Important victory BarentsKrans in Air Cargo cartel litigation

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The Amsterdam District Court rendered two groundbreaking judgments in Equilib / KLM et al, the largest private enforcement case in Europe. Equilib, funded by Claims Funding Europe and represented by BarentsKrans, had issued proceedings in 2010 when the Commission announced it had fined the members of the Air Cargo cartel for breaching article 101 TFEU by fixing surcharges on airfreight services between 1999 and 2006.

Temporal scope of the damage claims

As the European Court of Justice (ECJ) decided in Courage/Crehan (2001), each party that suffers damages as a result of an infringement of European competition law, is entitled to compensation.  Hundreds of companies had assigned these damage claims to Equilib, so that it could act as single claimant in the proceedings against the airlines. They had spent EUR 6,5 billion on airfreight services in the cartel period, primarily on shipments between the EU and third countries. And so most of the damages were suffered on those inbound and outbound routes.

The first judgment concerned the question whether a national court is allowed to determine whether European competition law was infringed in respect of inbound and outbound airfreight services before 1 May 2004. Before that date, the Commission for historical reasons did not have the power to enforce competition law in regard to air transport between the EU and third countries. As a consequence its Decision had only found an infringement in regard to those specific services as of 1 May 2004.

The High Court and the Court of Appeal in the English air cargo proceedings had decided that they lacked the power to find an infringement in regard to this area and period absent a prior decision of a national competition authority. They therefore could not reach the question whether the injured parties were entitled to compensation for such an infringement. With most of the damage claims thus thrown out, the cases in the United Kingdom recently settled for a fraction of the damages suffered.

The Amsterdam court however decided in favour of Equilib and the injured parties. It noted that the cartel prohibition was based on the Treaty itself and created rights with direct effect. This direct effect could not be made conditional on decisions of competition authorities. National courts had the power and the duty to enforce these rights and obligations. As the cartel members could no longer seek an exemption for their conduct under article 101(3) TFEU, the only reason for a national court to exercise restraint in this area no longer existed. The court therefore found that it could assess whether an infringement had occurred pre-May 2004. This means that all damage claims regarding those years are left intact. Compensation in the Dutch case is therefore likely to be substantially higher than what parties in the English litigation accepted in settlement.

Given the conflicting decisions of the English and Dutch courts, the matter will now be referred by the Amsterdam court to the ECJ.  Equilib is confident that the Dutch treatment of this issue will prevail.

Applicable law

In a second judgment the Amsterdam court had to decide on the applicable law governing the damage claims against the airlines. With regard to cartel conduct after 11 January 2009, the Rome II Regulation sets out in article 6(3)b that one can opt for the lex fori provided that the court is based in a member state where the infringement had a direct and substantial effect. In respect of an older cartel like Air Cargo Rome II could not be invoked.  Faced with the prospect of applying the laws of at least 17 European  jurisdictions to issues like damages and causation, the Amsterdam court said that this would be so burdensome as to conflict with Dutch due process and the European principle of effectiveness. On that basis, it held that it would apply Dutch law to all the claims. The decision, which is open for appeal, confirms that the Amsterdam court seeks to make private enforcement as efficient and effective as possible. Excessive delays in the consideration of these issues will not be tolerated.

The BarentsKrans team working for Equilib is led by Martijn van Maanen, Joost Fanoy and Jan-Willem de Jong.