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Finland, Cartels and the Presumption of Harm

Posted by on 04 November 2016
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The Directive 2014/104/EU on antitrust damages actions requires that it must be presumed in future Member State legislation that cartels cause harm, in particular via an effect on prices. However, it must be open to infringers to rebut this presumption.

Legislation in force in Finland does not recognize such presumption of harm. Under Finnish law, the plaintiff has the burden of proof on both the causation and quantum of harm. Thus, implementation of the presumption of harm entails that the burden of proof on the causation of harm will be reversed. However, as regards quantum, the Directive does not affect the status quo under Finnish law. The presumption of harm does not extend to quantum and Finnish courts already have the right to estimate the amount of harm if credible evidence on the amount is not available or such evidence can be obtained only with unreasonable cost or difficulty. In the proposal for the Act on Antitrust Damages Actions, which will implement the Directive, the Finnish legislator considers that the national provision in force meets the requirements of the Directive as regards the courts' powers to estimate the amount of harm.

Moreover, thus far Finnish courts have been rather critical in their assessment of causation of harm in cartel damages actions. Two of the most recent judgments resulted in dismissals of the claims because the plaintiffs had been unable to prove that the cartel had indeed caused the claimed loss. For the sake of clarity it should be noted that both judgments are subject to appeal. However, these judgments together with the rules on burden of proof in force raise the question whether the implementation of the presumption of harm will revolutionize the Finnish courts' assessment of cartel damages actions in the future. To answer this question, it is necessary to look at the two judgments in more detail.

The first relevant judgment concerns the so-called Car Spare Parts Cartel case, in which the Helsinki Court of Appeal handed down its judgment dismissing all claims on 31 March 2016, confirming a prior District Court judgment. The case is based on a Finnish Supreme Administrative Court ruling holding that between 2004 and 2005 five car spare parts wholesalers had participated in a concerted action to collectively boycott a car spare parts retail chain, which had announced a new strategic cooperation agreement with a competitor of the five wholesalers. The competitor of the infringers brought an action for damages amounting to some 50 MEUR, claiming that the infringement caused the partial failure of its cooperation with the retail chain and, thus, caused it to lose profits. Both the Helsinki District Court and the Helsinki Court of Appeal dismissed the action because the plaintiff had failed to prove that its alleged loss was caused by the infringement. In this case, the defendants presented extensive evidence, inter alia, on that the plan on which the claim was based was unrealistic and poorly prepared and that the alleged loss was mainly caused by other factors than the infringement. Based on the evidence presented by the defendants, both courts found that the alleged loss was mainly caused by other factors than the cartel and, therefore, found no legal basis for awarding damages.

The other relevant judgment concerns the so-called Raw Wood Procurement Cartel case, in which the Helsinki District Court dismissed by its judgment of 22 June 2016 the action for damages amounting to some 160 MEUR brought by the Finnish Forest and Park Service, the largest seller of raw wood in Finland, against three companies active in the forest industry. This is the first judgment in a large cluster of claims related to the same infringement still pending before the Helsinki District Court. The case is based on a Finnish Market Court judgment finding that the three companies had engaged in illegal price cooperation and information exchange in the purchase of raw wood between 1997 and 2004 in Finland. Also in this case the dismissal relies on the extensive evidence presented by the defendants on that the information exchanged was too generic to cause any effects and that the development of prices both during and after the infringement was driven by other factors than the cartel. Based on this evidence the Helsinki District Court concluded that the plaintiff had failed to prove that the infringement had caused any undercharge in agreements concluded between the plaintiff and the defendants.

So, would these cases have been judged differently had the presumption of harm applied? It is clear that implementation of the presumption of harm into Finnish law will shift the burden of proof in cartel damages actions to the defendant. This will naturally make a defendant's position more difficult, as to be released from liability, it has to prove that the cartel did not cause the loss claimed by the plaintiff. However, the level of evidence required to rebut the presumption of harm is left open in the Directive. In the two cases discussed above, the defendants prevailed based on the extensive evidence they presented to rebut the plaintiffs' claims. This is essentially what is required of the defendants also under the presumption of harm. Since the presumption of harm does not affect the rules on weighing of evidence under Finnish law, it may well be that the effect of the presumption of harm is only technical and the level of evidence required will not be affected. However, the presumption of harm is a step towards the unknown and only the future will show how the courts will interpret the requirements imposed by the presumption.


Christian Wik and Sari Rasinkangas

Christian Wik is a Helsinki-based Partner who heads the firm’s EU & Competition practice. This practice is internationally recognized, for example, by Global Competition Review GCR100, as among the leading in the world.

Christian has extensive experience in cartel investigations, advising on dominant market position claims and multi-jurisdictional merger filings, both on a national and EU level. He is often sought by clients to advise on all competition and antitrust related matters as well as joint ventures and M&A projects.

In addition to the above, Christian regularly advises energy and mining companies, and on projects relating to renewable energy.

https://www.linkedin.com/in/christian-wik-36b5b921

Sari Rasinkangas is a Helsinki-based Senior associate specialized in EU and competition law. She has extensive experience in a wide range of competition law assignments, including cartel and dominance matters, horizontal and vertical cooperation between undertakings, private enforcement of competition law, merger control as well as public procurement matters both in an advisory role as well as in proceedings before the Finnish and EU competition authorities and courts.

Sari regularly contributes articles to leading competition law publications. In addition to her LL.M. degree, Sari holds a post-graduate LL.M. degree from the University of Chicago, and she is a member of the New York Bar. Sari has also worked as a Visiting lawyer at TeliaSonera Finland Oyj.

https://www.linkedin.com/in/sari-rasinkangas-4336513

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