In a ground-breaking decision, the Supreme Court of Norway has confirmed the competence of Norwegian courts under Article 6(1) of the Lugano Convention to adjudicate the damage action brought by the Norwegian postal operator Posten Norge AS (‘Posten Norge’) and several of its subsidiaries against the members of the European trucks cartel. In the order, the Supreme Court has also confirmed legal principles, such as the joint and several liability of cartel members for the damage caused by their anticompetitive practices and the civil liability of the undertaking within the meaning of Art. 53 EEA Agreement.
In 2016, the European Commission fined five European truck manufacturers, namely MAN, Volvo/Renault, Daimler, Iveco and DAF, 2.93 billion EUR for their infringement of Article 101 TFEU and Article 53 EEA Agreement by their fixing of gross list prices for trucks, coordinating the timing of the introduction of new emission technologies and passing on costs related to those new technologies to customers (‘the Commission Decision’). According to the European Commission, the anticompetitive agreements lasted more than 14 years, from 1997 to 2011, and covered medium-duty trucks (between 6 and 16 tonnes) and heavy-duty trucks (more than 16 tonnes) throughout the European Economic Area (EEA).
Posten Norge, as well as several Norwegian and foreign subsidiaries, had purchased a large number of trucks from the cartel members during the cartel period (i.e., 1997 to 2011). Some of the trucks were purchased from the Norwegian subsidiary of Volvo, Volvo Norge AS, which was not an addressee of the Commission Decision.
By writ of summons of 18 July 2018, Posten Norge and 12 subsidiaries of the group, five domiciled in Norway and seven domiciled outside Norway, namely in Sweden and Slovakia, brought a damage action against Volvo Norge and the addressees of the 2016 decision of the European Commission that imposed fines. Volvo Norge agreed that it could be sued by all of the claimants, including the foreign subsidiaries, before the Norwegian courts under Article 2 of the Lugano Convention, i.e., at the place of its legal seat. However, a conflict arose as to whether the Norwegian courts were also competent to adjudicate the damage claims against the other defendants under the special jurisdiction rule of Article 6(1) of the Lugano Convention, given that Volvo Norge AS was the only entity with a seat in Norway and, contrary to all of the other defendants, was not an addressee of the Commission Decision.
Article 6(1) of the Lugano Convention and its application in cartel follow-on damage actions
According to Article 6(1) of the Lugano Convention, ‘a person may also be sued where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.’
The Supreme Court identified the issue at hand as whether the claims of the Norge Posten entities against Volvo Norge and the same companies’ claims against the addressees of the Commission Decision were so closely connected that they may be heard together in the court competent for Volvo Norge, the Oslo District Court.
At the outset of its decision, the Supreme Court confirmed that the Lugano Convention is applicable directly as Norwegian law under the Norwegian Dispute Act. When interpreting the Convention’s rules, however, due consideration must be made to judgments of the CJEU and national courts dealing with Regulation 44/2001, on which the Convention is based. The Supreme Court therefore used the CJEU judgment of 21 May 2015 in Case C-352/13 Cartel Damage Claims Hydrogen Peroxide SA (CDC) as the starting point of its assessment.
Pursuant to this precedent, it is required that ‘the same situation of fact and law’ creates a risk of diverging judgments if the claims are heard separately. The specific situation in CDC was, according to the Supreme Court, that the European Commission found in its Hydrogen Peroxide Cartel decision that all defendants sued in the civil action had participated in a ‘single and continuous infringement of the cartel prohibition in Article 81 EC/Art. 101 TFEU and Article 53 of the EEA Agreement.’ The defendants ‘[i]n those circumstances … could have expected to be sued in the courts of a Member State in which one of them is domiciled.’
With regard to the burden of proof and the substantiation requirement, the Supreme Court held that the claimant carries the burden of proving that the conditions for a joint hearing of the actions are met and that an exhaustive assessment of all necessary factors in the case file is required to determine whether ‘the claims are so closely connected’, legally and factually, that it is expedient to hear and determine them together to avoid irreconcilable judgments.
