On November 24, 2021, the Paris Court of Appeals overruled the Paris Commercial Court’s dismissal of the follow-on damage claim brought by two supermarket chains in the dairy products case. The Court of Appeals considered that the applicants had sufficiently substantiated the economic assessment of their harm. It also considered that they had only partially passed on the additional costs and therefore could claim damages for the costs that had not been passed on to consumers.
In March 2015, the French Competition Authority (“FCA”) imposed a €192.7 million fine, reduced to €132 million on appeal, on 10 producers of dairy products for having engaged in anticompetitive practices in the market for branded dairy products between 2006 and 2012 (the “Infringement”). Producers included subsidiaries of large groups, such as Andros and Lactalis/Nestlé.
Two years later, in March 2017, two entities of the Belgian retail group Louis Delhaize—Cora and Supermarchés Match (“Match”)—initiated an action for damages before the Paris Commercial Court against the infringing companies. The Commercial Court considered that the economic assessment of the harm suffered by Cora and Match was insufficiently substantiated and that their pass-on rate was likely close to 100%. The Commercial Court found that most of the dairy product producers took part in the cartel and that all the major supermarkets were victims of the cartel. It also found that the market shares of supermarkets had remained similar over the Infringement period. Taken together, these elements suggested that the supermarkets had passed on all of the overcharge to consumers (if some of the supermarkets had not done so, they would have likely gained market shares compared to those which had passed on the overcharge and therefore offered higher prices). Cora and Match appealed the Commercial Court’s ruling.
The appellants argued that the Commercial Court failed to rely on documents of the FCA’s case file which showed that Cora and Match may have borne an extra cost because of the Infringement. They also argued that the Commercial Court had ignored the extensive economic analyses presented by Cora and Match and had thus miscalculated the pass-on rate.
The Paris Court of Appeals’ assessment
First, the Court of Appeals upheld the Commercial Court’s finding that the pre-Damages Directive legal framework was applicable to the case because the Infringement ended before the entry into force of the French law provisions implementing the EU Damages Directive (i.e. before March 2017). This shifted the burden of proof to Cora and Match. Indeed, under the pre-Damages Directive framework, it was up to the appellant to demonstrate that it had suffered a damage. In contrast, under the new legal framework resulting from the EU Damages Directive, it is for the respondents to prove that the overcharge has been passed on.
Second, the Court of Appeals carried out its own assessment as to whether the three conditions under French tort law were met (i.e., fault, damage, and causal link between the fault and the damage). The Court of Appeals assessed whether the Infringement had caused “definite harm” to the appellants and verified the quantum of the alleged harm suffered by Cora and Match.
Regarding the definite harm suffered by the appellants, the Court of Appeals found that the economic analysis submitted by Cora and Match was sufficiently robust. It found that the pass on rate was limited due to Cora and Match’s internal commercial policy to limit price increases on the affected products. To calculate the overall overcharge rate, the Court used three separate rates, each relating to a different period of the Infringement. A first rate related to the start and end phases of the cartel. A second rate related to a middle phase of the cartel, when there was a “price war” between two infringing companies (Novandie and Senoble) which disturbed the functioning of the cartel. The third rate related to an inertia period following the end phase of the cartel.
The Court of Appeals then adjusted the overall overcharge rate to take into account the passing on effect by which Cora and Match adjusted their own consumer prices to reflect the upstream cost increase. The Court relied on Cora and Match’s economic analysis but also on their internal documents on pricing policy to conclude that Cora and Match had only partially passed-on the overcharge to their own customers. In particular, one internal marketing document showed that Cora had unilaterally decided not to raise customers’ prices despite the additional costs suffered.
Regarding the quantum of the definite harm, the Court of Appeals relied solely on the economic study provided by Cora and Match to assess the total amount of damages to be awarded by each of the respondents. First, the Court awarded damages for the additional cost the appellants incurred as a direct consequence of the Infringement. Second, the Court offered compensation for the additional cost resulting from the higher prices of products bought from companies which compete with, but are not members of the Infringement (so-called “umbrella effects”). Such competitors were incentivized to raise their own prices because of the Infringement and thereby led the appellants to pay an overcharge, albeit for competing products.
Finally, the Court adjusted the amount of damages to take account of the loss incurred by the appellants due to the time-lapsed since the Infringement.
The Court of Appeals thus ordered dairy producers to compensate for their respective share of the financial loss suffered by Cora (of a total of c. €2 million) and Match (c. €0.3 million) and to cover the costs of the entire legal proceedings (total of c. €0.2 million).
The Court of Appeals’ judgment (still subject to appeal) is yet another example of how important internal documents are in competition law cases, including in follow-on damages claims. It also shows the increasing number of successful damage claims before French courts, including claims from large retailers against their suppliers.
 Paris Court of Appeals ruling of November 24, 2021 (no. 20/04265).
 See FCA Decision No. 15-D-03 of March 11, 2015 relating to practices implemented in the fresh dairy products sector and Paris Court of Appeals, ruling of May 23, 2017 (no. 15/08224).
 See Paris Commercial Court, ruling of February 20, 2020 (no. 2017021571). “Passing-on” is an economic concept whereby an injured party passes on its actual loss resulting from an antitrust infringement to the next level of the supply chain (“overcharge”), by increasing the price of its products or services sold to its own customers.
 Interestingly, past judgments usually apply a single overcharge rate, applicable throughout the entire duration of the infringement at stake.
 The “inertia period” corresponds to the 10-month period following the end of the Infringement period defined by the FCA and during which the Infringement still produced effects on the Infringement’s market.