The Supreme Court states that the existence of lingering effect resulting from a cartel is possible, but the plaintiff must prove it

The Supreme Court has handed down a judgment, dated 22 July 2024, in which it rules on the extraordinary appeals for procedural infringement and cassation lodged in a claim for damages arising from the conduct sanctioned by the European Commission (EC) Decision of 19 July 2016, in the context of File AT.39824-Trucks, known as the truck cartel.

In addition to confirming the jurisprudential doctrine contained in the Supreme Court's previous judgments in relation to the truck cartel (the analysis of which we have already set out in our publications of 27 June 2023 and 3 April 2024), in this new judgment it rules for the first time on the possible existence of effects on the market of collusive conduct after the date on which such conduct ceased.

Background

The origin of this case lies in the EC Decision of 19 July 2016, by which the EC sanctioned five truck manufacturing companies and ten subsidiary companies of some of them for participation in a series of facts constituting collusive practices in breach of Article 101 of the Treaty on the Functioning of the European Union (TFEU).

The operative part of the Decision provided that such anti-competitive conduct took place between 17 January 1997 and 18 January 2011.

On the basis of that EC decision, the claimant company brought an action against one of the manufacturers sanctioned by the EC decision, claiming damages which it claimed to have suffered in the form of overcharging for the purchase of 44 trucks. Of these, two of the trucks had been purchased by the applicant on a date (4 February 2011) when the collusive conduct had already ceased (a couple of weeks earlier, on 18 January 2011).

The first instance judgment dismissed the claim on the grounds that the action was time-barred. Subsequently, the Zaragoza Provincial Court partially upheld the appeal lodged by the plaintiff and the claim, although –in what is relevant here– it dismissed the claim for the overcharge claimed for those two specific trucks acquired in the post-collusion period, on the grounds that there was no evidence in the case file to prove that those vehicles were acquired by the plaintiff with an overcharge caused by the cartel (which, as we have said, according to the EC Decision, had ceased two weeks before the acquisition of those two specific trucks).

The claimant company raised an appeal against that specific ruling (among others), arguing that the judgment of the Zaragoza Provincial Court infringed Article 101 TFEU and the case-law of the CJEU interpreting it (judgments of 14 January 2021 (Kilpailu- ja kuluttajavirasto, Case C-450/19), of 12 December 2019 (Otis and Others, C-435/18) and of 20 September 2001 (Courage and Crehan, C453/99)], since, according to the applicant, 'the effects caused by a cartel do not automatically disappear after the cartel has come to an end, but continue for some time afterwards, and there is no need for specific evidence in this respect, since the damage caused by the truck cartel must be presumed, as confirmed by the judgment of the German Supreme Court of 23 September 2020 (KZR 35/19)'.

Lingering effect

The lingering effect is the term by which doctrine and jurisprudence have been referring to the potential effect that may continue to occur in the market after the cessation of anti-competitive conduct

In this respect, the EC in its Practical Guide for the quantification of damages claims for breach of Articles 101 or 102 TFEU states that, while the lingering effect of a given collusive conduct is theoretically possible, it is equally possible that, in a post-conduct period, the reaction of an undertaking that participated in collusive conduct is to lower prices until a normal or equilibrium market is reached (vi. para. 44 of the EC Practical Guide).

However, the pronouncements of the courts of EU Member States on the existence of a lingering effect arising from collusive conduct (and in which cases, and under which premises, it can be assessed) were, to date, very limited. Among others, and by way of example:

1. In its judgment of 11 June 2010 (Case No 6 U 118/05), the Regional Court of Karlsruhe (Germany) held that there had been overcharging in the purchase of a good five months after the cessation of the infringement. The EC's own Practical Guide points to this example to support the possible existence of a post-collusive delay effect (footnote 39).
2. Also in relation to the truck cartel, a judgment of the Landgericht Hannover of 18 December 2017 concluded, in relation to a claim by the municipality of Göttingen for damages caused by the purchase of thirteen refuse and fire trucks, that it was not possible to assess the existence of truck cartel effects in relation to those trucks purchased in a period after the defendant's participation in the collusive conduct.
3. At the national level, too, within the litigation arising from the trucking cartel:
   1. The judgment of the Provincial Court of Appeal of Murcia, dated 25 March 2021, ruled that the theoretical possibility of a lingering effect "does not exempt from its proof and, therefore, it must be demonstrated that the effects of the cartel extended beyond the period of time considered by the Decision as the period of infringement".

