The competition law community is awaiting the preliminary ruling by the European Court of Justice (ECJ) in relation to questions posed by the Finnish Supreme Court in the follow-on damages proceedings brought in the Finnish asphalt cartel case by the City of Vantaa against Skanska Industrial Solutions Oy, NCC Industry Oy and Asfaltmix Oy (Case C-724/17). The case concerns the interesting question of which legal entities in a company group are responsible for the damages resulting from an infringement of Article 101 TFEU when corporate restructuring of the cartelists has taken place.

Finland’s highest administrative court ruled that a cartel existed on the asphalt market which also had the potential effect on trade between Member States. The City of Vantaa and the Finnish State claim damages sustained by paying excessive prices in relation to asphalt and initiated follow-on proceedings against the several members of the cartel after fines were imposed by the Finnish Competition authority. Claimants argue that the cartel caused damages notably in the construction and maintenance of roads.

Among the companies found to have participated in the cartel are Sata-Asfaltti Oy, Interasfaltti Oy and Asfalttineliö Oy. These companies were later liquidated and their sole shareholders, Skanska Industrial Solutions Oy, NCC Industry Oy and Asphalt Mix Oy, took over the capital of their subsidiaries and continued the business activities. The City of Vantaa claimed damages from these parent companies arguing, amongst others, that the latter are jointly and severally liable for the overcharges caused. The parent companies argue that they are not responsible for the damage caused by their formally independent subsidiary companies. The Finnish court has questioned whether this is correct and whether allowing this line of reasoning would conflict with the principle of effectiveness.

On 22 December 2017 the Finnish Supreme Court requested the ECJ for a preliminary ruling. Essentially, the Supreme Court seeks to ascertain whether it is a requirement under EU law that a company which is acquiring the total share capital of a company, liquidating that company, and continuing the business of the liquidated company can be held liable for the cartel damages caused by it in a way which would be akin to the principle of successor liability as applied under EU competition law. More precisely, the questions referred to the ECJ are:

  1. Is the determination of which parties are liable for the compensation of damage caused by conduct contrary to Article 101 TFEU to be done by applying that article directly or on the basis of national provisions?
  2. If the parties liable are determined directly on the basis of Article 101 TFEU, are those parties which fall within the concept of undertaking mentioned in that article liable for compensation? When determining the parties liable for compensation, are the same principles to be applied as the Court of Justice has applied to determining the parties liable in cases concerning penalty payments, in accordance with which liability may be founded in particular on belonging to the same economic unit or on economic continuity?
  3. If the parties liable are determined on the basis of national provisions of a Member State, are national rules under which a company which, after acquiring the entire share capital of a company which took part in a cartel contrary to Article 101 TFEU, has dissolved the company in question and continued its activity is not liable for compensation for the damage caused by the anti-competitive conduct of the company in question, even though obtaining compensation from the dissolved company is impossible in practice or unreasonably difficult, contrary to the EU law requirement of effectiveness? Does the requirement of effectiveness preclude an interpretation of a Member State’s domestic law making it a condition of compensation for damage that a transformation of the kind described has been implemented unlawfully or artificially in order to avoid liability for compensation for damage under competition law or otherwise fraudulently, or at least that the company knew or ought to have known of the competition infringement when implementing the transformation?

In the proceedings an oral hearing took place before the ECJ on 16 January 2019, where in addition to the parties in the Finnish case, the European Commission also took a position. The Commission argued that companies that acquired the assets of a cartel participant also acquired the liability for both fines and damages. There would be no compelling reason to treat the imputation of cartel conduct differently for fines than for damages. Otherwise, dissolving or restructuring of companies could lead to effectively avoiding liability.

Thus, the ECJ is faced with a preliminary reference by the Finnish Supreme Court and is expected to decide which companies can be held liable for damages resulting from the infringement of Art 101 TFEU, and whether and to what extent this interpretation could rely on Member State discretion, without impeding the effective application of EU law. Advocate General Wahl will issue his non-binding opinion to the ECJ on 6 February. Further developments will be the subject of another blog post.

By Annalies Outhuijse, Dominika Lysien, and Martin Seegers