Trucks Cartel: Within Four Months, the CJEU Provides Enlightening Procedural Clarifications on Follow-On Actions Through Two Preliminary Rulings

Kramer Levin Naftalis & Frankel LLP

[co-author: Alice Mollot]

Following record fines imposed by the European Commission on the main European truck manufacturers, under preliminary references, the Court of Justice of the European Union (CJEU) has recently ruled on certain procedural issues relating to the actions for damages brought before national courts by the victims of the trucks cartel.

As a reminder, for almost 14 years, between Jan. 17, 1997, and Jan. 18, 2011, several truck manufacturers throughout Europe agreed on the selling price of their trucks over six tons, which generated additional costs of 10% to 15% passed on the price paid by their customers.

In two decisions, the European Commission fined MAN, Volvo/Renault, Daimler, Iveco and DAF a total of €2.9 billion on July 19, 2016, and fined Scania €880 million on Sept. 27, 2017, for anticompetitive agreement.

The Court of Justice provides a grid to determine the competent national court under the Brussels
I
bis Regulation

In the first case (CJEU, RH v. Volvo, 15 July 2021, C-30/20), the action for damages is brought by a Spanish customer, RH company, against various Volvo entities before the Commercial Court of Madrid, although RH company purchased Volvo trucks in Cordoba between 2004 and 2009 and is domiciled in that city.

The question referred to the Court of Justice for a preliminary ruling concerned the interpretation of Article 7(2) of Regulation 1215/2012 (Brussels I bis Regulation), insofar as it provides that a person domiciled in a Member State may be sued in another Member State “in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur,” which means, under the established case law, both the place where the damage occurred and the place of the event giving rise to it, i.e., in this case, the place where the trucks were purchased.

The first issue in RH v. Volvo was to identify the “place where the damage occurred” within the meaning of Article 7(2) of the Brussels I bis Regulation.

In line with previous case law (for example, CJEU, 29 July 2019, Tibor-Trans, C-451/18), the Court confirms that the place where the damage occurred covered the entire European Economic Area (EEA) market, of which Spain forms part.

The real new question in this case, going beyond the established case law, is how to identify the competent court within the Member State.

In this respect, the Court considers that Article 7(2) of the Brussels I bis Regulation “confers directly and immediately both international and territorial jurisdiction on the courts for the place where the damage occurred.” In addition, the Court states that “the delimitation of the court’s jurisdiction within which the place where the damage occurred, within the meaning of that provision, is situated, is as a rule a matter for the organisational competence of the Member State to which that court belongs.

Consequently, the competent court is the one identified by the Member State, according to its national procedural rules, which may lead to designate a specialized court when this Member State conferred to it a particular type of litigation, as in France, where eight judicial courts and eight commercial courts, as well as the Paris Court of Appeal, have exclusive jurisdiction to hear actions for damages related to anticompetitive practices (Art. L. 420-7, R. 420-3, R. 420-4 and R. 420-5 of the French commercial code).

With this decision, the CJEU gives a clear analysis grid of the determination of the national court with jurisdiction in follow-on actions, which will be alternatively:

  • The court of the place where the goods affected by the collusive arrangements were purchased, if the harmed buyer purchased goods exclusively within the jurisdiction of a single court; or
  • The court of the place where the victim’s registered office is situated, in the case of purchases made in several places. 

This important decision is likely to be transposed beyond competition law, as the Court states a general rule that, where a Member State has an international jurisdiction under Article 7(2) of the Brussels I bis Regulation, this provision also determines which court within the Member State has territorial jurisdiction.

***

A victim of an infringement under EU competition law committed by a parent company may claim compensation for the resulting damage from its subsidiary if those companies constitute a single economic unit

Also in the context of an action for damages relating to the trucks cartel, the answer to the second question referred to the Court of Justice for a preliminary ruling (CJEU, Sumal v Mercedes Benz Trucks España, C-882/19) provides new light on the liability of companies within the same group.

In this case, the company Sumal purchased trucks from Mercedes Benz Trucks España, a subsidiary of the Daimler group, through a dealership of the group in Spain, and subsequently brought an action for damages caused by the trucks cartel against Mercedes Benz Trucks España.

This claim was initially rejected at first instance, considering that only Daimler, and not its subsidiary, was concerned by the infringement sanctioned by the Commission’s decision of July 19, 2016. Due to the different positions of the Spanish courts on this issue, the Provincial Court of Barcelona, before which Sumal appealed the judgment, asked the CJEU whether the concept of a single economic unit should make it possible to extend liability for the conduct of its parent company to the subsidiary, even though the subsidiary was not specifically referred to in the Commission’s sanction decision — and if so, under which conditions.

In order to answer the question, the Court recalls that Article 101 (1) TFEU refers to the concept of “undertaking” to designate the perpetrator of an infringement of competition law, and as an autonomous concept of EU law, it refers to the “economic unit,” which is understood to be “a unitary organization of personal, tangible and intangible elements, which pursues a specific economic aim on a long-term basis.” These autonomous concepts provide grounds that it automatically entail the application of joint and several liability among the entities of which the economic unit is made up at the time that the infringement was committed, in order to ensure an effective and dissuasive application of European competition law.

It is in application of these concepts that, in a judgment on the liability of an undertaking for anticompetitive conduct, the case law of the Court has previously held “that the conduct of a subsidiary may be imputed to the parent company” (e.g., CJEU 10 September 2009, Akzo Nobel, C-97/08, pt. 58).

Before affirming that there may also be vertical downward liability within a group, the Court notes that “the organisation of groups of companies that may constitute an economic unit may be very different from one group to another”; this is why it refuses to automatically extend the liability of the parent company to any of its subsidiaries and sets out the conditions for such an extension.

Thus, the Court specifies that, in the context of an action for damages caused by anticompetitive practices, in order to hold the subsidiary liable for the conduct of its parent company, the victim must prove:

  • The economic, organizational and legal links between the companies, in order to show that “it is precisely the economic unit of which the subsidiary, together with its parent company, forms [the] part that constitutes the undertaking which actually committed the infringement found earlier by the Commission.
  • The specific link between the economic activity of the subsidiary and the subject matter of the infringement for which the parent company was held to be responsible, meaning that the products concerned by the infringement and the products marketed by the subsidiary are the same.

However, with regard to fundamental procedural rights, the Court also specifies that the subsidiary defendant in a damages action must remain able to assert its rights of defense by refuting its liability, either by contesting that it belongs to the same undertaking as the parent company held responsible for the infringement by the Commission, or by contesting the existence of the infringement alleged where no decision has been adopted by the Commission.

Moreover, the question also arose as to whether Article 101 (1) TFEU precluded national legislation that provides for the possibility of imputing liability for the conduct of one company to another company only where the latter controls the former, i.e., in essence imputing only the liability for the conduct of a subsidiary to its parent company, but not vice versa. The Court of Luxembourg recalled that, in accordance with a primacy principle of EU law, such a regulation should be disregarded in favor of the direct application of the Article 101 (1) TFEU.

In summary, these two recent preliminary rulings by the Court of Justice clarify the legal regime applicable to follow-on actions brought by victims of anticompetitive practices before national courts, in a way that seems to favor the compensation of their losses.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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