In context

For your eyes only: no disclosure of settlement to other cartel members

November 13, 2016
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In context

The District Court of The Hague recently clarified that a claimant in a cartel damages action does not have to disclose a settlement agreement with a defendant to the co-defendants. But given that all cartel members are jointly and severally liable for the harm caused by the cartel, the claimant should reduce its damages claim by the settling defendant’s internal contribution share in the overall damage. If the settlement amount significantly exceeds that share, the claim will need to be reduced by the actual settlement amount to avoid overcompensation. The ruling clarifies the court’s approach to contribution claims. It safeguards claimants from having to disclose their settlement agreements prematurely, while protecting cartel members from having to pay more than they are liable for.

In October 2008, the European Commission imposed fines of EUR 676 million in total on several paraffin wax producers for participating in a cartel. Following the Commission’s cartel decision, litigation vehicle CDC filed a damages claim with the District Court of The Hague against a number of these paraffin wax producers. In June 2015, CDC reached a settlement with Sasol, one of the paraffin wax producers, and subsequently reduced its claim by Sasol’s share in the overall alleged damage. CDC left the precise determination of this share to the district court. The defendants argued that CDC should disclose the exact settlement amount agreed with Sasol to ascertain whether CDC had not already been fully compensated for the damages claimed as a result of the settlement. In addition, all the cartel members addressed in the European Commission’s decision should be brought into the main proceedings to determine Sasol’s internal contribution share.

 

The district court found that CDC’s claim reduction was not related to the settlement amount actually paid by Sasol, but referred to Sasol’s share in the harm in light of the internal allocation of liability for the harm among all the cartel members. As a result, it was only necessary to determine Sasol’s share without having to establish the other cartel members’ internal contribution shares. Furthermore, the district court ruled that CDC does not have to disclose the exact settlement at the moment, because nothing indicates that the settlement amount paid exceeds Sasol’s internal contribution share. Disclosure may, however, be necessary at a later stage.

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