EU court ruling to prompt consumer damages claims against cartels

The European Court of Justice in Luxembourg. [Cédric Puisney/Flickr]

Companies found guilty of taking part in cartels are likely to face more damages lawsuits from victims after Europe’s top court said that cartel members could be found liable for price rises initiated by rival businesses outside the cartel.

Thursday’s (5 June) landmark ruling from the Luxembourg-based Court of Justice of the European Union (ECJ) came in a case involving elevator manufacturers Kone, Otis, Schindler and ThyssenKrupp.

The companies were fined €992 million euros by the European Commission in 2007 for fixing prices of elevators and escalators in Belgium, Germany, Luxembourg and the Netherlands.

A subsidiary of the Austrian Federal Railways later sued the companies for €1.8 million in an Austrian court, saying its elevator suppliers, which were not members of the cartel, were able to charge an inflated price as a result of the cartel’s actions.

The Austrian court subsequently asked the ECJ for guidance because Austrian laws block victims from seeking compensation if their suppliers are not part of a cartel.

Judges in Luxembourg backed the plaintiff.

“Where a cartel has the effect of leading competitors to raise their prices, the members of the cartel may be held liable for the loss caused as a result,” they wrote in the ruling.

The judgment will raise the stakes for cartel members, said Gerwin Van Gerven, a partner at law firm Linklaters.

“It’s an important decision, it increases the exposure and potential damage for cartel defendants.”

While European damages claims against cartels are still a fraction of those in the United States, more and more companies in Europe are taking legal action to recover losses.