Jurisdiction in Matters Relating to Anti-competitive Practices – The CJEU in Volvo and Others

The authors of this post are Lena Hornkohl, LL.M. (College of Europe), Senior Research Fellow Max Planck Institute Luxembourg for Procedural Law, and Priyanka Jain, LL.M. (Coventry University), Research Fellow Max Planck Institute Luxembourg for Procedural Law.

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On 15 July 2021, the Court of Justice of the European Union (CJEU) issued an important judgment regarding the interpretation of Article 7(2) of the Brussels I bis Regulation in the context of the Trucks cartel with huge implications beyond the competition law context.

Essentially, the CJEU held that Article 7(2) of the Regulation concerns both international and territorial jurisdiction. However, Member States are free to centralise the handling of particular types of disputes, such as disputes relating to anti-competitive practices, to a single specialised court. Outside of such specialisation, Article 7(2) confers international and territorial jurisdiction on the court within whose jurisdiction the harmed undertaking purchased the goods affected by those arrangements or, in the case of purchases made by that undertaking in several places, the court within whose jurisdiction the harmed undertaking’s registered office is situated.

Background

In 2016, the European Commission had fined several truck manufacturers for cartel infringements conducted between 17 January 1997 and 18 January 2011 in proceedings under Article 101 TFEU and Article 53 of the EEA Agreement. Between 2004 and 2009, RH, established in Cordoba (Spain), purchased five trucks from a Spanish subsidiary of the cartelists with registered offices in Madrid (Spain). Subsequently, RH brought an action for cartel damages against the parent companies (with domicile outside of Spain) and the Spanish subsidiary before the Juzgado de lo Mercantil no 2 de Madrid (Commercial Court No 2, Madrid, Spain).

The Spanish court was uncertain as to how Article 7(2) of the Brussels I bis Regulation is interpreted, mainly whether it concerns international and territorial jurisdiction. In its judgment, the CJEU now largely follows the opinion of Advocate General Jean Richard De La Tour of 22 April 2021.

Private Enforcement of EU Competition Law and Article 7(2) of the Brussels I bis Regulation

Article 7(2) of the Brussels I bis Regulation confers jurisdiction on the courts for the ‘place where the harmful event has occurred’. Particularly in the context of cross-border infringements of Article 101 TFEU, the place where the damage occurred has been a constant source for preliminary references.

To recap where we stand today: In CDC Hydrogen Peroxide (C-352/13), the CJEU established that in cartel damages actions brought against defendants domiciled in the various Member States and who participated in the cartel infringement at different times in different places, the harmful event occurred in relation to each alleged victim on an individual basis. This can entail the place where the claimant company has its registered office. In Tibor-Trans (C‑451/18), the CJEU transferred the established dual concept for Article 7(2) Brussels Ibis Regulation to private enforcement of competition law: the place where the harmful event has occurred is intended to cover both the place where the damage occurred and the place of the event giving rise to it. It means that the defendant may be sued, at the applicant’s option, in the courts for either of those places.

The CJEU already held in Tibor-Trans that if it is apparent from the decision at issue that the infringement established in Article 101 TFEU giving rise to the alleged damage covered the entire EEA market, the place where that damage occurred, is in that market, of which the individual Member States form part. In the present judgment, Volvo and Others, the CJEU underlines this once more for Spain in particular (para. 31).

Article 7(2) of the Brussels I bis Regulation Confers International and Territorial Jurisdiction

The CJEU then goes beyond established case law and touches upon an issue relevant beyond cartel damages actions: Article 7(2) Brussels Ibis Regulation confers both international and territorial jurisdiction on the courts for the place where the damage occurred (para. 33). In case a Member State has jurisdiction according to Article 7(2) Brussels Ibis Regulation (i.e. international jurisdiction), Article 7(2) Brussels Ibis Regulation also determines which court within the Member State has jurisdiction (i.e. territorial jurisdiction) – both according to the autonomous interpretation of Article 7(2) Brussels Ibis Regulation. Member States cannot apply different criteria for the conferral of jurisdiction (para. 34).

In its reasoning, the Court first refers to the wording of the provision. Indeed, Article 7(2) Brussels Ibis Regulation points specifically to ‘the courts for the place where the harmful event occurred’ and not simply (the territory of) the Member States alone. This interpretation is also in line with the CJEU’s reasoning in Wikingerhof (C-59/19), which concerned an abuse of dominance case and in which the CJEU referred to the court in particular (and not only the Member State’s territory as a whole). Second, the CJEU resorts to a historical interpretation and a rare literature review, as it mentions that its interpretation is following P. Jenards report on the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters (sadly leaving out P. Schlosser’s report previously cited by the Advocate General).

Member State Competence: Centralisation of Jurisdiction in Specialised Courts

However, the Member States have not lost all their say in the matter. The CJEU noted that the Member States have the option, as part of the organisational competence for their courts, to centralise the handling of disputes relating to anti-competitive practices in certain specialist courts (paras. 34 – 37). This specialised court would have exclusive jurisdiction irrespective of where the damage occurred within the Member State. Unfortunately, the CJEU did not use the opportunity to clarify how this centralisation would be possible given the absence of any centralisation rules in the underlying dispute.

