TenneT vs ABB: The case and discussion about the passing-on defence continues

The discussion on the admissibility of the passing-on defence in the dispute between TenneT and ABB continued with the judgment of the Court of Appeal Arnhem-Leeuwarden (Gelderland) of 29 May 2018 (ECLI:NL:GHARL:2018:4876). The procedure concerns a follow-on damages action of the Dutch state-owned grid operator TenneT against ABB – and in a different procedure against Alstom – in the worldwide gas-insulated switchgear cartel which caused TenneT to suffer damages. Both cartel participants invoked the passing-on defence in the individual proceedings. A cartelist can rely on this defence under certain conditions, provided the cartelist can demonstrate that the direct purchaser has passed on the overcharge to its customers. To the extent the reliance on the passing-on defence is successful, the purchaser is not entitled to compensation (excluding damages relating to lost profits due to quantity effects) because the overcharge is considered to have been suffered on the downstream level of indirect purchasers.

After several judgments of different courts in these TenneT-procedures with regard to the admissibility of the passing-on defence, amongst others by the Netherlands Supreme Court which confirmed the general availability of the passing-on defence (either as a factor affecting the calculation of the damages or under the doctrine of voordeelstoerekening, i.e. the principles on the setting-off under certain conditions of benefits enjoyed by the claimant). The Gelderland District Court ruled in 2017 that the passing-on defence in this case failed, because the end-users would most probably not start a successful procedure themselves, which made it unreasonable, according to the court, to deduct the amount passed on to the consumers from the compensation claimed by TenneT. In addition, the end-users will also benefit from the compensation through TenneT since it is state property. The court ordered ABB to pay damages to TenneT of €23.1 million to be increased by the statutory interest.

ABB filed a (further) appeal to the Court of Appeal and argued that the District Court Gelderland incorrectly calculated the overcharge and incorrectly rejected the passing-on defence invoked. Although the result should be awaited, since the Court of Appeal did not rule on the merits of the case, the interim judgment of the Court of Appeal of 29 May can be seen as success for ABB. In the first place, the Court of Appeal confirmed the Supreme Court’s judgment with regard to the basis of the passing-on defence and the applicability thereof in the case at hand. Moreover, the Court of Appeal appointed three independent economic experts to provide their views on the calculation and total amount of the overcharge sustained by TenneT and whether and to what extent the overcharge has potentially been passed-on. While it is usual for the court to appoint one economic expert, the court decided to appoint additional experts because TenneT stated that the expert should have an economic background while ABB stated the expert should have an accounting background. Recognising the complexity of the case and its financial importance, the court decided to appoint three experts, one with an economic background, one with an accounting background and a third one to avoid a deadlock. Further developments will be subject of a subsequent blog post.

by Annalies Outhuijse and Jaap Waverijn

 

2018-10-24T13:03:43+00:00October 24th, 2018|