For several years the Austrian Federal Chamber of Workers and Employees ("AK") has closely monitored prices of driving schools in different regions of Austria. In the course of these observations 6 driving schools in the Styrian city Graz turned out to have identical prices for the most commonly demanded driving courses. In 2004 the AK has informed the Federal Competition Authority ("FCA") of the facts of the case and the FCA has subsequently applied for fines before the Cartel Court. As a result of these proceedings the Cartel Court identified 5 of the 6 driving schools as cartel members and imposed a total fine of EUR 75,000 on them. After the fines have become final, cartel damage claims against the cartel members were assigned by potentially injured parties to the AK. Subsequently, the AK took legal actions against the respective driving schools in order to enforce the assigned damage claims.
Similar observations of the AK have recently led to the initiation of fine proceedings against 7 driving schools in the area of Innsbruck (Tyrol).
Both proceedings contain important implications for the enforcement of cartel damage claims as well as for the application of leniency provisions in Austria.
2. The results of the proceedings in detail
a) Regional Civil Court of Graz awards cartel damage claim to customers of a price cartel
According to price observations of the AK prices for driving courses in the area of Graz decreased after the breaking up of the cartel by 22%. In the private enforcement proceedings against the driving schools before the District Court of Graz (reference number 4 C 463/06h) one main question was the extent of loss which was caused by the anti-competitive agreement. The Court applied sec 273 of the Austrian Code of Civil Procedure ("ZPO"), which allows the Court to assess the extent of loss in its own straightforward discretion in case the fact that a loss occurred is undisputable but the actual extent of loss turns out to be difficult to prove. The Court followed the argumentation of the AK and stated that the extent of loss can be equated with the price differential between the cartel price and the price after the breaking up of the cartel. Another remarkable aspect of the District Court´s decision is that members of a cartel are jointly and severally liable for the loss caused by the cartel pursuant to sec 1302 Austrian Civil Code (ABGB) since the cartel members have acted intentionally when setting up the price cartel. As a result, the plaintiff was awarded a claim against the defendant even though the defendant was not a party to the relevant driving course agreement. The Appellate Court of Graz upheld the District Court decision (reference number 17 R 91/07p). It is generally expected that the appeal lodged against the appellate decision will not be successful which would make the case of the driving schools in Graz the first case in Austria in which cartel damage claims were awarded to customers of a cartel.
b) FCA applies its leniency provisions to members of a driving school cartel in Innsbruck
In August 2007 the FCA has applied for fines for seven driving schools in the area of Innsbruck before the Cartel Court. As the FCA announced on its webpage, two of the alleged cartel members have substantially cooperated with the FCA in the investigations against the cartel. The FCA further stated that it will apply the principles of the Austrian leniency program laid down in sec 11 subsec 3 Federal Competition Authority Act (WettbG) and in the leniency handbook on the "whistle blowing" driving schools. Although the classification as "leniency applicant" is not legally binding for the FCA pursuant to sec 11 subsec 4 WettbG, the driving schools can expect a fine reduction of 30 to 50 % or 20 to 30 % respectively, depending on the priority of the filing of the leniency application.
In the proceedings against driving schools in Graz, Austrian Courts have for the first time awarded damages to the customers of cartel members. In its decision the Appellate Court has confirmed the view that the price differential between the cartel price and the competitive price may constitute the extent of loss and, accordingly, the amount of damages to be awarded. When facing difficulties in assessing the amount of the loss, the court may rely on procedural provisions (ie sec 273 ZPO) leaving it reasonable discretion in its evaluation. By reference to sec 1302 ABGB the decision, however, raises the question whether only cartels by object entail joint and several liability of cartel member whereas members of a cartel by effect would merely become liable on a limited or pro-rata.
In the recently opened fine proceedings against driving schools in Innsbruck, the FCA has applied its leniency program to two of the seven cartel members, which will in return for their corporation in the cartel investigations face substantially reduced fines.
The two proceedings could mark the starting point of Austrian case law dealing with controversial EC competition law issues such as the definition of loss in the context of (price) cartels or such as the legitimacy of defensive pleas such as the "passing on"-defense. In the light of the awarding of damage claims to customers of a cartel it is generally expected that the number and significance of legal actions taken against cartel members will increase. Thereby Austrian courts may soon have to decide on whether leniency provisions of the WettbG and the Austrian Cartel Act impeding "access to file" for plaintiffs preparing follow-up actions against cartel members in the context of follow-up damage claims are proportionate and/or constitutional, especially with regard to the rights of to "access to file" and "access to information" as warranted by the Austrian constitution.
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