• Professional News
  • 10 February 2014

Cartel members may be liable for umbrella pricing

It will be contrary to the European Antitrust law to categorically exclude any civil liability of a party to a cartel in the case of umbrella pricing. This has been proposed by Advocate General Kokott in a new opinion.

It will be contrary to the European Antitrust law to categorically exclude any civil liability of a party to a cartel if it can be proved that the person not party to the cartel sets his prices higher than what would otherwise have been expected under competitive conditions. This has just been proposed by Advocate General Kokott in case C-557/12, involving an ’elevator cartel’ in Austria.

Umbrella pricing exists when undertakings that are not themselves party to a cartel benefit from the protection of the cartel’s practices – operating 'under the cartel’s umbrella', so to speak – and knowingly or unknowingly set their own prices higher than they would otherwise have been able to under competitive conditions.

Causality and foreseeability
In her proposal, Advocate General Kokott establishes that the requirements for taking action for damages can be fulfilled if it can be proved that a person not party to the cartel charges inflated prices.

Kokott points out that the sufficiently direct causal link will be present if the cartel did at least contribute to the cause of the umbrella pricing.

It is Kokott's opinion that any loss is foreseeable if the cartel members ought reasonably to take it into consideration on the basis of their practical experience. In such a case it will be foreseeable by and even likely to any cartel member that a person not party to the cartel will set his prices according to the cartel members’ market behavior. This will especially be the case if the cartel members cover a significant proportion of the relevant market.

Therefore, according to Advocate General Kokott, it would be contrary to European Antitrust law to categorically exclude a cartel member’s civil liability resulting from umbrella pricing. In such a case it will always be necessary to carry out a comprehensive assessment of all the relevant circumstances in order to determine whether the cartel in the case in question has given rise to umbrella pricing.

The opinion delivered by the Advocate General is non-binding for the parties of the case and the EU Court of Justice. Until the Courts final decision in the case it is not possible to finally conclude if it will be contrary to the European Antitrust law for a Member State to categorically exclude any civil liability of a party to a cartel for consequential effects of umbrella pricing.

Read the opinion of Advocate General Kokott in case C-557/12

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