Brussels Court of Appeal Dismisses European Commission's Follow-on Damages Action in Elevator and Escalator Cartel Case

• 07/01/2025
• News

The European Commission (the Commission) has suffered a new defeat in its protracted effort to obtain damages for the harm which it and other European institutions supposedly suffered as customers of products and services in relation to elevators and escalators installed on their premises. The Brussels Court of Appeal (the CA) dismissed its action on 18 November 2024 (see, attached judgment). 
 
Background
 
In 2007, the Commission fined Kone, Otis, Schindler, and ThyssenKrupp (the elevator suppliers) for anticompetitive practices involving elevators and escalators (cartel infringements) in several countries, including Belgium, where the cartel infringements took the form of market sharing, bid-rigging, and the exchange of business sensitive information in relation to the supply of elevators and escalators as well as associated servicing and maintenance contracts. The cartel infringements occurred between 1996 and 2004 (the Commission Decision of 21 February 2007).
 
In 2008, several European institutions, represented by the Commission, brought an action for damages to seek compensation for harm allegedly incurred in connection with a series of servicing and maintenance contracts before what was then the Brussels commercial court.
 
On 6 November 2012, in response to a reference for a preliminary ruling from the Brussels commercial court, the Court of Justice of the European Union held that the Commission was entitled to bring an action for damages as a private entity, provided that it would not use for that purpose the confidential information which it had obtained during the public enforcement effort against the cartel.
 
On 24 November 2014, the Brussels commercial court ruled in favour of the elevator suppliers, dismissing the action brought by the Commission. It found that the Commission had failed to prove the alleged fault, as well as any concrete damages and loss of opportunity.
 
In 2015, the Commission appealed the ruling of the Brussels commercial court to the CA, again seeking damages. The Commission argued that the cartel infringements established by the Commission Decision of 21 February 2007 constituted fraud and asserted that the EU institutions would not have contracted, or at least would have done so under more favourable terms, had there been no cartel infringements. It also maintained that the cartel infringements constituted a fault pursuant to Articles 1382 and 1383 of the old Belgian Civil Code which resulted in the alleged harm.
 
As noted, on 18 November 2024, the CA delivered its judgment in which it dismissed the action of the Commission and ruled in favour of the elevator suppliers.
 
CA Judgment
 
The CA judgment contains the following noteworthy points: 
•    The CA considered that the burden of proof lies with the party seeking compensation, i.e., the Commission. The CA required the Commission to demonstrate that it suffered harm causally related to the fault of the elevator suppliers, in accordance with Articles 1382 and 1383 of the old Belgian Civil Code. The CA added that this burden could not be shifted to the elevator suppliers (pp. 21, § 4.2.3.1). Additionally, the CA declined to appoint an expert to investigate fault or harm, emphasising that an inquiry by a court-appointed expert could not substitute for the Commission's obligation to provide evidence (pp. 44–45, § 4.2.8). 
•    The CA observed that even though the Commission Decision of 21 February 2007 had established infringements of competition law that are tantamount to a fault within the meaning of Articles 1382 and 1383 of the old Belgian Civil Code, these did not necessarily constitute a fault that harmed specific economic operators. The CA went on to state that the Commission had to adduce concrete evidence that, for each of the 20 servicing and maintenance agreements in question (the relevant agreements), the respondents had deceived the EU institutions or had otherwise engaged in pre-contractual misconduct under the umbrella of the cartel (p.32, § 4.2.5.3). According to the CA, the fact that the cartel infringements had an impact on the market does not mean that they also influenced the specific agreements or projects at issue (p.33, §4.2.5.4).  
•    The Commission relied on a unilateral expert report to prove that the cartel had had a genuine impact on the relevant agreements. The report supposedly showed that the EU institutions had to pay significant surcharges for the servicing and maintenance contracts and presumed that these higher prices had been caused by the cartel infringements. However, the CA held that the figures submitted by the expert did not in themselves prove a concrete link between the general fault (i.e., the cartel) and any specific damage. Other potential causes for possible harm, such as cost structure changes or technological advancements, had not been accounted for. Consequently, the CA considered that the expert report was unable to substantiate the claim (pp. 34–36, § 4.2.5.6). 
•    As to proof of the damage and the causal link, the CA considered that cartel participants may act with the intention of gaining an advantage but that this does not mean that they were able to achieve such a benefit, and certainly not that this happened at the expense of specific economic operators. The CA noted that the public enforcement of the competition rules against cartels must be distinguished from a private law action for damages. For assessing the infringement in public enforcement and determining fines, criteria such as the duration, size and nature of the cartel can be decisive. By contrast, private actions require proof of concrete harm to the claimant in the market in which the cartel operated. According to the CA, serious and long-term cartel behaviour is indicative of market distortion but does not amount to proof of concrete harm to a specific economic operator (pp. 37-38, § 4.2.5.7).    
o    The fact that the elevator suppliers together had a significant market share on the relevant market and that this combined market share remained stable during the infringement period does not allow for any consequences to be drawn about pricing on the market, let alone prices of individual contracts with the EU Institutions. The CA differentiated price cartels (which directly affect prices) and market-sharing cartels, noting that the latter may not have a direct impact on price formation. In other words, according to the CA, it is possible for the market-sharing cartel to confer benefits on the cartel members, without those benefits entailing any disadvantage for the customers (p. 40, § 4.2.5.7). It added that even the theoretical consideration that a cartel is likely to have an adverse effect on prices cannot lead to a reversal of the burden of proof: it was not for the elevator suppliers to prove that the cartel caused no effect on the prices of the relevant agreements (p. 37, § 4.2.5.7). 
o    In the same vein, the CA did not see a possibility to presume the existence of a causal link. The CA held that public claims may presume that the exchange of sensitive data affected the market, but this does not equate to harm to individual customers (p. 40, § 4.2.5.7).

Assessment
 
The CA judgment, which is still subject to a possible appeal to the Supreme Court, establishes stringent evidentiary requirements for a party claiming damages as compensation for harm resulting from a competition law infringement. Directive 2014/104 governing actions for damages for infringements of competition law (the Directive) did not apply to this action for damages which had been brought long before the Directive was implemented in Belgian law.
 
Still, it is not clear whether the Commission would have been helped by the rebuttable presumption provided for by Article 17 (2) of the Directive (which provides that cartel infringements cause harm) or by the requirement imposed on Member States by Article 17 (1) of the Directive that they should not apply a burden or standard of proof that “renders the exercise of the right to damages practically impossible or excessively difficult”. Ironically, even the Commission, which should not suffer from the information asymmetry which the Directive sought to combat (recitals 15 and 47 of the Directive), was unable to overcome the CA’s high bar