Publication: European Court of Justice 5th July 2018, ECLI:EU:C:2018:533
The Lithuanian airline, flyLAL, operated, inter alia, flights departing from and arriving at Vilnius Airport (Lithuania). In 2004, the Latvian airline Air Baltic started to operate flights departing from and arriving at that airport, with part of those flights serving the same destinations as flyLAL. flyLAL subsequently sustained financial losses and went into liquidation. flyLAL considered that Air Baltic had ousted it from the market by applying predatory prices to certain routes departing from and arriving at Vilnius Airport, with such predatory practices being funded by reductions granted to Air Baltic on fees for airport services provided by Riga Airport (Latvia).
Consequently, on 22 August 2008, flyLAL brought an action against Air Baltic and Riga Airport before the Regional Court, Vilnius, Lithuania, seeking compensation, in the amount of EUR 57 874 768.30, for damage allegedly caused by their anticompetitive conduct. flyLAL also asserted that, once it had been ousted from the market, Air Baltic moved the majority of the flights it had operated to and from Vilnius Airport to Riga Airport.
By judgment of 27 January 2016, the Regional Court, Vilnius upheld in part the action brought by flyLAL, ordering Air Baltic to pay flyLAL EUR 16.121.094 by way of damages, in addition to default interest at the rate of 6% per annum. However, it dismissed flyLAL’s action in so far as it was directed against Riga Airport.
In its abovementioned judgment of 27 January 2016, the Regional Court, Vilnius went on to state that Lithuanian courts derived their jurisdiction from Article 5(3) and (5) of Regulation No 44/2001 on the basis, first, that the anticompetitive conduct that had caused damage to flyLAL, in particular the application of predatory prices, alignment of flight times, illegal advertising, termination of direct flights and moving passenger traffic to Riga Airport, had taken place in Lithuania and, secondly, that Air Baltic operated in that Member State through its branch in Lithuania. flyLAL, Riga Airport, and Air Baltic appealed against that judgment before the Court of Appeal, Lithuania. In connection with the issue of jurisdiction this Court referred the case to the European Court of Justice with three questions, two of which concerned the interpretation of Article 5 (3) and (5) of the Council Regulation (EC) No 44/2001 of 22 December 2000 currently Article 7 (3) and (5) of the Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
The Article referred to reads as follows:
A person domiciled in a Member State may be sued in another Member State:
[…]
(3) as regards a civil claim for damages or restitution which is based on an act giving rise to criminal proceedings, in the court seised of those proceedings, to the extent that that court has jurisdiction under its own law to entertain civil proceedings;
[…]
(5) as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place where the branch, agency or other establishment is situated;
[…]
The European Court of Justice declared that Article 5(3) of Regulation No 44/2001 must be interpreted as meaning that, in the context of an action seeking compensation for damage caused by anticompetitive conduct, the notion “place where the harmful event occurred” may be understood to mean either the place of conclusion of an anticompetitive agreement contrary to Article 101 TFEU, or the place in which the predatory prices were offered and applied in cases where such practices constituted an infringement of Article 102 TFEU.
Article 5(3) of Regulation No 44/2001 must further be interpreted as meaning that, in the context of an action seeking compensation for damage caused by anticompetitive conduct, the “place where the harmful event occurred” covers, in a situation such as that at issue in the main proceedings, inter alia, the place where the loss of income consisting in loss of sales occurred, that is to say, the place of the market which is affected by that conduct and on which the victim claims to have suffered those losses.
Finally, Article 5(5) of Regulation No 44/2001 must be interpreted as meaning that the notion of a “dispute arising out of the operations of a branch” covers an action seeking compensation for damage allegedly caused by abuse of a dominant position consisting of the application of predatory pricing, where a branch of the undertaking which holds the dominant position actually and significantly participated in that abusive practice.
