• Umbrella Effect within the Framework of Private Competition Enforcement
  • February 16, 2017
  • Undertakings in various levels of the chain of distribution, as well as with end-consumers, may incur damages from anti-competitive conduct by other undertakings. The concept of private enforcement of competition laws is aimed at recovery of such damages, along with losses of profit and accrued interest as regulated under Art. 57, et seq, of the Act on the Protection Competition numbered 4054 ("Competition Act"). The corresponding piece of legislation in the European Union's acquis communautaire is Directive 2014/104/EU on Certain Rules Governing Actions for Damages under National Law for Infringements of the Competition Law Provisions of the Member States and of the European Union ("Directive")1. The damages caused by a certain, anti-competitive conduct that results in artificial price increases are often discussed within the vertical chain or from the viewpoint of the competitors; whereas, the concept of umbrella effect concerns the damages beyond these categories. In other words, it entails the liability of members of a cartel for the price increases they have caused in the general market - more specifically, the purchasers of their competitors. Although neither the Competition Act, nor the Directive, include any explicit provisions with regard to the so-called "umbrella effect," it was discussed by the European Court of Justice ("ECJ") in its Kone decision, and in several decisions of the US courts, which we will elaborate on further, below.