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 (‘Amsterdam Court’). It concerns damage actions against members of the international Air Cargo cartel (‘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.
Context and background
The proceedings before the Amsterdam Court were brought by two ‘claims vehicles’ which prior to filing their actions had bundled the damage claims of many affected companies. The claimants seek a declaratory judgment and damages against multiple airlines involved in the cartel for their breach of Article 101(1) TFEU and Article 53(1) EEA Agreement by having coordinated various elements of the price to be charged for airfreight services on routes between airports within and from the European Union and the European Economic Area.
According to the European Commission in its 2017 decision the anticompetitive practice took place from 1999 to 2006. However, due to the system of secondary legislation put in place by the Council under Art. 103 TFEU for the air transport sector, the Commission limited its findings of an infringement for EU-third country routes to the time period from 1 May 2004 and for non-EU EEA-third country routes from 19 May 2005. For that reason, the defendants claimed that the Amsterdam Court did not have competence to apply Art. 101 TFEU in the context of the damage actions for the period from 1999 to May 2004/May 2005 respectively and that the force remained solely with the authorities of the Member States and the Commission under the ‘transitional regime’ provided for in Articles 104 and 105 TFEU.
The Amsterdam Court did not agree with this argumentation and was of the opinion that the claimants could rely on the direct effect of Art. 101 TFEU for the entire period in dispute, irrespective of the public enforcement of competition law. However, referring to the fact that its position deviated from the judgment of the High Court in Emerald Supplies Ltd v British Airways Plc as upheld by the Court of Appeal (England and Wales) in La Gaitana Farms SA & Ors v British Airways Plc., the Amsterdam Court referred the following question to the CJEU:
‘In a dispute between injured parties (in the present case shippers, recipients of air cargo services) and air carriers, do the national courts have the power – either because of the direct effect of Article 101 TFEU, or at least of Article 53 [of the EEA Agreement], or on the basis of (the direct effect of) Article 6 of Regulation 1/2003 – to fully apply Article 101 TFEU, or at least Article 53 [of the EEA Agreement], with regard to agreements/concerted practices of air carriers in respect of freight services on flights operated before 1 May 2004 on routes between airports within the [Union] and airports outside the EEA, or, before 19 May 2005, on routes between Iceland, Liechtenstein, Norway and airports outside the EEA, or, on flights operated before 1 June 2002, between airports within the [Union] and Switzerland, also for the period that the transitional regime of Articles 104 and 105 TFEU applied, or does the transitional regime preclude that?’
While focusing on the main issue of the competence of national courts to apply Art. 101(1) TFEU and Art. 53(1) of the EEA Agreement to anticompetitive practices which occurred during that ‘transitional regime’, AG Bobek took the opportunity to also address the more fundamental issue concerning the (inter)dependence of public and private enforcement of EU competition rules.
Power of national courts to apply Art. 101 TFEU does not depend on secondary EU law
AG Bobek identified the ‘underlying and general question of the present case’ as to ‘whether the application of Article 101 TFEU by the national courts can be circumscribed or excluded altogether by secondary legislation restricting administrative enforcement of EU competition rules.’ In his view this is not the case and national courts have to give full effect to Art. 101 TFEU. This stems according to AG Bobek from the common characteristic that Art. 101 TFEU shares with a number of other Treaty provisions that guarantee fundamental individual rights, such as Articles 45 and 46 TFEU (free movement of workers), Art. 49 and Art. 50(2) TFEU (freedom of establishment) and Art. 157 TFEU (principle of equal pay for equal work).
In all of those cases, the Treaty provision concerned first sets out the principle and then goes on to designate the appropriate EU institution(s) that will ‘flesh out’ that principle by adopting additional, specific rules which sometimes even indicate exactly what those ‘implementing’ rules should cover. However, according to AG Bobek, the approach of the CJEU has always been that, even where the required ‘implementing’ rules are not yet in place, the ‘base principle’ as set out in the Treaty provision is itself directly effective and is to be applied independently by all competent national authorities, including national courts.
AG Bobek concludes that from a structural point of view of the Treaty, the applicability of Art. 101 TFEU by national courts existed since the entry into force of the EEC Treaty. Moreover, the first and second paragraphs of Art. 101 TFEU produced full effects even before the Council acted pursuant to its ‘empowerment’ under Art. 103(1) TFEU.
