Dutch Court rules on cartel damage claims in Gas Insulated Switchgear case

On 16 January 2013, the District Court for the Eastern Netherlands handed down a landmark judgment concerning a claim for cartel damages. The judgment concerns a follow-on claim for damages by the Dutch electricity company, TenneT, against three entities of the ABB-group ("ABB"). The case is one of the first in the Netherlands to address substantive issues of civil liability for a cartel infringement.

Firstly, the District Court ruled that both ABB Ltd. and its main Dutch subsidiary, ABB B.V., are liable. ABB Ltd. - a parent company within the ABB group - was found liable by the European Commission of participation in the Gas Insulated Switchgear infringement. From the text of the Commission's decision, it appears that ABB Ltd. was held liable for its own participation (not merely on the basis of its control over participating subsidiaries). According to the Arnhem Court, it was therefore bound to find ABB Ltd. liable for civil damages. However, TenneT had purchased the product which was subject to the cartel, namely a gas-insulated switchgear station, based on an offer of tender from ABB B.V., a subsidiary within the ABB Group. ABB B.V., which was not amongst the addressees of the Commission's decision, argued that the mere fact that its indirect parent company, ABB Ltd., had been found liable of cartel conduct did not imply that ABB B.V. should also be held liable for cartel damages. The Court agreed in principle that an entity within a group of companies is liable for cartel damages only if that entity itself was liable of wrongdoing. However, the Court further held that such wrongdoing exists if the subsidiary was aware of the infringement and was therefore aware, or should have been aware, that it was being used as an instrument for the implementation of a cartel agreement. Based on the specific facts of the case and the defendants' procedural posture during the Court hearing, the Court found that ABB B.V. did in fact have knowledge of the infringement and was therefore liable vis-à-vis TenneT.

Secondly, the Court ruled that TenneT's claim was brought within the prescribed time limits. Under Dutch law, a claim for damages becomes time-barred five years after the claimant has sufficient knowledge of the facts to be able to file a claim. On 13 May 2004, the European Commission issued a press release announcing that it had launched an investigation into the conduct of, inter alia, ABB. On the same day, ABB issued its own press release indicating that an internal audit had revealed evidence of anti-competitive conduct by ABB employees in the relevant market. By the time TenneT filed its claim in 2010, more than five years had passed since those initial press releases. Therefore, ABB argued that TenneT's claim was now time-barred. However, the Court rejected this line of argument. In the Court's view, even if it were assumed that TenneT was aware in 2004 that the European Commission had launched an investigation, it does not follow that TenneT had sufficient knowledge to be able to file a claim for damages.

Thirdly, the Court rejected ABB's "passing-on"-defence. According to the Court, TenneT suffered a loss as soon as it overpaid for the cartelized product. If TenneT managed to recover some or all of the alleged overcharge from its own customers, the damages may be reduced on the basis of "compensation for advantage" ("voordeelsverrekening"), a Dutch doctrine that allows a defendant to offset a benefit that was conferred onto the claimant through his wrongdoing against the damages owed for that same wrongdoing. While the Court and the parties will revisit the potential application of that doctrine later in the proceedings, in its interim decision the Court openly doubts whether ABB can successfully rely on "voordeelsverrekening". According to the Court, allowing set-off may not be reasonable in this case. In this context, the Court appears to assume that an award of damages will ultimately be passed on by TenneT to its own customers through a reduction in electricity prices.