Advocate General (AG) Kokott is one of the most influential and experienced members of the European Union’s judiciary. Recently, she handed down a landmark opinion in relation to the Austrian Elevators and Escalators cartel damages case on the scope of damages claims that can be brought by claimants. The key issue in Austrian Elevators and Escalators revolved around the alleged losses resulting from the operation of the cartel by an entity who was not a commercial operator on the market affected by the cartel. AG Kokott after an extensive discussion of case law and legal principle took the view that the full effectiveness and efficiency of Art. 101 TFEU would be undermined if damages were just limited to operators active on the market affected by the cartel.
It is clear, that if the European Union Court of Justice (CJEU) concurs with AG Kokott, the consequences, in terms of the incentives for public entities to pursue antitrust damages claims are likely to be significant. For instance, major public procurement contracts are continually plagued by price-fixing and bid rigging cases. If, however, not only the contracting public authority as the ‘operator’, but also a public finance agency, or the state treasury funding the project, are entitled to damages, then cartelists will face a formidable new group of potential claimants.
Scope of the Opinion
In her opinion of 29 July 2019 in Case C-435/18, Otis Gesellschaft m.b.H. e.a., (Austrian Elevators and Escalators) AG Kokott examined the scope of compensation and the persons eligible in cartel cases. She considered that the full effectiveness and efficiency of Art. 101 TFEU would be severely undermined if the right to claim for damages caused by a cartel was limited only to operators active on the affected market. In that regard, the AG highlighted that the existence of the right to compensation, encompassing (i) the categories of affected persons that have standing to claim for compensation, (ii) the types of damages, and (iii) the scope of the damages is a matter of EU law, not national law. AG Kokott reiterated that the substantive aspects of the right rooted in Art. 101 TFEU, including those related to causality, should be applied in uniform manner thus ensuring equal treatment throughout the EU.
In passing, AG Kokott confirmed that (i) notwithstanding the temporal limits for the application of the Damages Directive, the EU acquis can be invoked immediately before the national courts, (ii) the principles of effectiveness and equivalence apply to the detailed procedural rules governing the exercise (modalités de mise en oeuvre procédurale) of the right to compensation, while the constitutive conditions (conditions matérielles) require an autonomous EU interpretation, (iii) the objective pursued by Art. 101 TFEU does not foresee any restriction of the right to compensation, and (iv) while the patrimonial damage (damnum emergens) has to be proven, interest is due from the date of harm until compensation is paid.
AG Kokott issued her opinion following a request for a preliminary ruling from the Supreme Court of Austria ‘Oberster Gerichtshof’ (‘Referring Court’) to the CJEU in the context of an action for damages introduced by the Austrian Regional Authority ‘Land Oberösterreich’ (‘Claimant’) against the participants in the elevators and escalators cartel (‘Defendants’), as sanctioned by the Austrian and European authorities. During the infringement of Art. 101 TFEU by the elevator and escalator manufacturers (‘Cartel’), the Claimant was granting subsidized loans to companies for the construction of social housing. These companies were direct purchasers of elevators and the subsidized loans were calculated inter alia based on higher construction costs as a result of the overcharge imposed by the Cartel.
The Claimant brought a follow-on action for damages against the Defendants before the Commercial Court of Vienna (Court). The action was dismissed by the Court because the Claimant was neither a customer nor a supplier active on the market affected by the Cartel. This judgment was subsequently quashed on appeal by the Vienna Higher Regional Court who considered that the EU cartel prohibition also protects the financial interest of players that are not active on the affected market but who nevertheless have suffered harm as a result of the Cartel.
The Defendants brought the case before the Austrian Supreme Court who sent a request for a preliminary ruling to the CJEU asking in substance whether Art. 101 TFEU requires that a player, who is not active as supplier or customer on the relevant product and geographic market affected by the Cartel, can also claim compensation for losses that lie in the fact that the loan amount granted was higher than what it would have been without the Cartel, meaning the Claimant was unable to profitably invest those amounts elsewhere.
