Home > Legal articles > Cartel victims may take shelter under a cartel’s umbrella
According to Advocate General Kokott, cartel members may be liable for damages resulting from umbrella pricing. Umbrella pricing occurs when non-cartel members take advantage of the cartel by charging higher prices than they would have done under normal competitive conditions. If the European Court of Justice follows the Advocate General’s opinion, cartel members may have to worry about not only potential fines by competition authorities and damages claims by cartel victims, but also providing compensation to customers of non-cartel members.
The Advocate General’s opinion relates to a request for a preliminary ruling by the Austrian Supreme Court in a case where a customer of a non-cartel member is suing four companies involved in the elevator cartel for damages before the Austrian civil courts. Austrian national law categorically excludes the liability of cartel members for umbrella pricing.
The Advocate General (AG) is of the opinion that the issue of civil liability of cartel members for umbrella pricing is a matter of EU law and not national law. The principle that any individual is entitled to claim compensation for loss sustained where there is a causal relationship between that loss and an infringement of the competition rules stems from EU law itself. In regard of umbrella pricing, the AG considers that a direct causal link can be assumed if the cartel was at least a contributory cause of the umbrella pricing and two conditions are fulfilled:
Concerning the first criterion, the AG states that it is common business practice in a market economy for companies to keep a close eye on market trends and to take those trends duly into consideration when making their own commercial decisions. It is therefore not unforeseeable for cartel members that companies not party to their cartel will set their prices keeping the cartel members’ market behaviour in mind. As for the second criterion, the AG argues that it can hardly be maintained that recognition of civil liability of cartel members for losses resulting from umbrella pricing is incompatible with the objectives of the competition rules: to create a system of undistorted competition in the European internal market. The practical effectiveness of the competition rules is safeguarded only if both the system of public as well as private enforcement evolves as effectively as possible. Outright exclusion of umbrella pricing from the private enforcement system would not serve this purpose.
The AG closes with the comment that allowing damages claims for umbrella pricing does not result in the automatic obligation of cartel members to compensate customers of non-cartel members. It will always be necessary to carry out a comprehensive assessment of all relevant circumstances and evidence to determine whether a cartel, in any given case, has given rise to umbrella pricing. Thus, as far as the AG is concerned, cartel members should beware of even more lurking damages claims.
17 February 2021
Guidance on green cooperation: Dutch competition authority leads the way
17 February 2021
Green competition: how consumer law can help prevent misleading sustainability claims
17 February 2021
Signed charter needed for foreign in-house counsel to have legal privilege
17 December 2020
Digital Services Act and Digital Markets Act: Commission flexes its muscles
16 November 2020
Fake online reviews – back as area of enforcement by competition authorities
12 November 2020
23 October 2020
Privilege of foreign in-house counsel: English court sets standard, Dutch to follow?
15 October 2020
14 October 2020
Foreign investment screening in Dutch vital sectors – what we know so far
14 October 2020
Investment screening in the Dutch telecoms sector as of 1 October 2020
De Brauw Blackstone Westbroek
Claude Debussylaan 80
1082 MD Amsterdam
The Netherlands
P.O. Box 75084
1070 AB Amsterdam
The Netherlands