EU Held Liable To Pay Damages As a Result of the “Excessive” Length of Judicial Proceedings for an Appeal Against a Cartel Decision

The possibility for a claim to be brought against the European Union (the “EU”) as a result of “damage” caused by its institutions is enshrined in Article 340 of the Treaty on the Functioning of the European Union (“TFEU”).  In a General Court judgment of 10 January 2017, Case T-577/14 Gascogne Sack Deutschland and Gascogne v European Union (EU:T:2017:1), the appellants successfully brought a claim for material and non-material harm suffered as a result of the “excessive” length of the judicial proceedings in the context of an appeal against a European Commission (“Commission”) decision of 30 November 2005.

The timing of the process was as follows. On 23 February 2006, two entities from the Gascogne group filed appeals before the General Court against the Commission decision of 30 November 2005 finding the existence of a cartel in the plastic industrial bags sector in a number of Member States. The written procedure of the General Court proceedings in each of these cases ended in February 2007 and the oral procedure began in December 2010. The appeal was not dismissed by the General Court until 16 November 2011. 

The Gascogne entities proceeded to file appeals before the Court of Justice on 27 January 2012 (see cases C-40/12 P, Gascogne Sack Deutschland v Commission, EU:C:2013:768, and C-58/12 P, Groupe Gascogne v Commission, EU:C:2013:770) on the grounds that, inter alia, the General Court judgments should be set aside, or the fine imposed be reduced, as a result of the length of the procedure. The Court of Justice held that the appropriate remedy for the appellants was not a reduction in the fine, but rather a separate action for damages that should be filed before the General Court pursuant to the second paragraph of Article 340 TFEU and Article 268 TFEU (see paragraphs 88 of case C-40/12 P and 82 of case C-58/12 P), hence the case at issue.

In finding that the claim by the Gascogne entities for material and non-material harm was well-founded, the General Court applied the cumulative test for non-contractual liability for the EU as a result of damage caused by an institution. The test is as follows:

  1. The conduct of the institution in question must be unlawful and in the case of judicial proceedings, regard should be had to the specific circumstances of the case, such as its complexity and the conduct of the parties;
  2. Actual damage must have been suffered, which can result in “material harm” as well as “non-material harm”; and
  3. There must be a “causal link” between the unlawful conduct and the damage suffered.

Regarding limb 1, the General Court found that there had been a breach of the Gascogne entities’ right to a hearing within a “reasonable time” as contained in Article 47 of the Charter of Fundamental Rights. In particular, the General Court found that there was an unjustifiable period of inactivity of 20 months between the end of the written procedure and the opening of the oral procedure before the General Court. In the context of proceedings concerning EU competition law, the General Court considered that a period of 15 months is generally reasonable, given that such cases are more complex than cases concerning other areas of EU law. The General Court also held that in the case of actions for annulment of a Commission decision, the length of proceedings can be increased by one month per additional related case being considered by the court in parallel (i.e. in relation to the same Commission decision).

As regards limb 2, the General Court considered that “actual and certain” material harm in the form of losses had been suffered due to the costs payable in relation to a bank guarantee during the unjustifiable period of inactivity. Furthermore, these losses were also caused by this period of inactivity. In other words, regarding limb 3, the bank guarantee costs would not have been payable if the General Court proceedings had not included an unjustifiable period of inactivity.

In addition, the General Court recognised that non-material harm had also been suffered by the Gascogne entities in the form of a level of uncertainty which exceeded the level of uncertainty that could not normally be expected from litigation (“incertitude qui a dépassé l’incertitude habituellement provoquée par une procedure juridictionnelle”), which also had an impact on the decisions by the management of those companies.

Accordingly, the EU was held liable to pay (a modest) amount of damages of approximately EUR 47,000 (plus interest) for the material harm suffered and EUR 5,000 (plus interest) to each of the two Gascogne entities for the non-material harm suffered.

The decision is available at: http://curia.europa.eu/juris/liste.jsf?language=en&jur=C,T,F&num=T-577/14&td=ALL# (as at 19 January 2016 only in French)