On 19 November 2015, the Regional Court of Düsseldorf (the "Court") rejected a car insurer's claim for damages resulting from the European Commission's decision in the car glass cartel case. This judgment indicates that it remains difficult for indirect purchasers of products that formed the object of a cartel to prove that the damage resulting from the cartel has been passed on to their market.
In 2008, the Commission fined four car glass producers for participating in market-sharing, discussing target prices, and allocating customers, between 1998 and 2003 (see VBB on Competition Law, Volume 2008, No. 11, available at www.vbb.com). The total fine imposed on the producers amounted to over € 1.3 billion. According to both EU law and German law, such a Commission decision constitutes binding proof in national courts that the conduct in question has taken place, was anti-competitive and is therefore illegal.
In 2010, Huk-Coburg, a German insurance company, claimed damages of at least € 21.56 million (while leaving the exact determination of the amount to the discretion of the Court and claiming almost double that amount with interest included) for having paid excessive prices for the settlement of insurance claims related to car glass during the period of 1998 to 2006.
The Court accepted that the Commission decision finding a cartel constitutes prima facie evidence of higher prices in the market for car glass, and found that the car glass manufacturers had not put forward sufficient evidence to prove the contrary. Moreover, the Court noted that it is unlikely that the cartel participants would have continued their cooperation for such a lengthy duration if the cartel had not had the effect of lessening competition. Consequently, the Court acknowledged that damage had occurred with respect to the car glass manufacturers' direct customers, namely car manufacturers, who had paid higher prices as a result of the cartel.
However, the Court found that Huk-Coburg had not advanced sufficient elements proving that the damage had been passed on to the downstream market of car insurance (i.e., indirect customers). In the judgment, reference is made to the so-called ORWI case law of the German Federal Supreme Court, in which that Court found that there is no presumption that an increase in price during the cartel period, on a market level downstream of the cartel's direct customers, is attributable to that cartel. Rather, such a causal relationship must be materially established, in a concrete sense, by the indirect customers, which Huk-Coburg failed to do.
The principle established in the ORWI case is based on the assumption that the direct customers of the cartel participants would possibly have charged the same price to their customers, even in the absence of the cartel. The Court lists a number of relevant factors to take into account in this regard, including price elasticity of supply and demand; the duration of the cartel; and the intensity of competition on that market level. The Court deemed that the evidence adduced by Huk-Coburg did not show that the direct customers of the cartel members had determined their price on the basis of costs, rather than on value, target, or some other consideration.
The Court acknowledged the existence of certain market conditions suggesting that a passing-on of the higher price could have taken place, namely the inelasticity of demand by end users, the absence of alternatives, and the fact that all car manufacturers were equally affected by the cartel. However, the Court also referred to the particularity of this sector, in which car manufacturers (i.e., direct customers) have a monopoly with regard to the original spare parts market. Further, the Court considered, a monopolist sets its price based on profit maximisation, rather than on costs. This is illustrated by the fact that car manufacturers have a significant profit margin and are able to sell the car glass at 7 to 10 times more than their purchasing price. As a result, the Court concluded that car manufacturers were capable of absorbing the cartel surcharge into their own margins, and that a passing-on of this surcharge had therefore not necessarily taken place. The Court thus rejected Huk-Coburg's claim for damages.
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