AG Kokott started her substantive analysis by recalling that ‘the right of any person to claim damages caused by a cartel is rooted directly in Article 101 TFEU’ (para 40). Then, the AG added that Art. 101 TFEU ‘does not contain any restriction of the right to claim damages caused by a cartel’ (para 81). In that regard, AG Kokott specified that any categorical and systematic exclusion ‘for legal reasons, of the compensation for certain types of loss, regardless of the specific circumstances of this case’ is not compatible with Art. 101 TFEU’ (para 87). Further, AG Kokott concluded that players not active on the affected market cannot be precluded per se from seeking compensation for damages that are foreseeable for the tortfeasors and sufficiently linked to their behaviour (paras 63, 78 & 151).
Then, the AG reiterated that while the concrete conditions of application and procedural rules governing the exercise of the right ‘ that is the question of knowing how compensation is to be granted), in particular, the rules on judicial competence, rules of procedure, limitation periods and administration of proof, are governed by national law’ (para 41), the normative elements of this right (including its nature and scope) ‘have to be subject to uniform and autonomous interpretation across the European Union’ (para 54). According to AG Kokott, the objective of Art. 101 TFEU ‘would be compromised if the legal requirements applied by national courts assessing the civil liability for breaches of Article 101 TFEU for specific types of losses suffered by specific persons differ fundamentally from one Member State to another’ (para 55).
Finally, AG Kokott confirmed that notwithstanding the limits of its temporal application, the Damages Directive can provide guidance on the effective exercise of the right rooted directly in Art. 101 TFEU, as far as it reflects principles established by the CJEU’s case-law (para 8). Concretely, AG Kokott highlighted that even for damage claims prior to the entry into force of the Damages Directive, ‘the disadvantage caused by the absence of a specific [monetary] amount during a specific period , as well as the advantage resulting from the availability of a specific [monetary] amount during a specific period are generally compensated by the fact that the amounts to be repaid have to be increased by the amount of interest accruing from the date on which the repayment is due, applying the market interest rate’ (para 114).
With regard to interest, AG Kokott further states that ‘all amounts of the compensation for damages caused by a cartel, regardless of their nature – for instance the losses of interest, damages resulting from overcharge or any other damage – have to be compensated together with interest accruing on the amounts from the date on which these amounts became due’ (para 119). The AG explains that ‘a simple irregular absence of a specific amount during a specific period is to be considered as a financial loss, with no need for further justification’ (para 120). For AG Kokott, ‘the right to perceive legal interest, renders unnecessary the production of evidence on the generated profits by a concrete possibility of an investment’ (para 122). It is sufficient to ‘explain to the national judge which amount was missing and during which period and, where appropriate, the interest rates applicable during that period’ (para 124).
Following the recent judgment by the CJEU in Skanska and Kone, the opinion in Austrian Elevators and Escalators by AG Kokott confirms that any substantive legal question, including aspects of causality, related to the enforcement of rights rooted directly in Art.101 TFEU shall be governed by EU law, not national law. Such approach favours equal treatment and a level playing field for claimants and defendants throughout the EU, independent of (i) the Member state where the damages action is pending, and (ii) the national law governing the claim(s). Furthermore, the requirement that EU law be equally and uniformly applied to all substantive questions related to the enforcement of rights will provide greater legal certainty to all parties involved in private antitrust enforcement..
AG Kokott also endorses the practice of national courts, including supreme courts, who refer to EU principles enshrined in the Damages Directive for the effective enforcement of antitrust damages claims not covered by its temporal scope. Importantly, AG Kokott confirmed that as an essential component of compensation, interest is due from the time when the harm occurred. Moreover, the opinion implies that claimants may substantiate a financial loss in excess of legal interest if they can demonstrate that they would have been able to invest the amounts paid in excess as a result of the cartel. As regards the actual calculation of interest over time, it could be opportune to refer to the EUI Interest Study covering thirteen jurisdictions so far.
By Vasil Savov and Juraj Siska
* The authors would like to thank Professor Alan RILEY for his valuable observations. This commentary is based on the French version of the opinion by Advocate General Juliane Kokott. All quotes have been translated into English by the authors who have also added their own emphasis. This article was originally published on the website of Competition Law Insight.