A Dutch Court Hands Down the First Substantive Damages Judgment in the Netherlands for an Infringement of Competition Law
In a recent judgment, a District Court in the Netherlands (the DCA) handed down a judgment in what is the first substantive damages judgment in the Netherlands for a breach of competition law. In issuing the declaration of liability, the DCA held that ABB must pay damages to the Dutch grid operator TenneT for the overcharge that arose as a result of the gas insulated switchgear cartel, putting aside arguments by ABB that any damages should take into account the fact that the overcharge had been passed on to customers of TenneT. The court considered that in this case the indirect purchasers were likely to benefit from compensation to the direct customer.
The claim was brought following a decision of the European Commission finding that ABB had participated in a cartel in the market for gas insulated switchgear. The damages claim focused specifically on a tender organised by the legal predecessor of TenneT in 1992 for the provision of gas insulated switchgear installations in the Netherlands (the NL tender). The tender, allegedly rigged by ABB, was won by ABB with a bid of around EUR 40 million. Although the Commission decision does not refer explicitly to the NL tender, the DCA held that the infringing conduct fell within the purview of the infringement of competition law already established by the Commission.
While the judgment marks a seminal moment for cartel damages claims in the Netherlands, and is an indication of further judgments to come, it has to be seen in context. In that respect, there are a number of points about the case that should be noted.
- First, the claim by TenneT was for a declaratory judgment. The DCA was therefore called on to rule on the likelihood that damages were suffered. Issues pertaining to causality and quantum of the damages were not decided by the DCA.
- Second, other courts in the Netherlands are not bound by the ruling handed down by the DCA and there are two further instances of appeal from the DCA. This means there is every likelihood that the judgment will be appealed.
- Finally, it does not follow that, as a matter of Dutch law, there is no recourse to the passing on defence as a result of this judgment. The DCA’s rejection of the passing on defence was an assessment specific to the facts of the case. In this particular instance the lower prices for electricity transport following a compensatory payment of the overcharge by ABB would in turn benefit the indirect purchasers, as it would almost certainly result in lower electricity prices. The argument could be replicated therefore in other bid rigging cases where equipment is written off over a long period of time and the compensation paid by the cartelist is likely to benefit downstream customers.
Despite these caveats, the judgment provides a snapshot of what could lie ahead in the area of damages claims against competition law infringers. Moreover it is also, potentially, a reflection of what is to come in other EU jurisdictions, particularly the United Kingdom and Germany, where there are a number of pending judgments and imminent reforms designed to facilitate the bringing of such claims.
Samuel Buyoya, a trainee solicitor in the Brussels office, contributed to this article.