With regard to the specific rules governing the air transport sector AG Bobek concluded that it was limited to the administrative enforcement only and that the absence of any specific rules governing the judicial application of Art. 101 TFEU cannot preclude the Amsterdam Court from directly applying Art. 101 TFEU in the context of a potential award of damages arising from the anticompetitive conduct of the airlines prior to 1 May 2004.
Art. 101 TFEU guarantees individual rights that national courts must protect
In very clear terms AG Bobek confirms that the EU cartel prohibition guarantees individual rights that can be invoked before national courts. In this context he recalls the established case law of the CJEU:
- In SABAM, the Court held that the cartel prohibition could be used as a ‘shield’;
- In Courage and Crehan, the Court held that that provision could be used as a ‘sword’ in relation to a claim for damages arising from an infringement of Article 101 TFEU.
In both cases, AG Bobek extracted from Art. 101 TFEU the part of the provision which produces direct effect between individuals: the prohibition of certain anticompetitive agreements. He concludes: ‘In summary, it is thus clear that Article 101(1) TFEU and its predecessors were directly applicable from the entry into force of the EEC Treaty. They remained directly effective throughout that period so that individuals could enforce their rights before the competent national courts. Above all, this independent power conferred on the national courts to apply Article 101(1) TFEU in accordance with that power and in line with the type of proceedings brought before them under national law, had in fact never been restricted by the Council by the application of what is now Article 103 TFEU.‘
Art. 53 EEA Agreement has to be interpreted uniformly with Art. 101 TFEU
AG Bobek recalls established case law that under the principle of homogeneity provisions of the EEA Agreement which are identical in substance to those of the Treaty must be interpreted uniformly. Accordingly, Art. 53 (1) of the EEA Agreement must also be found to produce direct effect and create rights in respect of the individuals concerned, which the national courts must safeguard.
The bigger picture: private and public enforcement of competition rules
At the end of his opinion AG Bobek gives important guidance on the interaction between public and private enforcement. In this context he details why the opinion of the Amsterdam Court finding itself competent to apply Art. 101 TFEU to the entire infringement period as established by the Commission was correct. AG Bobek in particular states:
- No form of secondary law can take away the competence of the courts to directly apply Art. 101 (1) TFEU and Art. 53 (1) EEA Agreement to protect the subjective rights derived from EU law.
- The Amsterdam Court is competent to determine the liability of the defendants under the relevant national rules. The decision of whether the competition law infringement gives rise to such liability is a private law decision and not a public law decision.
- If that were not the case, such private damage actions would only ever be of a ‘follow-on’ nature and in essence be dependent on a previous public law decision.
- It is therefore incorrect to state (as the defendants do) that the need for consistency between public and private enforcement precludes national courts from exercising their duties under EU and national law, namely protecting individual rights derived from directly effective provisions of EU law.
For all those reasons AG Bobek specifically disagrees with the analysis of the High Court of England and Wales in Emerald Supplies Ltd v British Airways Plc.
Comment and outlook
The opinion of AG Bobek highlights the importance for national courts to fully protect the individual rights guaranteed directly under Art. 101 TFEU. The power of national courts in this respect must be interpreted broadly and is, in particular, not dependent on prior public enforcement actions. On the other hand, the case also shows the importance for national courts to make use of their powers, including the possibility of making requests for a preliminary ruling to the CJEU. This is an efficient solution where national courts diverge on the interpretation of EU competition law, as was the case between the Amsterdam District Court and the High Court of England and Wales. This implies, however, that national courts need to be aware of parallel actions and/or developments in other Member States. To allow national courts to effectively use their powers under Art. 101 and 102 TFEU it therefore seems highest time for the Commission to establish a Europe-wide database for private enforcement actions.
One should be aware of the practical implications for victims of infringements of EU competition law: The opinion of AG Bobek clearly backs the approach and interpretation of Art. 101 TFEU by the Amsterdam District Court. Should the CJEU follow its Advocate General, companies affected by the air cargo cartel that claimed for damages in the Netherlands are likely to obtain compensation (if they can substantiate their harm) for the entire duration of the cartel. Companies that had claimed before the English High Court only obtained compensation for a fraction of the cartel period.
By Till Schreiber