In the case Kone and others before the European Court of Justice following a preliminary reference by the Austrian Supreme Court, Advocate General Kokott advised the Court that customers should be able to seek damages from alleged cartel members for “umbrella sales”. The theory behind umbrella claims is that higher prices charged by non-cartel members can be caused by the general higher price level resulting from a cartel.
According to the referring Austrian Supreme Court, the alleged loss resulting from purchases from non-cartel members would, under Austrian law, not fulfill the requirement of an adequate causal link between a cartel and this alleged loss. Furthermore, the Austrian Supreme Court considered that the loss alleged would not be covered by the protective purpose of the competition rules. However, the Supreme Court had doubts as to whether rejecting the claim on this basis would be in line with the EU principle of effectiveness, specifically the effectiveness of the cartel provision of Article 101 TFEU.
Contrary to the view of most scholars and practitioners, Kokott noted first of all that causality is a matter of EU law. She stated that not so much the existence of claims for compensation is dictated by national law as, rather, the details such as jurisdiction, procedure, time-limits and the standard of proof of application of such claims.
Kokott considers that the causality criterion for liability under EU law should be a “sufficiently direct causal nexus". For this direct causal nexus it would be required that (i) the harm is foreseeable; and (ii) compensation of the loss should be consistent with the objectives of the provision of law which is infringed.
In this case, according to Kokott, it was anything but unforeseeable or surprising that parties not involved in the actual cartel set their prices with an eye to the market behavior of the undertakings being part of a cartel, and therefore, at a higher level than they would have absent the cartel. Moreover, Kokott considered that the competition rules clearly have the purpose of protecting against harm caused by umbrella pricing.
Consequently, Kokott concludes that EU law precludes national law which categorically excludes civil liability for umbrella claims. It will always be necessary to carry out a comprehensive assessment of all the relevant circumstances in order to determine whether the cartel in the case in question has given rise to umbrella pricing.
If the Court of Justice were to follow Kokott's opinion this may have far-reaching consequences for competition law damage cases. However, it remains to be seen whether the Court of Justice will side with the Advocate General's opinion.
