Quite recently two new pieces of legislation have been drafted in the EU. The Brussels I Regulation has been amended and will enter into force in January 2015. In June 2013 the Commission also advanced a proposal for a Directive on certain rules governing the actions for damages under national law for infringements of competition law.
Many legal scholars and practitioners have pointed out on numerous occasions that more clarification should be provided concerning damages for antitrust infringements within the EU. It would therefore be logical to inquire whether these two pieces of new legislation could actually clarify the matter of relevant jurisdiction when it comes to damages for antitrust infringements. The proposal for a directive makes reference to the new Brussels I Regulation (No. 1215/2012) and the obligation to stay proceedings for the sake of consistency among closely related actions. Can we actually expect consistency and avoid the risk of ‘irreconcilable judgments resulting from separate proceedings’?
A person domiciled in a Member State can be sued either according to the general rule in Article 4 or according to the special rule for actions in damages in Article 7(2). On the other hand, consumers enjoy the special privilege of being able to choose between the courts of his/her own domicile and the courts of the defendant’s domicile. Can a defendant not domiciled in one of the Member States be sued for antitrust damages before a European Court based on the rules of the Brussels I Regulation?
The relevant jurisdiction for consumer actions against non-resident defendants is established by Article 17(2):
Where a consumer enters into a contract with a party who is not domiciled in a Member State, but has a branch, agency or other establishment in one of the Member States, that party shall, in disputes arising out of the operations of the branch, agency or establishment, be deemed to be domiciled in that Member State.
This means that where an establishment of an organisation is used to implement a cartel on the territory of a particular Member State, an action for damages related to the harm produced on that national market could be brought before the national courts of that Member State.
In antitrust law we also have to deal with the concept of undertaking and antitrust liability: a subsidiary or agency cannot be liable for the conduct of the parent, but the parent bears antitrust liability for the conduct of its subsidiaries, if their activity is merely an expression of the will of the parent or principal. This statement fits well with the concept of ‘branch, agency or establishment’, since the subsidiary is not seen as a separate entity, but as an extension of the parent under the appearance of permanency. (See Somafer and more recently Ahmed Mahamdia).
A cartelist could be ‘deemed to be domiciled’ in a Member State other than where it is primarily domiciled, if it has ‘a branch, agency or other establishment’ in a different Member State. If a cartelist is domiciled outside the EU and has a subsidiary in the EU that conducts business to consumer retail commerce, then according to article 17(2), it could be sued in the EU by consumers in the relevant Member State, if the subsidiaries are to be defined as ‘a branch, agency or other establishment’ and the dispute is one related to an actual consumer contract within the meaning of Regulation 1215/2012 (See also Regulation 44/2001).
However since the ‘passing-on defence’ will be allowed according to Article 13 of the new Directive, this means that when establishing the harm suffered by the consumers as overcharge payers, the court also decides by way of implication the overcharge paid by non-consumers as purchasers. Point b) of Article 13 of the Directive requires proof that the infringement resulted in an overcharge for the direct purchaser. However in this situation the direct purchaser is a non-autonomous market actor, whose actions give expression to the will of the cartelist.
The combination of vertical integration, global cartels, consumer actions and ‘passing-on defence’ remains an unpredictable area for the legal practitioner and continues to constitute a prolific source of scholarship. The reference to Article 30 of Regulation 1215/2012 could be fruitless, if the claimants are still confronted by the series of obstacles previously encountered on the way towards ‘consistency between judgments resulting from related actions’, obstacles which have not yet been removed by the legislators.
I intend to write a sequence of blog posts in which I will revisit the ‘big case law’ based on the Brussels I Convention/Regulation and identify some of the neuralgic points that could impede consistency between judgments addressing the same cause of action in the field of private enforcement of competition law.
Institute of Competition Law