Photo credits @ MOL (illustrative purposes only)

Mercedes-Benz vs MOL: EU court rules against ‘economic unit’ theory in truck cartel case

The Court of Justice of the European Union on July 4th delivered a judgment clarifying the jurisdiction rules for damages claims arising from anti-competitive cartel activities. The case involved Hungarian energy company MOL, which sought to sue Mercedes-Benz Group AG in Hungary for damages incurred by its subsidiaries across different EU member states due to a truck cartel.

You can read this article in 2 minutes

MOL, in its 2019 lawsuit, claimed it suffered harm equivalent to the overpayment made by its subsidiaries on 71 lorries purchased or leased from the Mercedes-Benz Group during the cartel period. The company argued that as the parent company (with subsidiaries in Hungary, Croatia, Italy, Austria, and Slovakia), it was directly affected by the financial losses suffered by its subsidiaries, thus invoking the “economic unit” concept to establish jurisdiction in Hungary.

However, the Court of Justice of the European Union (CJEU)  ruled that the concept of “economic unit,” often used to establish liability for competition law breaches, cannot be reversed to determine the jurisdiction for damages claims.

“The concept of the ‘place where the harmful event occurred’ does not cover the registered office of a parent company bringing an action for damages for harm suffered solely by its subsidiaries…even if it is claimed that that parent company and those subsidiaries form part of the same economic unit,” the court stated in its judgement.

MOL argued that since anti-competitive practices trigger joint and several liability of the entire economic unit, the parent company’s registered office should be considered the “place where the damage occurred” for jurisdictional purposes, even if the direct damage was suffered by its subsidiaries.

However, the CJEU rejected this argument, stating that it contradicts the principles of proximity and predictability in jurisdiction rules.

“The courts of the Member State in which the affected market is located are best placed to assess such actions for damages,” the Court asserted, emphasising that the most appropriate jurisdiction is where the anti-competitive conduct occurred or where the subsidiary purchased the goods.

Nevertheless, the court clarified that victims of anti-competitive conduct can still pursue legal action in the defendant’s domicile or in the market affected by the conduct.