On 14 March 2019, the Court of Justice of the European Union (“CJEU”) issued a preliminary ruling in Case C-724/17 Vantaan kaupunki v Skanska Industrial Solutions Oy and Others, holding that the principle of economic continuity applies in actions for damages resulting from infringements of Article 101 of the Treaty on the Functioning of the European Union (“TFEU”). The judgment followed a preliminary reference from the Supreme Court of Finland, submitted in the course of proceedings regarding an asphalt cartel in the Finnish market.

Background

Several Finnish companies, including Sata-Asfaltti Oy (“Sata-Asfaltti”) and Skanska Asfaltti (“Skanska”), participated in a cartel in the asphalt market lasting from 1994 until 2002.

During this time period, the Finnish asphalt market underwent significant changes. Amongst several other acquisitions and restructurings between the participants of the asphalt cartel, Skanska acquired Sata-Asfaltti in 2000. When Sata-Asfaltti was eventually dissolved following voluntary liquidation in 2002, its remaining business was fully transferred to its parent entity Skanska.

In 2009, the Supreme Administrative Court of Finland fined those companies that remained after the market consolidation (including Skanska) for their participation – as well as for the participation of the companies they had acquired – in the asphalt cartel. On the basis of this judgment, the City of Vantaa (“Vantaa”) sought compensation for harm incurred through increased prices from several of the companies with which it had contracted during the relevant time period. Amongst others, Vantaa sought compensation from Skanska, not only for its own participation in the cartel, but also for that of Sata-Asfaltti.

Vantaa’s claim was initially upheld in the district court. However, the Finnish Court of Appeal subsequently sided with Skanska, which disputed its liability for damages resulting from Sata-Asfaltti’s business. Skanska argued that it could not be held liable for infringements of legally independent companies and that claims for damages resulting from Sata-Asfaltti’s participation in the cartel should instead have been brought during the latter’s liquidation proceedings. Hence, Skanska argued that Sata-Asfaltti’s obligation had expired, since Vantaa had failed to claim damages during Sata-Asfaltti’s liquidation proceedings.

On subsequent appeal, the Finnish Supreme Court noted that, under Finnish civil law, liability usually pertains only to the legal entity that actually caused the damage in question. It therefore stayed the proceedings and submitted the following questions for a preliminary ruling to the CJEU:

  1. Does EU law or national law decide who is liable for damages resulting from infringements of Article 101 TFEU?
  2. If EU law decides who is liable, does the principle of economic continuity require that liability is determined based on the concept of an “undertaking”?
  3. If national law decides who is liable, are provisions excluding liability for damages on behalf of companies, which acquire a business that has participated in an infringement of Article 101 TFEU, contrary to the EU law requirement of effectiveness?

 Judgment

 Examining the first and second questions together, the Court held that it is for EU law to determine the entity that is liable for damages resulting from infringements of Article 101 TFEU. Furthermore, it held that the principle of economic continuity applies not only for fining purposes, but also with regard to follow-on actions for damages. The Court therefore confirmed that companies can be held liable for damages resulting from infringements of Article 101 TFEU by subsequently-acquired businesses, if they continue their economic activity.

The Court highlighted that the right to claim compensation for damages resulting from anticompetitive conduct ensures the full effectiveness of EU competition law. As such, the effective enforcement of EU competition law would be jeopardized if companies were permitted to escape liability from follow-on damages through alterations in their corporate structure. Hence, the concept of an “undertaking” should also apply in proceedings for the recovery of damages resulting from infringements of Article 101 TFEU.

Photo of Melissa Van Schoorisse Melissa Van Schoorisse

Melissa Van Schoorisse focuses on a wide range of complex antitrust issues, including multi-jurisdictional merger control filings, international and Belgian cartel investigations, state aid matters, and general behavioural advice, counselling and compliance work.

She specializes in the wider music, media, and entertainment sector …

Melissa Van Schoorisse focuses on a wide range of complex antitrust issues, including multi-jurisdictional merger control filings, international and Belgian cartel investigations, state aid matters, and general behavioural advice, counselling and compliance work.

She specializes in the wider music, media, and entertainment sector as well as the transport, metals and mining, and the power generation and energy industry. In that context she has advised international and Belgian clients on the potential antitrust issues surrounding renewable or alternative energy sources, the consolidation of the Belgian energy sector, and the value of consumer data sets in merger control cases.

Melissa is well-regarded in the market, with clients praising her for being “very responsive, diligent”, “hands on” and giving “clear guidance.” “She is really good and knows the ins and outs of the BCA. She sees the big picture and the detail.” (Chambers Europe)

Prior to joining Covington, Melissa has gained extensive experience as an associate at two international law firms in Brussels, and as a secondee to the in-house competition team of a multinational oil and gas company in London, dealing with a wide array of vertical issues, cartel investigations, M&A transactions, and compliance training.

Read more about Melissa Van Schoorisse
Show more Show less