Archivo de la etiqueta: CDC

Forum shopping in Damage claims, Yes Please!! (The CDC Saga, again)

Here we have a new Judgement that clears more the ideas behind the Damage claims in the EU after a Cartel.

CDC by chance of by effort are the ones ahead being the spearhead in this types of claims, and clarifying what and what could not be done in these type of cases.

In this case, C-352/13 the Court has clarified the application of Brussels one, to these procedures in the EU. We all know the context of this suits, the Hydrogen Peroxide cartel. And the claimant, CDC.

The local court of Dortmund, has elevated a question to the Court of Justice, asking, first, if in a Single Continuous Infringement (SCI) cartel case of many participants, an applicant can sue in only one jurisdiction to avoid contradicting awards; secondly, asking if a causal link is needed between the harm and the place it had occurred to be able to sue in a local court; and, finally, if the forum shopping can be avoided by application of a clause in the main contract derogating jurisdiction.

In the first one, it is applicable Article 6(1) of the Regulation, and the procedural exception contained in it. The applicant had chosen Germany as its preferred forum, since Evonik, a participant of the cartel is domiciled there. The problem was, that the defendants have alleged that CDC and Evonik had reached an illegal agreement to get to an out-of-court settlement before the sue, to manipulate articles 6 exception. The final answer is that forum shopping is legal, if the settlement is real, and not agreed beforehand (which has to be proven). This of course, to avoid irreconcilable judgments in several jurisdictions.

In the second question arises the applicability of Article 5(3) of the Regulation, in relation to the Torts doctrine, or the extra-contractual responsibility principal (quasi-delict in some places), this is just the application of the known principle that one can sue in the place where has suffered the damage.As stated in paragraph 40 of the judgement. And precedent case-law.

Finally, and interestingly, in application of the extra-contractual responsibility principle, the third questions says that a defendant cannot use a derogation of jurisdiction clause to avoid being sued in another jurisdiction than its jurisdiction. The Courts says, that although it is true that this clauses have to be complied with, they are only valid when talking about problems that arise from the contract and the relationships created by it, not from a quasi-delict conduct outside the contract.

This is interesting, because, companies can add to jurisdiction derogation clauses in agreements a phrase stating that, the derogation is also applied in cases of responsibilities arising from competition law, although it would be technically correct, the other party in the contract might be suspicious about it, but I am sure that contract lawyers would find a way to insert such provisions.

By: J. Nicolás Otegui Nieto


Damages Directive, Case Akzo Nobel v EC & CDC, and the end of the Leniency Program ¿?

Since the publication of the Damages Directive to be implemented in 2016, we see how the discussion in favor of more extended Decisions of the EC to ease things for possible claimants of damages in their applications before the Courts of the Union raises.

First will see how we can infer from the text of the Directive that the Leniency Program could be seriously hampered. Then we will see that change of posture of the EC regarding the publication of file information in two cases related with the Hydrogen Peroxide Cartel. Is not a coincidence that in both cases the CDC was involved, this is the association of claimants represented by T. Funke.

After reading the text of the Damages Directive we can see how despite the fact of protecting the Leniency Program participants information, regardless admitting the access to the file during the process itself, paragraphs (26) and (38), and articles 5.6 and 6.6 protect information and documents submitted during the leniency proves (which in practice is in doubt in Case Akzo Nobel), in practice, at the time of paying damages, this protection drops, at least from the economic point of view.

Looking close to article 11 we already see how an SME, that has not led or coerced the cartel, is only responsible for the damages caused directly to its suppliers and users (this has consequences we’ll see). Then in paragraph 4 a) of the same article, although protecting also the leniency applicants, this protection falls in point b) of the same paragraph.

Article 11.4 b): “to other injured parties only where full compensation cannot be obtained from the other undertakings that were involved in the same infringement of competition law.” Emphasis added.

The Directive puts the charge of paying to the leniency applicant, if the other parties in the cartel are not solvent, and, if we add the article if the SMEs, we see how the applicant will end up paying.

Besides that, we have to take into account that later on, when talking about ADR, the leniency applicant will not be safe yet, because in article 19.3, it says that if the other undertakings cannot pay, although, cautious and proactive, the applicant again, has to bear the unpaid amounts, this is because the full compensation right that cartel victims have in the directive.

One could say, well, it is only bad from the economic perspective; at least they do not get my business information, but no…

Because the 28th of January, Case T-345/2012 Akzo Nobel v CE y CDC has been made public, there, the EC changes its posture, maybe because the good arts of Mr. Funke (open to speculation), on the access to documents submitted in a leniency procedure, after a very nice article of Leo Szolnoki in GCR I took a deep look at the decision of the General Court.

But first, we have to bear in mind that in 2011 the EC was on the other side of the street, in Case CDC v European Commission (T. Funke representing CDC, also related to the Hydrogen Peroxide Cartel), there the EC said that CDC access to the files can hamper the success of the Leniency Program, and Luxembourg said that CDC was right, that the damages claimants cannot exercise their right of compensation  if they do not have access to the file (paraphrasing the case off course).

Getting back to the case of past January, we see at the doorstep of the implementation of the Damages Directive, how the General Court is starting to assume a posture regarding access to documents within the leniency program and its publicity.

Spite the fact that the lawyers of Akzo Nobel wielded the same arguments that the EC used in CDC c European Commission, that the access to the files could put in danger the program itself, the GC has made it clear, one of the consequences of the participation in a cartel is that you have to pay for the damages you caused, even if you are the one snitching your partners, that that is not sufficient to impede the publicity of an extended version of a Decision, to say that, I would be an easy target for claimants, and finally, that in this case, Akzo could not proof that the information voluntary submitted was business secrets or confidential (see paragraphs 81 and 82).

Thus, and as a conclusion, among the possible “damages” to pay while paying damages, even been proactive and negotiating via ADR, plus the change of posture of the EC and the GC, regarding information voluntarily submitted within a leniency process, just in the case of an “Italian torpedo”, I do not think that many undertakings would like to denounce its buddies in a cartel. Maybe just until we can see clear examples of the implementation of the new directive in national and EU courts.

Let’s think in a company like Recticel, the mayor producer of foam in many countries, which incentivized the cartel itself, then dismantle it by leniency applications all over the EU and US, in the future set of circumstances, could not apply.

This is because on one side you have the GC revealing my “secrets” to my competitors, and on the other side applying the Damages Directive, me been the more solvent, taking into account all afore commented, certainly I would be the one paying in all jurisdictions.

We shall see how jurisprudence evolves when the Directive enters into force.

By: J. Nicolás Otegui Nieto