Cartel Damages Actions: European Court of Justice Rules on Application of Council Regulation

The European Court of Justice ruled on 23 October 2014 that actions for damages on the ground of breaches of EU competition law generally fall within the scope of application of Council Regulation (EC) No 44/2001. This means that court decisions in cartel damages actions can be recognised and enforced faster and easier in other EU Member States.

The European Court of Justice’s decision (C-302/13) is based on a request for a preliminary ruling by the Supreme Court of Latvia. The Latvian court has to decide in proceedings on the recognition and enforcement of a decision handed down by a Lithuanian court in which the Lithuanian court ordered provisional and preventive measures against Latvian businesses. The Lithuanian court had issued these measures in an action for damages filed by flyLAL-Lithuanian Airlines AS on the ground of the abuse of a dominant position by Air Baltic Corporation AS in the market for flights to and from Vilnius as well as on the ground of anti-competitive agreements between Air Baltic Corporation AS and the Riga airport operating company.

As for the application of Council Regulation No 44/2001 the European Court of Justice had to carefully define the legal nature of the Riga airport company’s acts, i.e. to decide whether the airport company had been acting under private law or was exercising public powers. The ECJ ultimately ruled that the airport company’s acts are to be qualified as private-law acts and thus affirmed the application of Council Regulation No 44/2001. In its decision the ECJ followed the conclusions of Advocate General Kokott, who emphasised essentially that the supply of airport services for consideration qualifies as an economic activity. The European Court of Justice held that it was irrelevant that rates of airport charges and their determination were subject to generally applicable statutory provisions of the Republic of Latvia, as such provisions exclusively concerned the relationships between the Republic of Latvia and the airport company, but not the legal relationships between the latter and airlines which benefit from its services. It said, this would need to be assessed differently only where airport operators were exercising public powers, e.g. offer services regarding control and surveillance of air space.

This decision provides more legal certainty. Thus, it is highly appreciated. The European Court of Justice has strengthened private cartel law enforcement in cross-border cases by establishing a clear basis for recognising and enforcing judgments in other EU Member States. The judgment is also of substantial significance for private-law acts of public-sector businesses in the field of EU competition law as well as for the aviation industry.