, it is apparent from the order for reference that the agreement entered into by the banks concerned specifically had as its object the restriction of competition and that none of the banks had challenged the legality of Akcenta’s business before they were investigated in the case giving rise to the main proceedings. The alleged illegality of Akcenta’s situation is therefore irrelevant for the purpose of determining whether the conditions for an infringement of the competition rules are met.'

The CJEU emphasises that 'it is for public authorities and not private undertakings or associations of undertakings to ensure compliance with statutory requirements' (para. 20). In this context, questions of institutional design arise: What institutions are in the best position to effectively enforce competition and consumer law? For further observations regarding some recent developments in this area, I refer to our colleagues on the ACELG blog - 'Integrate or separate: institutional design for the enforcement of competition law and consumer law'.

No competition - Record fine for TV cartels

Yesterday, the European Commission imposed a record fine of €1.47 billion on a number of international companies that had participated in one or both of two cartels concerning TV and computer monitor tubes. According to the Commission's findings, the companies fixed prices, shared markets, allocated customers between themselves and restricted their output for over a decade (1996-2006).

Several of the companies involved plan to appeal the 'disproportionate and unjustified' fine (see also FT article 'Record €1.47bn fine for TV cartels').

On the basis of EU law, any person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages (cf. CJEU Courage and Manfredi).

More information is available in the European Commission's press release and on its website.

Cartel theory

While as consumers we might feel the consequences of cartels in practice, theoretical studies in law & economics can teach us something about the dynamics behind these attempts of firms to restrict competition among them (e.g. through price fixing or market sharing). In about 1,5 hours from now Martijn Han (Amsterdam Center for Law & Economics, ACLE) will defend his PhD thesis on the topic of 'vertical relations in cartel theory'. How do managers and firm owners behave in cartels? In what way may the functioning of buyer groups (cooperations of retailers) be explained? And how are economic damages resulting from a cartel distributed? Martijn did the math and reached some interesting conclusions, which may be further explored on his website.