Posts Tagged Anti-trust

Vestel v HEVC Advance (Delaware) and Philips (NL). High Court denies stand-alone competition law damage both on the basis of Article 7(2) BRU Ia and residual CPR rules.

In [2019] EWHC 2766 (Ch) Vestel Elektronik v HEVC Advance and Koninklijke Philips NV, Hacon J found no jurisdiction in a stand-alone competition law damages case (no finding of infringement yet; claim is one of abuse of dominant position). He rejected the existence of jurisdiction against Philips NV (of The Netherlands) on the basis that no damage existing or potential could be shown grounding Article 7(2) Brussels Ia tortious Jurisdiction. Against the Delaware defendant, the relevant CPR rules applied per Four Seasons v Brownlie did not lead to jurisdiction either.

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.12.1

 

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Office Depot v Holdham et al. Lis alibi pendens in follow-on cartel damages suit. Delay in the Swedish proceedings crucial factor in High Court’s rejection of a stay

in [2019] EWHC 2115 (Ch) Office Depot BV et al v Holdham SA et al, the High Court in August (I had promised posting soon after the Tweet. That did not quite happen) held on issues of lis alibi pendens (and, alternatively, a stay on case management grounds) in a follow-on cartel damages suit arising from the European Commission’s cartel finding in the envelopes market. That’s right: envelopes. Cartel cases do not always involve sexy markets. But I digress (and I also confess to finding stationary quite exciting).

Sir Geoffrey Vos’ judgment deals with the fate of the Office Depot claimants’ follow-on proceedings in England against certain Bong (of Sweden) corporate defendants, after the Bong parties had commenced Swedish proceedings for negative declarations as to their liability. In March 2019 the relevant Swedish court said in effect that Article 8 Brussel I a was not engaged so that the Swedish Bong proceedings for negative declarations could only proceed against the locally domiciled Office Depot company, which was Office Depot Svenska AB, but not the non-Swedish Office Depot entities. Parties at the time of Sir Geoffrey’s decision (Swedish followers may be able to enlighten us on whether there has been a decision in the meantime; at 23 the expected date is mentioned as ‘the autumn’) were awaiting a certiorari decision by the Swedish Supreme Court.

CJEU C–406/92 The Tatry of course is discussed, as is CDC. Sir Geoffrey also discussed C-129/92 Owens Bank, in particular Lenz AG’s Opinion (the CJEU did not get to the part of the Opinion relevant to current case). Discussion between the parties, at Sir Geoffrey’s request, focused on the issue of the judge’s discretion under lis alibi pendens for related actions, rather than on whether or not the actions are related (it was more or less accepted they are; see ia at 43 ff).

At 46 ff the Court then exercises its discretion and finds against a stay, on the basis in particular of the expected length of the Swedish proceedings: at 54: ‘the grant of a stay would be contrary to justice in that it would delay unreasonably the resolution of proceedings that can only be tried in England and already relate to events many years ago‘, and at 48: ‘The stage in the Swedish proceedings is a long way behind these. It will be between one and two and a half years before jurisdiction is resolved there, two courts already having refused jurisdiction. It will be perhaps between three and five years before the substantive litigation in Sweden is resolved, if it ever gets off the ground.

Swedish courts do not tend to get used for torpedo actions. Yet the swiftness of English court proceedings yet again comes in to save the day (or indeed, scupper the stay).

Geert.

(Handbook of) EU Private International Law, 2nd ed. 2016, Chapter 2, Heading 2.2.12.1

 

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Legal advice and legitimate expectations – The ECJ in Schenker

In Schenker, Case C-681/11, defendants in the main proceedings were members of the Spediteur-Sammelladungs-Konferenz (Freight Forwarding Agents Consolidated Consignment Conference; ‘the SSK’). The SSK was an interest group comprising some of the ordinary members of the Zentralverband der Spediteure (Central Association of Freight Forwarding Agents; ‘the Zentralverband’). The Zentralverband, which was set up as an association, represents the collective interests of freight forwarding agents and of logistics service providers with a forwarding licence.

The SSK pursued the objective of ‘enabling more favourable road/rail consolidated consignment rates to be granted to shippers and to end consumers (compared with the rail tariffs for general cargo) and – through the creation of equal conditions of competition – of promoting fair competition among its members, an objective … to be pursued whilst having particular regard to ensuring compliance with Austrian, [European Union and European Economic Area (EEA)] law on cartels’.

The Austrian competition court confirmed that the arrangement was a ‘minor cartel’, meaning that it could go ahead without the approval of the competition authority. Hence, it would seem – but I am not au fait with the detail of Austrian competition law – putting the ball back in the camp of the cartel: for a finding of mini-cartel does not to me seem to imply a finding of non-breach of competition law.

Advice of counsel had confirmed the existence of a ‘mini cartel’ both at the time of the 1996 agreement and later, in 2006, at the entry into force of a new competition law. In neither instance had counsel advised on the legality or not under EU competition law. The European Commission raided the offices of members of the cartel in 2007, following which the Austrian competition authority pursued the case for breach of EU (as opposed to national) competition law. The courts in first instance held that the finding of a mini-cartel implied the absence of impact on cross-border trade, which is  prerequisite for EU competition law to apply. Upon appeal, questions were referred to the ECJ.

The Court held that an undertaking which has infringed that provision may not escape imposition of a fine where the infringement has resulted from that undertaking erring as to the lawfulness of its conduct on account of the terms of legal advice given by a lawyer or of the terms of a decision of a national competition authority.

In the case of the competition authority, since it does not under EU law have the power to adopt a decision concluding that there is no infringement of EU law, it cannot cause companies to entertain a legitimate expectation that their conduct does not infringe competition rules. Moreover, in the present instance the national authority examined the companies’ conduct on the basis of national competition law only.

In the case of the legal advice, a person may not plead breach of the principle of the protection of legitimate expectations unless he has been given precise assurances by the competent authority (the ECJ referred to its finding in  AJD Tuna, and Agrargenossenschaft Neuzelle). It follows that legal advice given by a lawyer cannot, in any event, form the basis of a legitimate expectation on the part of an undertaking that its conduct does not infringe EU competition law or will not lead to a fine.

The judgment to me it would seem to have important implications: for legal advice is often sought by companies not just to enable them to adapt their behaviour, but also to buy themself an insurance policy.

Geert.

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