Illegal information exchange between cigarette manufacturers in the Netherlands and Belgium
On 29 September 2021, the Dutch Competition Authority fined tobacco manufacturers British American Tobacco (BAT), Philip Morris, Japan Tobacco International (JTI), and Imperial Tobacco 82 million euros for anti-competitively sharing confidential information about future prices. In the Netherlands, the infringement lasted from July 2008 to July 2011. On 1 October 2021, two days after the Dutch decision was published, the Belgian Competition Authority charged the same tobacco manufacturers for the same conduct in Belgium. While the infringement is not yet established because the procedure is slightly different in Belgium, we expect that to happen very soon. Illegal information exchange between cigarette manufacturers in the Netherlands and Belgium Although consumers pay high taxes when buying cigarettes in both countries, manufacturers can freely set cigarette retail prices (unlike other products, prices are printed on the packages by manufacturers). Therefore, the infringement most likely had a significant impact on consumer prices and, in turn, manufacturers anti-competitively increased their profits. The infringers were also not constrained by competitors that did not participate in the infringement because the four manufacturers covered more than 90% of the market volume in both countries. According to the two competition authorities, the four manufacturers set their prices knowing about future prices of competitors because they shared prices with wholesalers weeks before they were adjusted on the packaging (and wholesalers shared the information with manufacturers). For example, the Dutch Competition Authority published some snippets from the internal emails sent within JTI recommending that they follow the example of BAT, Philip Morris, and Imperial Tobacco by increasing resale prices by 10 euro cents as of August-September 2009. 10 euro cents (per pack) may sound low when the average consumer price of a cigarette pack during the infringement was as high as 6 euros. But because 5 to 6 hundred million packs of cigarettes were sold in the Netherlands yearly between 2008 and 2011 and 4 to 5 hundred million packs in Belgium, the extra profit generated — assuming a 10 cents per pack price increase and a 90% market coverage — is estimated in the ballpark of 146 million euros in the Netherlands and 126 million euros in Belgium. The actual damage size may differ depending on the various prices applied by the manufacturers during the infringement period (the 10 cents per pack increase may not be representative to all sales), and the prices they would have set absent the infringement. Consumers can go to court and claim these damages from the four manufacturers. Your contacts: Akos Reger Ben Bornemann
Contribution to the CNMC’s public consultation on quantification of damages
The Spanish Competition Authority (CNMC) plans to support judges by developing guidelines on quantifying damages caused by competition law infringements. The CNMC held a public consultation on the draft version of these guidelines. The contributions were published on the CNMC’s website, including ours. While the issues we picked up were partially addressed by the draft guidelines, we believe they merit further elaboration.
AG Rantos delivers a halfway opinion on the temporal application of the EU Antitrust Damages Directive (C-267/20, AB Volvo, DAF TRUCKS NV / RM)
In his opinion of 28 October 2021, Advocate General Rantos confirmed that the nature of the rules implementing the EU Damages Directive is determined by EU law and not by national law. The Advocate General states that the provisions on limitations and presumption of cartel-related harm are substantive. In contrast, the possibility for national judges to estimate the amount of harm is a procedural provision. Moreover, AG Rantos considers that pre-Directive knowledge-based limitation periods applied to cartel damage claims could reasonably begin with the publication of a fining decision’s multilingual summary.
Sumal v Mercedes Benz: CJEU confirms civil liability of a subsidiary for the participation of its parent company in a competition law infringement
On 6 October 2021, the Court of Justice of the European Union rendered its judgment in Case C-882/19, Sumal SL v Mercedes Benz Trucks España SL. Following the Opinion of Advocate General Pitruzzella, the CJEU has confirmed that, under certain conditions, a subsidiary which is not the addressee of the administrative decision can be held liable for the damages caused by the infringement for which the parent company has been fined.
