European Union: EU Advocate General Confirms Availability Of "Umbrella Claims" Against Cartel Members

In her recent opinion to the Court of Justice of the European Union (CoJ), Advocate General Juliane Kokott stated that loss resulting from "umbrella pricing" is recoverable from cartel members. Umbrella pricing is when a company that is not a member of a cartel raises its prices by more than the amount that would be expected under normal competitive conditions, as a result of the cartel. The opinion, from Jan. 30, 2014, follows a reference to the CoJ by an Austrian court hearing a damages action brought against providers of services for escalators and lifts (see COMP/38.823).

AG Kokott considered that loss resulting from umbrella pricing is not unforeseeable by the cartel members, and that the reparation of that loss is consistent with the objectives of Article 101 of Treaty on the Functioning of the European Union (TFEU). It would, she suggested, run counter to the practical effectiveness of EU competition rules for national civil law to exclude compensation for such loss.

AG Kokott also stated that the civil liability of cartel members for umbrella pricing is a matter of EU law rather than national law. The principle that an individual is entitled to claim compensation for loss where there is a causal relationship between that loss and an infringement of the competition rules follows from the prohibition in Article 101 of the TFEU. There must therefore be a sufficiently close causal connection between the cartel and the losses resulting from umbrella pricing. AG Kokott does not consider cartel members automatically jointly and severally liable for overcharges caused to customers of undertakings not party to a cartel. Instead, liability should be determined by evidence establishing a causal link between the umbrella pricing and the infringement, assessed on a case-by-case basis by national courts.

The Advocate General's opinion, which is not binding on the CoJ, is available here.

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