NMBS/SNCB Obtains Appointment of Experts to Investigate Abuse of Dominant Position by Electrabel

On 11 October 2011, the Brussels Court of Appeal (Hof van Beroep/Cour d’Appel) gave an interlocutory judgment designating a panel of experts in a case pitting NMBS/SNCB, the national railway company, against Electrabel. The appeal judgment overturns the initial judgment of the Court of First Instance of 20 September 2010 (See Van Bael & Bellis on Belgian Business law, Volume 2010, No. 9, p. 3, available at www.vbb.com).

Based on obligations assumed in the Kyoto Protocol, the European Union introduced an emission trading system whereby companies are required to hold permits (or carbon credits) in proportion to their emission of greenhouse gasses. Four studies by the Electricity and Gas Regulation Commission (Commissie voor de Regulering van de Elektriciteit en het Gas/Commission de Régulation de l'Électricité et du Gaz – the “EGRC”) found that by selling to its industrial customers permits obtained for free or at a lower price, Electrabel had made windfall profits. As Electrabel controls 70% of the electricity market for industrial customers, NMBS/SNCB argued before the Belgian courts that Electrabel had abused its dominant position by charging excessive prices for these permits.

Electrabel refused to cooperate with the investigations as to the existence of possible windfall profits. Lacking evidence, NMBS/SNCB asked the Court of Appeal to appoint an expert. A request of this nature can only be granted if the plaintiff is able to show a prima facie case. To support its request, NMBS/SNCB relied on the four studies prepared by the EGRC. In addition, it invoked a decision by the German competition authority (Bundeskartellamt) against RWE AG, which, together with E.ON Energie AG, holds a duopoly on the German energy market. The German competition authority had considered that an undertaking in a competitive market would be unable to charge such windfall profits to its customers. The case was closed when RWE AG offered commitments to the German competition authority. Finally, NMBS/SNCB also referred to Electrabel's annual accounts which allegedly do not comply with Belgian accounting rules.

The Court of Appeal found that these three elements combined give rise to a prima facie case and designated a panel of experts to investigate the alleged windfall profits. The Court of Appeal relied heavily on the fact that Electrabel had adduced no specific evidence whatsoever rebutting the claim made by NMBS/SNCB. By designating a panel of experts, the Court of Appeal seems to have somewhat departed from earlier case law which requires the production of specific evidence before appointing an expert. The rationale for this traditional case law is that judges want to avoid claims being made on the basis of little or no evidence at all, which would then be substantiated by intrusive research of appointed experts.

A second interesting point in the judgment concerns excessive pricing. Price is a reflection of the cost necessary for the production of a product. The Court of Appeal now suggests that if part of the cost for the production of electricity was not justified (in this case, the price of the permits passed on to the customers), NMBS/SNCB would not be obliged to pay that part of the price. As this line of reasoning was only an obiter dictum of the interlocutory judgment, we must wait for the final judgment on the merits for confirmation that excessive pricing could occur when only part of the price of a product is excessive, rather than the global price of that product.

As adducing proof of abuse of a dominant position is often very difficult, this ruling is liable to strengthen the position of claimants in private enforcement proceedings.