Germany has a vibrant private antitrust litigation culture. Recent years have seen a massive surge in multimillion-euro lawsuits for cartel damages. In the trucks case alone numerous actions for damages in an amount of several billion euros have been filed and are currently pending in courts across Germany.
Private antitrust litigation in Germany comes in many different forms – proceedings are not limited to follow-on damages claims; rather, there is a high proportion of standalone litigation, often closely related to contract disputes or to the abusive behaviour of dominant companies.
Due to the high relevance of cartel damages claims across Europe, the following survey, however, mainly focuses on damages claims.
With the 7th Amendment to the Act against Restraints of Competition (ARC) in 2005, the German legislator introduced a set of rules that significantly improved the conditions for bringing damages claims in Germany and this led from 2006 onwards to a series of damages actions. In 2017, Germany implemented the EU Commission’s Directive on cartel damages actions in the form of the 9th Amendment to the ARC, resulting once again in comprehensive changes, particularly to German antitrust damages law. The 9th ARC Amendment further facilitated the assertion of cartel damages claims. For instance:
The 10th Amendment to the ARC is currently under discussion. It will further strengthen potential victims of anti-competitive behaviour by introducing a rebuttable assumption of cartel exposure for products or services purchased from one of the infringers within the scope of the cartel.
Germany as a Jurisdiction of Choice
As a result of the new rules and increased marketing efforts of litigation firms, the number of private cartel damages claims in Germany has increased substantially in recent years (the number of judgments per year almost quadrupled from 2012 to 2017), with hundreds of private damages actions pending in consequence of prominent cartel cases at EU and German level, such as the trucks case, the sugar case, the airfreight case, the railway tracks case and the autoglass case. An even higher number of cases does not make its way to the courts, but is settled in out-of-court negotiations.
Due to the comparatively short duration of proceedings and usually moderate costs involved, Germany has become one of the jurisdictions of choice for plaintiffs in Europe and is probably the closest runner-up to England and the Netherlands in this regard. It is fair to assume that the importance of Germany as a forum for follow-on claims will further increase following Brexit and further plaintiff-friendly reforms to the ARC.
As illustrated by the significant number of private cartel damages cases brought before German courts each year, Germany is a very attractive jurisdiction for plaintiffs. However, even though German courts have issued numerous decisions – including several in which damages were awarded – there are still a number of open issues to be decided, either by the courts or the German legislator.
One of these open issues with major impact on litigation strategies is the question whether collective actions are admissible: this concerns the question of whether and how individual customers may assign their damages claims to especially created trial vehicles in return for financial participation if the assigned claims are successfully asserted in court (see 3 Class/Collective Actions). As US-style class actions do not exist in Germany, these models are intended to facilitate the collective assertion of antitrust damages claims. In early 2020, the Regional Court Munich I dismissed such a claim in the value of roughly EUR600 million in the trucks case due to breach of the German Legal Services Act (RDG) by the plaintiffs. The plaintiffs have appealed this decision and it is currently under review by the Higher Regional Court Munich. As yet, it remains unclear whether and under what conditions such models are admissible under German law.
In Germany, both standalone and follow-on claims are available. Cartel damages claims are predominantly follow-on cases, since the infringement decisions of national competition authorities and the European Commission (EC) are binding for the courts in any subsequent private antitrust litigation, which facilitates bringing such claims. There is also a high proportion of standalone claims, which are available for any kind of breach of competition law.
The legal basis for such claims is established by statute, mainly the ARC. Claims for injunctive relief are usually based on Section 33 ARC, and claims for damages on Section 33a to 33h ARC. General tort law, especially Section 823 of the German Civil Code (GCC), can also serve as a legal basis for private antitrust claims.
Designated Regional Courts
In Germany, no specialist competition courts exist. Cases concerning a breach of German or European antitrust law are heard before civil courts. The exclusive jurisdiction lies with the regional courts (Landgerichte), regardless of the value of the matter in dispute (Section 87 ARC). In most of the German federal states, competition matters are concentrated in one to three regional courts (Section 89 ARC). These courts usually establish special antitrust chambers which hear all antitrust law cases brought to the court. The judges dealing with antitrust litigation cases are therefore experts in their field. This also applies to the courts of appellation (see 11 Appeals).
German Code of Civil Procedure
As German law provides for the special jurisdiction of certain courts, parties cannot diverge from their jurisdiction and agree to negotiate their disputes on antitrust law in other courts of law.
If an antitrust claim is brought in an inconvenient forum (forum non conveniens), it will not automatically be referred to the court of competent jurisdiction in antitrust matters for the relevant judicial district. Instead, Section 281 of the German Code of Civil Procedure (CCP) requires the plaintiff to petition the court to refer the claim to the proper legal venue.
According to Section 33b ARC, the court is bound by a finding that an infringement has occurred, as made in a final decision by the National Competition Authority (NCA), the EC, or the competition authority in another member state of the European Union. The specific scope of this binding effect is still in dispute.