In its reasoning, the CJEU stressed the complexity of the rules applicable to cartel damages actions, which argues in favour of centralisation of jurisdiction within the Member States. Furthermore, the CJEU mainly follows Advocate General De La Tour’s analogy to the Sanders and Huber (C-400/13 and C-408/13) judgment by stating that ‘a centralisation of jurisdiction before a single specialised court may be justified in the interests of the sound administration of justice’. While Sanders and Huber concerned a matter relating to cross-border maintenance obligations under Regulation EC No 4/2009, the ideas can indeed be transferred to the Brussels I bis Regulation, as the disputed provision of Regulation EC No 4/2009 in Sanders and Huber was one of the provisions relating to the rules on jurisdiction which replaced those in the Brussels I bis Regulation. In Sanders and Huber, the CJEU established that, although the jurisdiction rules have been harmonised by the determination of common connecting factors, the specific identification of the competent court remains a matter for the Member States.

Surprisingly and contrary to Advocate General De La Tour (and the EU legislator in procedural contexts), the CJEU does not expressly mention procedural autonomy and the principles of equivalence and effectiveness. Likely, as general principles of EU law, they are a no-brainer in the view of the Court: Member States have the organisational competence to centralise proceedings, subject to compliance with the principles of equivalence and effectiveness.

Absence of Specialised Court: The Place Where the Goods are Purchased or the Harmed Undertakings Registered Office

For Member States without any centralisation rules, such as in the present case, the CJEU provides further guidance on identifying the place where the damage occurred to ascertain the court having jurisdiction within the Member State in cartel damages actions. Naturally, as both territorial and international jurisdiction are determined by Article 7(2) Brussels Ibis Regulations, the following statements are also applicable to international jurisdiction.

The CJEU here combines two strains of case law, which from now on should be considered one after the other. First, by analogy outside of competition law to Verein für Konsumenteninformation (C‑343/19), it held that the place where the affected goods were purchased determines which court has jurisdiction (paras. 39, 40). However, this is rightfully only applicable when ‘the purchaser that has been harmed exclusively purchased goods affected by the collusive arrangements in question within the jurisdiction of a single court’ since ‘[o]therwise, it would not be possible to identify a single place of occurrence of damage with regard to the purchaser harmed’. Second, the CJEU refers to CDC Hydrogen Peroxide and the above-mentioned concept of the harmed company’s registered office (paras. 41, 42). In case of purchases made in several places, which is likely in the context of big, lengthy cartels, the courts of the place where the harmed undertaking has its registered office have jurisdiction.

In its justification, the CJEU rightfully refers to the principles of proximity, predictability and sound administration of justice. Both – the place where the goods were purchased and the harmed company’s registered office – allow a certain proximity and efficacious conduct of proceedings. The CJEU also gives a clear, predictable roadmap for claimants and, thus, predictability: in case the affected goods were purchased in one place, that court has jurisdiction; in case the goods were purchased in several places, the court within whose jurisdiction the harmed undertaking’s registered office is situated, has jurisdiction.

Comment and Conclusion

The judgment fills in another gap in the Article 7(2)-saga. Article 7(2) Brussels I bis Regulation nevertheless generally remains to be one of the troublemakers of the Brussels I bis Regulation, which will be up for a possible revision or at least a report soon (Article 79 Brussels I bis Regulation: 11 January 2022).

For now, the judgment has vast implications in- and outside of the competition law context. In the competition context, it determines a clear roadmap for international and territorial jurisdiction in the sense of Article 7(2) of the Brussels I bisRegulation outside of centralisation. In general, the judgment underlines a prevailing opinion in academia: Article 7(2) Brussels Ibis Regulation confers both international and territorial jurisdiction.

Particularly for competition law, but also for other sectors which are highly complex or demand technical expertise, the judgment highlights the huge potential for centralised and specialised courts (recently also discussed in an article available here). At the moment, Member States largely lack centralised and specialised courts in the competition context. Advocate General De La Tour already underlined that the centralisation of jurisdiction promotes the development of the necessary specific expertise. This idea can be spun even further. The efficiency of centralised and specialised courts could be increased by introducing competition lay judges. They could make the expensive experts in cartel damages actions to some degree obsolete. At the centralised courts, the competition lay judges could assess a case based on their particular professional qualifications and business experience, which allows for a practical and appropriate judgment in competition disputes.

Beyond competition law, we want to mention another area that is in desperate need of concentration provisions: collective consumer redress. Establishing a centralised court for collective redress is essential, in our opinion, for the Representative Actions Directive to become a successful instrument. The future central court could ensure a uniform and coherent application of the Directive and become a specialised court with judges skilled in dealing with the complexity of collective litigation.

Inspiration can be taken from initiatives of centralisation in the other Member States. In the Czech Republic, the Parliament recently passed an Act (218/2021) that enables the concentration of applications for recovery under the European Account Preservation Order in a single court in the country. Questions nevertheless remain: when complexity and technicality call for centralisation, where do we draw the line? When are general courts sufficient, and where do we need specialisation? Here, further (EU) coordination would be helpful.