It also runs contrary to a European Commission Directive on damages, according to another legal expert.
The Paris Court of Appeal, on 27 February 2014, awarded poultry producer Doux €1.66 million ($2.29m) in compensation against Ajinomoto Eurolysine and its distributor, CEVA Santé Animale.
A spokesperson for Ajinomoto told FeedNavigator.com today that it was considering whether to appeal the ruling.
Emmanuelle van den Broucke, a partner at Dentons law firm in Paris, said the French judgment will encourage other companies to seek reparation for anti-trust practices.
But she said she was surprised at the verdict in favor of Doux.
Van den Broucke wonders why the Court did not question the methodology of the claimant to calculate damages. “The claimant (Doux) itself acknowledges the lack of precision of its own method used to calculate the harm resulting from the anticompetitive agreement,” said van den Broucke.
Another law firm, Van Bael & Bellis, said that the judgment was “rare” and of interest as, “its finding appears to differ from the European Commission’s draft Directive on actions for damages, which provides that the burden of proof that the overcharge was passed-on rests on the cartelist.
In the present case, the Court of Appeal appears to consider that the burden of proof rests on the direct customer of the cartelist (the claimant).”
Ajinomoto v Doux case background
The European Commission, in 2000, found that Ajinomoto participated in a cartel among lysine producers.
The Doux group argued that the purchase price of lysine was higher because of the cartel, causing it margin loss and reducing its competitiveness. It sued Ceva Santé and Ajinomoto to obtain damages for the loss.
In 2009, the Court of Appeal allowed Doux’s action for damages, but its judgment was subsequently quashed by the French Supreme Court in 2010 on the basis it had not responded to Ajinomoto’s claim that the Doux group had passed-on the overcharge to its customers.
The current Paris Court of Appeal case hinged on whether Ajinomoto could escape liability on the basis of the passing-on defense.
The passing-on defense, said Van Bael & Bellis, allows parties to escape, or at least reduce their liability for the harm caused by anti-competitive behaviour by claiming that the overcharge was passed-on by their direct customers to their own customers.
The Court of Appeal’s February ruling found Doux had not passed-on the overcharge to its customers on two grounds.
- Large retailers, which represented 80% of Doux’s customers, possessed strong bargaining power and consistently refused to accept any price increase.
- The cost of lysine as feedstock represented only 1% of the total cost of the final product, the amount of which was not sufficient for Doux to ask its customers to pay a higher price.
Therefore the Doux group could not have passed on the additional costs to the distributors and was eligible for damages.