In a request for a preliminary ruling, the Barcelona Provincial Court asks the EU Court of Justice which legal entities within the undertaking are liable for the damages caused by an infringement of Art. 101 TFEU. Is this liability limited to the addressees of the fining decision or could in principle every legal entity that forms part of the single economic unit be sued for damages? The response will have significant procedural and material law implications for claimants and defendants in antitrust damages litigation throughout the European Union.
On 3 December 2019, Barcelona Provincial Court (‘Barcelona Court’) lodged a request for a preliminary ruling (‘Request’) to the Court of Justice of the European Union (‘CJEU’). The Request concerns the issue of civil liability of the legal entities within the undertaking that has been sanctioned for the infringement of EU and national competition law. The main characteristics of the national case are as follows:
- The claim is based on the infringement of Art. 101 TFEU (‘Infringement’) as established by the European Commission (‘Commission’) in the decision of 19 July 2016 (‘Decision’) related to the European Trucks Cartel (‘LKW-Kartell’);
- The Decision is addressed to fifteen legal entities that are part of the five undertakings namely DAF, MAN, Daimler, Iveco, and Volvo/Renault who participated in the Trucks Cartel;
- Regarding Daimler, the Decision was addressed to Daimler AG, a company seated in Germany;
- The follow-on action for damages is initiated by Sumal (‘Claimant’), a Spanish transport company seated in Barcelona;
- The Claimant acquired between 1997 and 1999 at inflated prices two Daimler trucks from a dealership in Spain under a leasing contract;
- The action is brought solely against Mercedes Benz Trucks España (‘MBTE’), a Spanish subsidiary of Daimler AG, which was not an addressee of the Decision.
The Barcelona Court is hearing the case on appeal. The court of first instance had previously dismissed the action against MBTE because the company lacked capacity to be sued. It had been considered that only legal entities to which the Decision was addressed can be held liable for the Infringement.
In front of the Barcelona Court, MBTE asserts that (i) the Decision is not addressed to it and no reference is made to it in the Decision, (ii) it did not participate in the Infringement, (iii) the trucks were acquired from a dealer who negotiated prices independently, (iv) it has separate legal personality from Daimler AG and the dealer. The Claimant asserts that as part of the single economic unit with Daimler AG, MBTE should be held liable for the damages caused by the Infringement.
The Barcelona Court considers that in line with Art. 71(2)(b) of the Ley de Defensa de la Competencia, companies to whom a fining decision is addressed could be held liable for the harm caused by the infringement. This would apply to direct participants in the illegal practices and to companies that exercised decisive influence on these participants. The Barcelona Court then points to conflicting court rulings in Spain regarding the civil liability of subsidiaries that are non-addressees of the fining decision.
The Barcelona Court deems that by analogy with existing EU courts case law, a subsidiary which is not an addressee of the Decision, could in principle be held civilly liable for the Infringement in which the ‘undertaking’ participated.
EU law discussion
In the public enforcement procedure, the infringement of Art. 101 TFEU is imputable personally to each participating undertaking. However, the undertaking as an economic unit is usually lacking legal personality. The fining decision is therefore addressed to specific legal entities. In practice, the decision is often addressed to subsidiaries involved in the anticompetitive behavior and to their parent companies as the ultimate legal entities exercising decisive control.
In its recent judgment in Skanska, the CJEU stated that the determination of the entity required to provide compensation for the damage caused by an infringement of Art. 101 TFEU is governed by EU law (para. 28). The CJEU further specified that the liable entity is the undertaking, within the meaning of Art. 101 TFEU (para. 32). In that regard, it is relevant to recall the landmark judgment in CDC HP where the CJEU had specified that the joint conduct of the undertakings infringing Art. 101 TFEU leads to joint civil liability.
However, the CJEU did not so far explicitly discuss the civil liability of specific natural or legal persons that are part of the infringing undertaking. In Otis Belgium (para. 50), the CJEU had stated that in antitrust damages cases, national courts cannot take decisions running counter to the decision adopted by the Commission. In light of this statement, the question remains whether the binding effect relates only to the legal entities to whom the fining decision is addressed or if all legal entities that are part of the undertaking can be held liable on the basis of the decision.
One potential outcome could be that only subsidiaries active in the affected market should be held liable in damages actions. From a strategic viewpoint, it might seem doubtful that large damages actions will be initiated solely against a subsidiary. So far, many such actions have been lodged against several entities, including parent companies. Such approach facilitates access to justice and effective compensation of harmed companies which dealt mainly with local subsidiaries of the infringing undertakings.
Another question of general interest, not subject to the Request, is whether subsidiaries not-addressees of fining decisions could serve as anchor defendants under Art. 8(1) Brussels I bis? Would the competence of the court be dependent on the civil liability of the anchor defendant or should the joint and several liability of the undertaking to which it belongs be sufficient to fulfill the requirements set up by the CJEU in CDC HP, i.e. the existence of an identical legal and factual situation that should be assessed by the same court in order to avoid irreconcilable judgments?
If the CJEU takes a broad view and holds that in principle every legal entity of one undertaking is liable for the damage caused, this will open many litigation alternatives for persons damaged by the anticompetitive conduct of an undertaking.
By Jeanne Cousin, Juraj Siska & Vasil Savov