   2. And, similarly, the judgment of the Provincial Court of Appeal of Pontevedra, dated 14 January 2022, concluded in the following terms in relation to the possible existence of both a lingering effect and an umbrella effect arising from a cartel:

      "(20) We can agree - and this is pointed out in the scientific literature and is also made explicit in the Practical Guide - that the effects of the cartel do not disappear on the day of its termination, and that prices may have remained inflated at times subsequent to the infringement. This is likely to be the case, given the duration of the cartel, at least in the periods close to the end of the conduct considered by the Commission. But this effect, as with the possibility of assessing the umbrella effect in respect of other competitors, or in respect of other types of goods, e.g. light trucks, required both its express request in the complaint, and a detailed justification during the evidence phase".

4. Or, in the same sense as the latter two, in the context of the vehicle manufacturers' cartel litigation, the Judgment of the Provincial Court of Appeal of Madrid (Section 32), dated 21 November 2023, -in that case, in relation to a single and continuous infringement composed of a plurality of conducts, where the property potentially affected by the sanctioned conducts had been acquired after the cessation of the defendant's participation in the specific conduct that could potentially influence the purchase price of the vehicle-, also concluding that the lingering effect could not be presumed in the absence of proof.

This was therefore the context in which the appeal under analysis was submitted to the Spanish Supreme Court for consideration, and the possible existence of post-collusive effects in the acquisition of two trucks in February 2017.

The Supreme Court's pronouncement on the lingering effect

As we have advanced, the Supreme Court confirms the decision of the Provincial Court of Zaragoza on this point, with the following reasoning:

1. First, the Supreme Court states that, contrary to the appellant's contention, the case-law of the CJEU (Kilpailu- ja kuluttajavirasto Case, C-450/19) does not hold that the harmful effects caused by any cartel continue beyond the duration of the conduct; but that "in a case of collusive practices which have ceased to be in force, it is sufficient, in order for Article 101 TFEU to apply, that they continue to produce effects beyond the formal termination of the collusive contacts".
2. Consequently, the Supreme Court understands that the fact that the CJEU has declared that it is appropriate to compensate the damage caused by collusive conduct when its effects extend beyond the termination of the conduct, it does not mean that it must be presumed that all collusive conduct continue to produce effects on dates subsequent to that in which the sanctioning decision fixes the date of termination.
3. Therefore, the Supreme Court understands that the judgment of the Zaragoza Provincial Court does not infringe Art. 101 TFEU and the case-law interpreting it, since it does not deny the possibility of the existence of a price premium in a period subsequent to the termination of the conduct, but concluded that there was no evidence that the lorries purchased after 18 January 2011 were purchased at a cost overrun caused by the cartel.
4. Following this, the Supreme Court clearly established its position in relation to the existence and possibility of upholding a claim predicated on the existence of a post-collusive effect, stating the following: "the claim for compensation in respect of the trucks acquired outside the period during which the collusive conduct sanctioned in the European Commission's Decision on which the claim is based was developed required that the claim made an argument and that there was specific evidence as to when and to what extent the effects of the cartel on prices were prolonged after 18 January 2011 (or, at least, that they had been prolonged up to the date on which the lorries were acquired)". However, it found that this was not the case here, "where the treatment of the trucks in the plaintiff's complaint was no different from the treatment of the trucks purchased prior to that date during the period of the cartel".
5. Finally, the court adds that the justification of the existence of a delay effect -we understand, due to elementary rules of preclusion- cannot be attempted extemporaneously, by making allegations and providing documentation after the procedural moment in which the evidence should have been provided has expired.

Conclusion

The Supreme Court thus confirms the doctrine that had been established in recent years by the provincial courts of appeal in the context of the litigation of the truck cartel and the vehicle manufacturers' cartel, and in a novel ruling (to our knowledge, the first by a Supreme Court at European level), recognizes the theoretical possibility, ex Article 101 of the TFEU, of accepting a claim in relation to the acquisition of goods potentially affected by the effects of collusive conduct even if the acquisition took place after the cessation of the infringing conduct even if the acquisition took place after the cessation of the infringing conduct, but clearly establishes that, in such a case (and unlike what may happen for acquisitions during the collusive period), the damage in the form of overprice cannot be presumed and must be subject to argumentation (formulation of a theory of damage) and specific proof by the plaintiff.