Case C-557/12, KONE – indirectly escalated prices and lifting compensation from those inside prohibited cartels [judgment 2014, ECLI:EU:C:2014:1317]

Where a prohibited cartel has raised prices in a market, and a company has purchased goods from non-cartel members who had raised their prices – to a higher degree than would have been the case but for the existence of the illegal cartel – can that company claim damages from the companies that formed the cartel?

Facts
In 2007, the Commission slapped a then record fine of 990 million euro on four companies, including KONE, who were in the escalator and lift business (installation and maintenance), for having run a cartel between 2003 and 2005. The scope of the cartel covered not only Germany but the whole of the Benelux.

In 2008, the Austrian Supreme Court decided to uphold fines that had been handed out in 2007 by the Austrian Competition Authority against three of those companies, which also included KONE. The case related to guidelines which had had the effect of dividing up the Austrian market from the 1980s. The companies had even exchanged confidential commercial information between them. They then charged prices which were higher than would have obtained had there been competition in the market. This distorted competition. The members of the cartel took half of the new-build commissions that were available in Austria, and they divided these commissions up between themselves. The cartel did not sew up the market entirely. A third of the commissions went to companies that were not members of the cartel, or to companies which although they were members of the cartel still undercut the guidelines and thus offered a lower price.

The claimant company, ÖBB-Infrastruktur, had purchased lifts and escalators from companies that were not members of the cartel; however, those sellers had, in the wake of the cartel, still increased their prices to a degree higher than would have been the case but for the existence of the cartel. ÖBB-Infrastruktur therefore brought a damages claim totalling 1.8 million euro against the primary movers in the cartel.

ÖBB-Infrastruktur’s claim failed at first instance on the basis that these were indirect damages flowing from a cartel. This point was overturned on appeal.

At the Austrian Supreme Court, it was noted that Article 101 TFEU (previously numbered as Article 81 EC, and Article 85 EEC Treaty) had direct effect. The CJEU’s case law allowed anyone affected by cartel to claim compensation. There needed to be a causal link between the harm suffered and the tortious act. And if there was no EU rule applicable to a particular situation, then any domestic law had to be read in accordance with the principles of equivalence and effectiveness.

Under Austrian law, however, ÖBB-Infrastruktur’s claim would fail. There was no causal link because members of the cartel did not have to take into account the umbrella-pricing of the non-cartel member. The umbrella-pricing of non-cartel members was a decision of those companies and was as such indirect harm which did not qualify for compensation.

However, the Austrian Supreme Court noted that on the issue of umbrella-pricing, Austrian and German legal commentary was divided. It concluded, therefore, that since the principle of the effectiveness of EU law was at stake, it had to make a reference to the CJEU.

Question Referred
According to the Curia website, the Austrian Supreme Court has asked:

Is Article 101 TFEU (Article 81 EC, Article 85 of the EC Treaty) to be interpreted as meaning that any person may claim from members of a cartel damages also for the loss which he has been caused by a person not party to the cartel who, benefiting from the protection of the increased market prices, raises his own prices for his products more than he would have done without the cartel (umbrella pricing), so that the principle of effectiveness laid down by the Court of Justice of the European Union requires grant of a claim under national law?