Collective actions and claims aggregation in the Netherlands
This article continues the series on private enforcement in the Netherlands. New collective actions regime On 1 January 2020 the new collective actions regime in the Netherlands entered into force. Under the new regime, representative bodies can bring collective damage actions for monetary compensation including for damages caused by cartels and other anticompetitive conduct. Collective actions can be brought before any district court in the Netherlands. The normal rules on local jurisdiction and venue apply. The representative entity must demonstrate, i.a., that the collective claim has a sufficiently close connection with the Dutch jurisdiction, which is the case if: (i) a majority of individuals, on whose behalf the action is brought, reside in the Netherlands, (ii) the defendant resides in the Netherlands, and additional circumstances indicate a sufficiently close connection with this jurisdiction or (iii) the event(s) giving rise to the claim took place in the Netherlands. The representative entity must fulfil several conditions and standards regarding its experience, governance, funding, and its non-profit nature. In addition, it must be sufficiently representative, i.e. encompass sufficient constituents. The entity may be established on an ad-hoc basis. In the case of competing entities, the competent court will appoint an exclusive representative and following this appointment individual class members must opt-out or find themselves bound to a decision resulting from the collective action. If such a collective action results in a settlement instead of a court decision, individuals are given another chance to opt-out. Affected individuals from outside the Netherlands may join the action on an ‘opt-in’ basis. In the first judgement under the new class action regime relating to ‘diesel emission scandal’ the Amsterdam court awarded a group of 150,000 buyers of Volkswagen cars a price reduction of between 1,500 and 3,000 Euros. Collective settlement mechanism The new collective actions regime co-exists with the previous, still valid, possibility for representative entities to enter into collective settlements with (allegedly) liable parties, and then (jointly) request the Amsterdam Court of Appeal to declare such settlement universally applicable. It should be noted that concluding such collective settlements and having these declared universally applicable may be pursued without ever initiating a collective action. Claims aggregation by assignment In addition to collective actions there is an established practice of claims aggregation by way of assignment of claims to a specialised litigation vehicle. This assignment model has often been used in the field of competition damage actions. The bundling at a material level allows for the creation of significant procedural and practical synergies. In particular, the damage quantification can be conducted using a broader and more robust data base. The right of litigation vehicles to claim the damage in their own name and the validity of the underlying assignment contracts, have been confirmed by various Dutch courts in the Air Cargo, Sodium Chlorate and Paraffin Wax cartel cases. By Till Schreiber
Antitrust Damages in the Ad-Tech Sector
On 22 June 2021, the European Commission confirmed the opening of a formal antitrust investigation into whether Google previously abused or is currently abusing its dominant position in the online intermediation of programmatic display advertising business. Prior to the Commission’s announcement, the French Competition Authority (FCA) had already handed down a decision on 7 July 2021, including a EUR 220 million fine, finding that Google breached Article 102 TFEU and the French Competition Act in the same advertisement sector.
First Italian judgment awarding damages against the European trucks cartel (Naples “Diego Armando Maradona” Stadium: Salernitana 1 – Juventus 0)
The trucks cartel fined by the European Commission in 2016 and 2017 triggered a wave of follow-on damage actions throughout the entire European Union. In Italy, after several legal actions having been launched by logistics associations and transport companies against the six sanctioned manufacturers, the Chamber of the Naples District Court specialised in business matters rendered the first judgment awarding damages in 2021.
Revival of the ‘claims assignment class action’ in German private antitrust enforcement (and beyond)
Corporate victims of anticompetitive practices by their suppliers regularly consider their possibilities to exercise their rights in the best interest of their company. On 13 July 2021, the Federal Court of Justice (Bundesgerichtshof) held that the ‘class action collection’ (Sammelklage-Inkasso) is permissible. Correcting a contrary trend followed by lower courts, the landmark AirDeal judgment of Germany’s supreme court fundamentally confirms the legality of the opt-in ‘assignment model’, i.e. the contractual transfer of claims for damages of numerous victims of the same infringement to a specialised third party for the purpose of bundling, analysis, and joint enforcement of these claims. This approach from a procedural economy perspective has become increasingly important all over Europe in recent years, especially for private antitrust cases due to a lack of effective collective redress mechanisms. In Germany, it has also been approved by a current reform of statutory law.
Trucks cartel: AG Pitruzzella’s opinion on civil liability of subsidiaries for competition law infringements of the undertaking
On 15 April 2021 the CJEU’s Advocate General (AG) Pitruzzella handed down his opinion in the preliminary ruling procedure relating to the Trucks cartel litigation in Spain. The Barcelona Provincial Court (‘Barcelona Court’) requested the CJEU to interpret EU law on the question of whether a subsidiary company is liable for damages where the Commission has only fined the parent company for anticompetitive behavior. The AG in Case C-882/19 takes the view that, subject to conditions, a subsidiary without being addressee of the cartel decision can be held liable for the damages caused by the infringement. The Opinion, when confirmed by the CJEU, has as well implications on the question of where victims of Europe-wide cartel behavour might bring claims for damages.
Air Cargo Cartel: Application of Art. 101 TFEU in damage actions by national courts (Netherlands: 1 – England: 0)
On 6 May 2021 the CJEU published the opinion by AG Bobek in Case C‑819/19 Stichting Cartel Compensation and Equilib Netherlands BV v. KLM NV et al regarding a request for a preliminary ruling from the Rechtbank Amsterdam. It concerns damage actions against members of the international Air Cargo cartel. The case is particularly interesting as it shows the importance of choosing the right forum for a damage action in EU-wide cartel cases and the risks if national courts do not make use of preliminary rulings that are aimed at ensuring a consistent application of EU law across all Member States. Should the CJEU follow the opinion of AG Bobek, claimants that have pursued damage claims before the Amsterdam Court will have good chances to obtain compensation for the entire duration of the cartel from 1999 to 2006, while claimants before the High Court of England and Wales saw their damage claims significantly reduced to the period between 2004 and 2006.