The CJEU sets limits to the application of the concept of economic unity

In its judgment of 4 July 2024 (Case C425/22-), the CJEU ruled that the principle of economic unity cannot be used to interpret the "place where the harmful event occurred" referred to in Article 7(2) of Regulation No. 1215/2012 (Brussels I Bis Regulation) as meaning that it can be identified with the domicile of a parent company bringing an action for damages suffered exclusively by its subsidiaries domiciled in other Member States as a result of a competition infringement.

The CJEU again addresses the concept of economic unity in the context of claims for damages arising from infringements of competition law, as it did in its judgment of 6 October 2021 (Case C-882/19, Sumal, (ECLI:EU:C:2021:800)). This time, it does so in relation to the competent forum for bringing such civil actions.

The question was referred for a preliminary ruling in proceedings in which the Hungarian company MOL Magyar Olaj- és Gázipari Nyrt. (MOL) brought a follow-on action against Mercedes-Benz Group AG (Mercedes-Benz) arising from the decision of the European Commission of 19 July 2016 (Case AT.39824, Trucks), which sanctioned Mercedes-Benz, among other truck manufacturers, for anti-competitive practices.

MOL's subsidiaries, domiciled in other Member States, purchased a number of Mercedes-Benz trucks, and MOL brought a follow-on claim against Mercedez-Benz before the Fovárosi Ítélotábla (Hungarian Capital High Court) claiming the alleged damage suffered by its subsidiaries as a result of the purchase of those trucks.

In seeking to justify the jurisdiction of the Hungarian courts, MOL relied on the concept of 'economic unity' and argued that, in so far as MOL is the parent company of the group, and the centre of economic interests of the group is located at its registered office, the 'place where the harmful event occurred' (in accordance with Article 7(2) of the Brussels I Bis Regulation) would be Hungary. Therefore, it is the Hungarian courts that have jurisdiction to hear the civil action.

Mercedes-Benz challenged the jurisdiction of the Hungarian court, and both the Fovárosi Ítélotábla (General Capital Court) and the Fovárosi Ítélotábla (High Court of the Hungarian Capital) upheld the plea of lack of jurisdiction. The case came before the Kúria (Hungarian Supreme Court) which, faced with a question not settled by the case-law of the CJEU (i.e. whether the theory of economic unity can be invoked when the economic unit is the one who has suffered the alleged damage and not the sanctioned company, as was the case in Sumal), decided to refer the matter to the CJEU.

In the first question, the Supreme Court asks whether Article 7(2) of the Brussels I Bis Regulation must be interpreted as meaning that the concept of "place where the harmful event occurred" includes the domicile of the parent company bringing a civil action for damages suffered exclusively by its subsidiaries as a result of anti-competitive conduct.

The CJEU recalls that the expression “place where the harmful event occurred” refers both to the place where the damage occurred and to the place of the causal event giving rise to that damage, so that the action may be brought, at the choice of the plaintiff, before the courts of either of those two places (judgment of 15 July 2021, Volvo and Others, C- 30/20, (EU:C:2021:604)). It also stresses that (i) this expression cannot be interpreted broadly so as to encompass any place where the harmful consequences of an event which has already caused damage actually occurring elsewhere may be experienced and that (ii) that damage which is merely the indirect consequence of the damage initially suffered by other persons, direct victims of damage occurring in a place other than that in which it had an impact on the indirect victim, cannot provide a basis for jurisdiction under Article 7(2) of the Brussels I Bis Regulation (judgment of 29 July 2019, Tibor-Trans, C-451/18 (EU:C:2019:635)).

On the basis of the above and in line with the Opinion of Advocate General Nicholas Emiliou of 8 February 2024, the CJEU concludes that the expression "place where the harmful event occurred" contained in Article 7(2) of the Brussels I Bis Regulation does not include the registered office of the parent company bringing an action for the damage allegedly and exclusively caused to the subsidiaries by the anti-competitive conduct of a third party.

The judgment gives three reasons for rejecting MOL's argument: (i) first, that it has no support in EU case law; (ii) second, that it conflicts with the principles of proximity and foreseeability on which the competition rules enshrined in the Brussels I Bis Regulation are based; and (iii) third, that the application of the principle of "economic unity" is not necessary to guarantee the right of victims to claim damages suffered as a result of anti-competitive conduct.

As regards the principles of proximity and foreseeability of the competition rules, the CJEU recalls that the most appropriate courts and tribunals to examine this type of civil action, according to its own case law, are those of the Member State of the market concerned, and that an undertaking that has engaged in anti-competitive practices can reasonably expect to be sued before the courts of the place where those practices have distorted competition (judgment of 29 July 2019, Tibor-Trans C-451/18 (EU:C:2019:635)).

As for the argument that not applying the concept of "economic unit" for the determination of the " place where the harmful event occurred " would be an impediment to the possibility of bringing a claim, the judgment, in recital 41 et seq., considers that it is not necessary to apply this concept to guarantee such a right. It does so on the basis that, on the one hand, the alleged victims will always have the possibility of bringing proceedings before the court of the place where the defendant is domiciled in accordance with Article 4(1) of the Brussels I bis Regulation and, on the other hand, Article 7(2) of the same regulation, as indicated above, allows the injured party to bring proceedings before the court for the place where he acquired the goods which are the object of the anti-competitive agreements, or before the court for the place where the registered office of that undertaking is located, in the case of purchases made in several places (judgment of 15 July 2021, Volvo and Others, C-30/20 (EU:C:2021:604)).

Thus, the CJEU understands that, for the purposes of Article 7(2) of the Brussels I Bis Regulation, the concept of "economic unit" cannot be used to understand that the expression "place where the harmful event occurred” is that of the domicile of a parent company bringing a civil action arising from an anti-competitive act for the damage suffered exclusively by its subsidiaries domiciled in other Member States.

Taking into account the solution reached with regard to the first question, the CJEU determines that it is not necessary to address the second question insofar as it was based on the hypothesis that the previous answer would be positive and would allow the concept of "economic unit" to be applied to the reverse - i.e. to the claimant - for the determination of the place where the damage has ocurred.