Amsterdam District Court denies use of anchor defendants in power cable cartel follow-on
On 27 January 2021, the Court of Justice rejected the appeal filed by Goldman Sachs against the fine imposed by the European Commission for its involvement in the power cable cartel (we intend to shortly publish a separate post on this judgment). For Goldman Sachs and for other companies involved, the end of these proceedings does not mean that they can close this chapter.
Indeed, the Commission's decision has led to follow-on litigation for damages allegedly suffered as a result of the cartel. In one of those proceedings, the District Court of Amsterdam has recently ruled on jurisdiction and denied the use of Dutch anchor defendants for claims against their foreign group companies.
In these proceedings, utility companies from the Gulf states of Bahrain, Saudi Arabia, Kuwait and Oman are seeking a declaratory judgment that their (15) defendant counterparties, which are part of the Prysmian group, the ABB group and the Nexans group, have acted unlawfully by their participation in the cartel. In addition, they claim damages for alleged overcharges as a result of the cartel.
Close connection between claims again Dutch and foreign defendants?
In a motion contesting jurisdiction brought by the defendants domiciled outside the Netherlands, the court assessed whether it has jurisdiction to hear the claims against these foreign defendants. Claimants allege that there is jurisdiction for the claims against these defendants because of a close connection with the claims against the (anchor) defendants domiciled in the Netherlands.
The utility companies argue that the Dutch defendants, like the foreign defendants, participated in the cartel. This would follow from the fact that the nearly global cartel was also active in the Netherlands and the Dutch defendants are active in the power cable market. This argument is rejected by the court with reference to the fact that the Commission did not establish any (direct or indirect) participation in the cartel for the Dutch defendants. The court further finds that their active involvement in the cartel was insufficiently substantiated by the claimants.
The court sees no basis for imputing liability to the Dutch defendants as group companies of the foreign defendants that were held liable by the Commission. The court points out that it does not follow from the Commission's decision (nor from any other evidence) that the foreign defendants exercised decisive influence on the Dutch defendants, or vice versa. The court rejects the idea that the Dutch defendants were involved in the infringement on the sole basis that they are (indirect) subsidiaries or sister companies of the addressees of the Commission's decision.
Jurisdiction on the basis of concept of “undertaking”?
The utility companies also try to rely on the competition law concept of "undertaking", which refers to an economic entity, even if from a legal perspective it is formed by different natural or legal persons. It is an undertaking that can commit an infringement of the competition rules and in that case is liable for the damage caused by the infringement. With a reference to the Court of Justice’s judgment of 14 March 2019 in the Skanska-case, the liability of the Dutch defendants would result from the fact that they are part of the same ‘undertaking’ in which their parent company or group company has violated competition law.
This argument is also rejected by the court. The District Court refers to the fact that the Skanska-case concerned a very specific situation for which the Court of Justice applied the doctrine of economic continuity in order to prevent a company from evading its obligations under the EU competition rules through restructuring. According to the District Court, the Skanska judgment does not imply that this doctrine can also be applied outside this specific situation.
It remains to be seen whether the District Court's interpretation of the Skanska judgment is correct. Should one not argue, especially in a situation where there has been no restructuring as was at issue in the Skanska case, that the economic entity that committed the infringement and is liable for it, only consists of (i) the (legal) entity that is liable on the basis of its own actions and conduct, and (ii) the (legal) entity that has such an influence on the actions of the relevant entity under (i) that it can be held jointly and severally liable for it.
Conclusions of the District Court
The District Court concludes that the circumstance that the Dutch defendants are part of the groups Prysmian, ABB and Nexans is insufficient to assume that there is such a close connection between the claim against the Dutch and foreign defendants that the proper administration of justice demands that they be tried by the same court. Furthermore, the utility companies have not put forward sufficient facts and circumstances to make the Dutch (anchor) defendants (jointly and severally) liable on a similar basis as the foreign defendants for the cartel damage allegedly suffered by the utility companies. Accordingly, the court does not accept jurisdiction to hear the claims against the foreign defendants (ECLI:NL:RBAMS:2020:5882, Rechtbank Amsterdam, C/13/670229 / HA ZA 19-837 (rechtspraak.nl)).
For more information on this topic please contact Marc Custers or one of the other members of Loyens & Loeff’s Competition Litigation Team.