Non-addressee subsidiary of cartel member can be a valid anchor defendant
Applying these general principles to the case at hand, the Supreme Court identified the fact that the Norwegian anchor defendant, Volvo Norge, was not an addressee of the Commission Decision on a single and continuous infringement was the main difference between this case and the situation in CDC. However, according to the Supreme Court, this did not preclude a sufficiently close connection with the claims against the foreign defendants, which were all addressees of the Commission decision. In support of its interpretation, the Supreme Court referred to the general case law of the CJEU (CJEU judgment of 14 March 2019 in Case C-724/17 Skanska) according to which Articles 101 and 102 TFEU, corresponding to the EEA Agreement’s Articles 53 and 54, ‘produce direct legal effects in relations between individuals and directly create rights for individuals which national courts must protect.’ The Supreme Court also recalled the CJEU judgment of 24 October 2018 in Case C-595/17 Apple, in which it is expressly stated that the right to claim damages ‘prejudiced by an infringement of competition law rules to seek compensation for the harm suffered is independent of the prior finding of such an infringement by a competition authority.’ The Commission Decision in itself does not, according to the Supreme Court, constitute the basis for damages claims, but rather the infringement that has been committed by the companies as found in the decision. Therefore, the claimant must prove that companies other than the addressees of the Commission Decision have committed similar infringements relating to the same case.
Joint and several liability of non-addressees and addressees of Commission cartel decisions
The Supreme Court then assessed whether the claimants had sufficiently substantiated their allegation that the anchor defendant, Volvo Norge, and the other defendants were jointly and severally liable for the same infringement of the competition rules. It concluded that this was the case and therefore upheld the conclusion of the Appeal Court and the application of Article 6(1) of the Lugano Convention to the case at hand. The Supreme Court in particular confirmed that (i) joint and several liability for a single and continuous infringement of the competition rules does not require extensive activities, (ii) that there is no requirement that Volvo Norge must have participated to the same extent as the addressees of the Commission decision, and (iii) that Norwegian tort law suggests joint and several liability for companies that have infringed the competition rules, irrespective of their nature as an addressee.
The objective factors on which these conclusions could be reached were:
- A large part of the trucks procured by the claimants were purchased or leased from Volvo Norge.
- Volvo Norge is a company in the same corporate group as several of the addressees of the Commission Decision.
- Persons connected to the addressees of the Commission Decision also had board positions and other senior positions in Volvo Norge.
The Supreme Court explicitly rebutted the argumentation of the defendants that merely limited activities of a non-addressee subsidiary were not sufficient to establish joint and several liability, as this would contravene CJEU case law stating that such liability necessitates a planned and illegal conduct with the knowledge that the other undertakings have pursued the same objectives. The Supreme Court held that even a low level of activity may take place on an informed basis and be carried out according to specific plans so that the conditions for the liability for a competition law infringement by the subsidiary are fulfilled.
Finally, the Supreme Court confirmed that, as the infringement comprised the entire EEA, the foreign defendants were able to foresee legal actions from customers in any EEA State, irrespective of whether the relevant customers are domiciled in the state of the addressees of the Commission Decision.
The decision by the Norwegian Supreme Court is an important legal precedent, as it clarifies that all legal entities that participated in one and the same infringement of Article 101 TFEU and Article 53 EEA Agreement can be jointly sued at the place where any one of them is domiciled under the special jurisdiction of Article 6(1) Lugano Convention. Not surprisingly, the Norwegian Supreme Court applied the principles established by the CJEU in the CDC judgment to the Lugano Convention. However, the decision goes further than the CDC judgment, because the Norwegian Supreme Court confirmed the special jurisdiction and the principle of joint and several liability among all of the entities that were involved in a given competition law infringement, irrespective of whether the anchor defendant was an addressee of the fining decision. In the absence of a specific finding by the European Commission, it is for the claimant to substantiate the involvement of the respective non-addressee in the infringement. The decision of the Norwegian Supreme Court, which was issued in November 2019, is therefore in line with the later Sumal judgment of the CJEU, which confirmed that subsidiaries can be liable for infringements of Article 101 TFEU established in fining decisions of the European Commission addressed to their parent companies.
By Till Schreiber