The international nature of cartels means that claimants have often suffered loss in different countries and have a number of legal bases on which to bring their claims.
Claimants will inevitably want to maximise the damages that they can recover and try to bring as many claims as possible. Whether the damages are limited to those incurred in the country of the proceedings, or extend to the whole EU, or indeed worldwide, will depend on where the claim is brought and the types of claims relied upon.
Bringing a claim under EU law
When bringing claims in the courts of EU member states, cartel victims can rely on breaches of EU competition law in order to recover damages that were suffered in the EU. For instance, if the cartelised products are sold within the EU or into the EU then the losses in respect of those supplies can be recovered as being caused by such a breach. However, the claims based on infringements of EU competition law will not cover losses resulting from sales into markets outside the EU. If the cartelised products are sold into markets outside of the EU then it is unlikely that there will be any breach of EU competition law.
Bringing a tort claim under national laws
Faced with the limitation on pursuing claims for breach of EU competition law, it may be possible to recover worldwide losses by bringing a claim under national tort laws on the basis that the cartelists have unlawfully injured the claimant. Under English law, two torts are particularly relevant: ‘interference with business by unlawful means’ and ‘conspiracy to injure by the use of unlawful means’ (these are known as ‘economic torts’).
When considering the possibility of a tort claim, the first question is which governing law applies. This issue is currently determined by the provisions of the Rome II Regulation, but for events arising prior to January 2009, provisions of national private international law will apply.
Having determined the applicable law, the claimant must then determine the separate question of where the claims can be brought. For example, there is nothing impermissible about bringing a claim in a German court relying on principles of English tort law.
Bringing a claim for breach of foreign competition law
In addition to the potential claims for breach of statutory duty (EU law claims) and under tort, claimants may also be able to bring claims in the courts of EU member states for breaches of foreign (non-EU) competition laws. For instance, if the cartel victim suffered loss in an Asian country then it could seek to bring its claim in England under that foreign law to recover those losses.
To bring a claim based on a breach of foreign law, a claimant would have to show that (i) the foreign law applies (applying the Rome II Regulation, or other national law provisions); (ii) the relevant national court has jurisdiction (applying the Brussels Regulation); and (iii) the claims fall within the scope of the relevant foreign law.
English law economic torts: availability of worldwide damages
If a claimant is relying on the English law economic torts to recover worldwide damages, the ‘unlawful means conspiracy’ is likely to be the most effective and flexible of the torts for a claimant to rely upon. The elements that a claimant has to show in order to bring such a claim include the following:
(a) an agreement between two or more people (this should be evident in any cartel);
(b) unlawful means (in cartel claims there could be a number of unlawful means, including breaches of EU competition law, breach of foreign competition laws and deceit);
(c) knowledge (by the cartelists) of the facts which made the conduct unlawful – although the cartelist does not need to know that the transaction itself was unlawful;
(d) an intention (by the cartelists) to injure the victim by the use of the unlawful means; and
(e) loss suffered by the victim
The intention to injure
The intention of the cartelists to injure the victim is likely to be the most difficult element of this English tort for a claimant to prove, particularly where the cartel forms part of a complicated international supply chain.
For a direct purchaser to pursue an economic tort claim it will have to show that the cartelist knew that they would be the link in the supply chain that would bear the loss and that they would not simply pass it all on further down the line. If there is a clear identifiable class of claimant that the cartelist intended to injure then this could be sufficient. Claimants in cartel claims are well used to addressing passing-on issues in determining the amount of damages, but less so when establishing the wrongdoing.
Plainly, claims by indirect purchasers, being at least one step removed from the cartelist, will be more difficult to establish, although not impossible. For such a claim to succeed, the indirect purchaser would have to show that the cartelist knew and intended that the direct purchaser would pass on the increased costs to the indirect purchaser, and also explain the effect of the downstream pass-on issues.
Where there has been bid-rigging by suppliers in relation to specific purchasers, it will be more straightforward to show an intention to injure.
Whilst cartels are shrouded in secrecy, with limited information being available when legal proceedings are contemplated, claimants will have to explain in their claim documents the basis for this intention to injure.
The use of economic torts in bringing cartel damages claims is an emerging area of law and has not been fully tested yet by the English courts. Anyone involved in claims relating to international cartels should be aware of them but also wary about their application. To add to the complexity, it is possible that important issues of English law will have to be determined in proceedings brought in other EU member states, adding further uncertainty.
Whilst this article has focussed on English law torts, tort claims relating to conspiracies can also be brought under the statutory tort provisions in a number of civil codes of EU member states. Whether these provisions will enable claimants to bring effective tort claims relating to international cartels is a question for another article.