The judgment on the principal award obtained before the Paris Court of Appeal, which constitutes one of the largest damages cases ever tried in France, is now final.
The Court of Cassation’s ruling is very important for private enforcement law as it has clarified several key legal issues in relation to damages for anticompetitive practices.
On causation, the Court of Cassation has approved the characterization of the causal link by the Court of Appeal and has rejected the argument of a sharing of liability due to an alleged fault of the victim. The Court of Cassation decided that the Court of Appeal had “rightly decided, without reversing the burden of proof, since the Orange companies had not established, as they should have in view of their wrongful conduct at the origin of the damage, that the BTC and/or Digicel companies had themselves engaged in wrongful conduct likely to lead to a sharing of liability if applicable, and that this conduct by the Orange companies was at the origin of all the harm to the development of those companies“. It also upheld the finding of a single development loss caused by various practices that were cumulative and consolidated.
On the question of private expert witness reports, the issue was whether the court had relied solely on a single private expert report for the determination of the margin rate used to calculate the loss. The Court of Cassation held that the Court of Appeal had not relied exclusively on a private appraisal implemented at the request of one of the parties and had not reversed the burden of proof but had decided between two diverging analyses on the nature of the costs to be taken into account to determine the relevant gross margin and had taken into account other factual elements allowing it to assess its reasonableness.
As to the nature of the loss (“loss of profit” or “loss of opportunity”), the Court of Cassation validated, on the one hand, on the basis of principle and apparently for the first time, the method of using counterfactual methods that allow for the drawing up of hypotheses of the development that the victim would have experienced in the absence of the practices, and, on the other hand, by exercising its normative authority, accepted the classification of such loss as loss of profits, notwithstanding the fact that the evaluation was necessarily based on suppositions.
On the basis for assessment, the starting point, the rate and the capitalization of interest relating to the financial loss, the Court of Cassation first rejected the challenges relating to the admissibility of the request for capitalization of compensatory interest and the subsidiary request for the application of a rate of 5.3% from 2001 to 2005 and a rate of 9% from 2006 onwards. It considered that the capitalization of interest was necessary to ensure compensation for the loss of liquidity, ruling out the application of the regime of compound interest on all sums due provided for in Article 1154 of the Civil Code.
Next, the Court of Cassation addressed the substantive issues relating to loss of liquidity. The Court of Cassation’s ruling first sets out a principled reasoning that establishes the methodology for compensation for loss of liquidity :
“37. An undertaking that is the victim of exclusionary practices is entitled to compensation for the resulting loss. It may, moreover, claim additional compensation for any loss of opportunity to redeploy, with remuneration, the sums it has been deprived of. When the loss of opportunity invoked is derived from the impossibility of realizing an investment, for which the compensation sought is estimated at the average profitability of the capital invested in the sector in question, it is for the victim to establish the certain and direct nature of this loss of opportunity, by proving the reality of the investment project that could not be implemented as well as the impossibility of financing it other than with the sums of money of which it was deprived.”
After setting out this important principle, the Court of Cassation upheld the Court of Appeal’s decision to make compensation for the loss of opportunity subject to the demonstration of the impossibility of financing the projects in question from sources other than the sums of money of which Digicel was deprived as a result of the practices implemented by the Orange companies, which was the only way to establish the certainty of this loss and its direct link with the wrongful practices.
On the substance, with regard to the starting point for interest, the Court of Cassation held that “by retaining, as the starting point for interest to compensate for the additional loss arising from the unavailability of the sum allocated by it in respect of the development loss, that of the wrongful practices, which had lasted for several years, whereas at that date, this loss had not been fully constituted and was necessarily progressive”, the Court of Appeal had violated Article 1382 of the Civil Code. The Court of Cassation considered that there was no need to rule on the other grounds of complaint (i.e. the third, fourth and fifth grounds of appeal of Orange).
In summary, the Court of Cassation upheld the appeal in almost its entirety and only partially overturned it, i.e. “only insofar as it set the starting point for interest on the sum of EUR 173.64 million at 1 April 2003”. It will fall to the Paris Court of Appeal, in a different formation, to rule on this point.