Elevator firms from Kone Oyj (KNEBV) to Schindler Holding AG (SCHP) that were fined for conspiring to fix prices risk higher compensation claims after the European Union’s top court said cartels are liable when their illegal plotting leads to higher bills for customers across an industry.
When cartels spark a general increase in the market price charged by innocent firms, victims of the price-hike should be able to claim compensation from those that did conspire, the EU Court of Justice in Luxembourg said today in a ruling.
“It’s certainly another step toward making life easier for potential claimants and victims of cartels,” Chris Bryant, a lawyer at Berwin Leighton Paisner LLP, said by phone. “It’s always tough to bring claims, it’s going to remain tough but it’s getting easier. With judgments like this it shifts the balance of power toward claimants.”
While today’s ruling relates to a damages claim in Austria concerning an EU-wide elevator and escalator cartel, the decision paves the way for compensation requests against other cartels. The move comes on top of a plan endorsed by EU lawmakers in April to make it easier for antitrust victims to sue for damages.
OeBB Infrastruktur AG, an Austrian railways unit, is seeking compensation for a cartel on the country’s market for elevators and escalators from companies also including United Technologies Corp. (UTX)’s Otis.
Kone, based in Espoo, Finland, said it “considers the claim to be without merit.” The other elevator firms didn’t immediately respond to e-mails seeking comment on the ruling.
Kone shares declined as much as 1.8 percent in Helsinki trading and were down 0.2 percent at 4:10 p.m. local time.
The “vast majority” of damages claims end up being settled, Bryant said. “What this really does is put another weapon in the arsenal of the claimants when it comes to those negotiations for settlement. It’s something else that cartelists will have to get their calculators out to factor in.”
The ruling, while adding to the armory of customers, may be hard to apply in practice, said Stephen Kinsella, a lawyer at Sidley Austin LLP in Brussels.
“While stating the principle is easy, it is clear that in individual cases a customer is going to face a high evidential burden to show that the prices it paid to non-cartel members had been inflated,” he said.
The European Commission in 2007 fined five companies 992.3 million euros ($1.4 billion) for fixing prices in Belgium, Germany, Luxembourg and the Netherlands between at least 1995 and 2004. They rigged contract bids, allocated projects to each other and shared confidential information, the EU said.
ThyssenKrupp AG in 2011 won a court decision that cut a 479.7 million-euro fine, the biggest in the cartel. The company declined to comment on today’s ruling.
Schindler lost a bid to cut or quash its 143.7 million-euro penalty. Otis also lost an appeal to have its 224.9 million-euro fine overturned.
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