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Cartels & Claims!

Published on Sat, Nov 08,2014 | 10:18, Updated at Mon, Nov 10 at 18:16Source : CNBC-TV18 |   Watch Video :

Dow Chemical, Shell, Bayer, MasterCard, British Airways…and many other companies found guilty of cartelization are in more trouble now. Because those companies that were hurt by the cartelization are now seeking damages via private action claims. London is currently a hotbed of these cartel claims – can Indian companies look for a share of the pie too? Payaswini Upadhyay gets you the answers.

In 2009, Libya based oil producer- Waha Oil- sued UK headquartered Dunlop Oil & Marine for damages. Dunlop, along with 5 global companies, was found guilty of inflating prices of marine hoses by the European Commission. 2 months ago, Dunlop agreed to settle the claim.

In 2006, the European Commission found 13 companies guilty of fixing prices of rubber products. None of the 13 companies were based in the UK. A year later, 26 tyre manufacturers from US, France, Italy and Germany brought a damages claim in London not only against the cartelists but also their subsidiaries located in London. After a prolonged jurisdiction battle, the rubber companies agreed to settle recently with just 2 weeks into trial.

Currently, courts in the UK are entertaining 12 such private action claims including those against cartelists in the air cargo, interchange fees, copper tubes and vitamins sector.

Marc Reysen Partner, Rechtsanwalt
“These claims take time to actually make their way through the courts and that’s one of the reasons why we haven’t actually seen any final judgments awarding damages to foreign entities so far. But in principle, it should be possible to bring these actions here in the EU and perhaps England, the Netherlands and as a distant third, Germany have actually positioned themselves as jurisdictions which make it attractive- for a number of reasons- to bring claims there.”

Anthony Maton
Partner, Hausfeld
“We are acting in a case involving a number of global airlines who were involved in a cartel that fixed the price of fuel surcharges between 2000-2006. British Airways was very involved in that cartel and the European Commission has found that. We have come to London and we have sued British Airways in London on behalf of companies all around the world – from Asia, from South America, from Europe and North America and because of the way the rules work, we are entitled to bring all our claims against British Airways in London.”

The principle that Anthony referred to emanates from a 2001 judgment by the European Court of Justice. The Court held that any individual or business who has suffered damages by a breach of European Competition Law has a right to compensation. And here, only a casual link needs to be established between that damage and violation of Article 101 and 102 of the Treaty that prohibit anti-competitive agreements. The rule applies not only to direct purchasers but also to indirect purchasers who may have suffered harm as a result of increased prices.

Marc Reysen Partner, Rechtsanwalt
“The basic question is- who participated in the cartel? If you can identify this entity, then brining a claim against this entity should be a fairly straightforward matter. Cartels, by their very nature, have more than one participant. So given the fact that members of a cartel are jointly and severally liable for the damage they have caused, you may have a choice of venue if those members are domiciled in different jurisdictions. So that’s basically your first test. In England, the text has been expanded and any group companies that belong to the participants in the cartel may be captured as well.”

Anthony Maton
Partner, Hausfeld
“To date, almost all the claims have been what we call follow-on actions. You get a regulatory decision- normally made by the European Commission or sometimes made by a National Regulator in Europe. People use that regulatory decision in order to bring a follow-on action in a jurisdiction where they know there has been illegal competitive behavior and where a regulator has investigated that and made a decision. So people use that to claim compensation as a result of that infringement.”

But so far, India hasn’t joined the battle of private action claims playing out in Europe. And given the infancy of our Competition Act, no private action claims have even been initiated.

The Indian Competition Act allows parties to bring a claim for compensation before the Competition Appellate Tribunal. The compensation claim can be based on either the infringement order of the Tribunal or findings of the CCI.

Paku Khan
Partner, Khaitan & Co.
“Yes; there is heavy activity there because it is being pushed heavily by the European Commission on private right of action. Private rights of action are another form of deterrence. In the United States, you’ll have criminal sanctions, damages and follow on actions. In Europe, at the EU level, you have fines and in India too, there are fines. These are various measure of deterring the cartel activity and also just because in India, the CCI fines, it does not mean that’s the end of discussion. It then opens the offending party to a damages claim. And so it’s very important not to isolate just the UK or the EU. It’s big there because the European Commission is pushing it.”

Anthony Maton
Partner, Hausfeld
“Groups in different industries who have suffered as a result of cartelization have brought claims. But the critical thing is that these are not groups that are limited to the UK and in some case, groups are not even from Europe. In Air Cargo and Marine Hose, we have acted for businesses all across the globe in respect of bringing these type of claims. To date, we haven’t acted for businesses in India but its absolutely the case that businesses in India could bring claims in relation to Air Cargo in the same way businesses in Asia are and in the same businesses in South America in Marine Hose case.  The cartelization in its infringement is global in its extent. So if you’re an Indian company that put goods on to airplanes out of India into Europe between 200-2006, you would have overpaid in respect of fuel surcharges on air freight. You will have a claim and you will have the ability to bring it in London if that’s what you choose to do.”

Going forward, bringing a private action claim in Europe will get easier even further. The European Commission will soon issue a directive that will enable compensation claims by direct and indirect victims of EU competition law violations. The directive will give victims easier access to evidence and documents with third parties that are necessary to prove a claim, victims will have at least 5 years to bring damages claims and each participant of the competition law violation would be responsible for the whole harm caused by the group. Back home, though the law allows cartel victims in India to bring compensation claims against foreign cartels based on a CCI order, it will be some time before we see any activity on that front. For now clearly the West looks like a more bankable option for Indian companies to pursue private action claims.

In Mumbai, Payaswini Upadhyay


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