The German Federal Cartel Office
The German Federal Cartel Office (FCO) can intervene in private antitrust litigation according to Section 90 ARC. In all legal actions in which the decision depends in whole or in part on the application of the provisions of the ARC or on Articles 101 or 102 of the Treaty on the Functioning of the European Union (TFEU), the court has to inform the FCO about the action. If the FCO considers it to be appropriate to protect the public interest, it may appoint from among its members a representative authorised to submit written statements to the court, to point out facts and evidence, attend hearings, present arguments and address questions to parties, witnesses and experts in such hearings. Written statements by the FCO's representative are to be communicated to the parties by the court. So far, the FCO has not intervened on a regular basis in private antitrust actions.
Burden of Proof
Each party has to prove the premises justifying its claim. Regarding cartel damages claims, there are however some important exceptions to this general rule.
According to Section 33b ARC, the plaintiff does not need to show and prove the infringement of antitrust law, if a final decision of an NCA or the EU finds that an infringement has occurred. The court is bound by such a decision (see 2.3 Decisions of National Competition Authorities).
Furthermore, according to Section 33a (2) ARC, there is a rebuttable presumption that a cartel causes damages. This rebuttable presumption does, however, only apply to infringements after 26 December 2016.
For all cartel damages prior to this date, the injured party bears the burden of proof for the causation of damages by the cartel. According to the Federal Court of Justice (FCJ) in its first railway cartel decision there is no legal presumption or prima facie proof (Anscheinsbeweis) for the causation of damage by a cartel. The FCJ, however, also ruled that a factual assumption (tatsächliche Vermutung) exists, based on economic experience, that a cartel causes damages. Due to the variety and complexity of anti-competitive behaviour, this is but one of all the different aspects of each case that have to be taken into account by the court.
The defendant, on their part, can raise the pass-on defence, claiming that the damages that occurred have been passed on by the direct purchaser to the next market level. In an action for damages raised by a direct purchaser, the defendant bears the burden of proof for the pass-on defence. If, however, an indirect purchaser claims damages, the rebuttable presumption of Section 33c (2) ARC presumes in their favour that the damages have been passed on to the next market level (see 2.5 Direct and Indirect Purchasers). This inverse burden of proof regarding the pass-on defence in actions for damages by direct or respectively indirect purchasers, causes a risk of multiple liability for the defendant, which can only partially be averted by third-party notices.
Standard of Proof
Regarding the standard of proof, the court has to be convinced that the facts as presented by the plaintiff are true. However, conviction in this regard does not require absolute certainty. Rather, a high level of plausibility is sufficient (ie, beyond reasonable doubt).
The standard of proof is significantly reduced with regard to the amount of damages suffered by the plaintiff. The court can rule on this issue at its discretion and conviction, based on its evaluation of all the circumstances (Section 33a (3) ARC, Section 287 CCP).
In its second railway cartel decision in 2020 the FCJ further elaborated on the various standards of proof in a follow-on action for damages and indicated that the reduced standard of proof of Section 287 CCP might have a wider scope of application than it had previously.
Claims can be brought by direct and indirect purchasers. According to Sections 33 (1), (3) and 33a (1) ARC "the person affected" has the right of action. Section 33 (3) ARC defines affected persons as competitors or other market participants impaired by the infringement. This means that anyone who was overcharged somewhere along the distribution chain can pursue their claim in court. As a consequence, cartel members are not only exposed to the risk of damages claims being brought by their direct customers but also by indirect purchasers. The legal basis of any such claim is the same.
As already outlined (see 2.4 Burden and Standard of Proof), there is a rebuttable presumption that a hard-core cartel has caused harm at the direct customer level. Under certain circumstances, a rebuttable presumption also exists in favour of the indirect purchaser. According to Section 33c (2) ARC, there is a presumption in the indirect purchaser's favour that the overcharge was passed on, if an infringement resulted in an overcharge for the direct purchaser and the indirect purchaser paid for goods or services that were:
In many cases, this facilitates the assertion of damages claims for indirect purchasers.
On the other hand, the defendant can raise the pass-on defence vis-à-vis the direct purchaser (see 2.4 Burden and Standard of Proof). According to Section 33c (1) ARC, the pass-on defence does not exclude the occurrence of harm, but the harm incurred by the purchaser is deemed to be remedied to the extent that the purchaser has passed on the overcharge resulting from an infringement to its customers.
It is difficult to indicate the typical duration of court proceedings. The duration from issuing a claim until judgment is reached depends to a large extent on the complexity of the case and the workload of the competent court. On average, proceedings in the first instance take approximately one to two years. However, in very complex matters, the duration of the proceedings may be significantly longer, especially if the court needs to obtain the opinion of a court-appointed economic expert. The timeframe for an appeal is also usually one to two years. The same applies for a further appeal on a question of law to the FCJ.
Stay of Proceedings
The court can stay proceedings, ex officio, in accordance with Section 148 CCP if the decision in the lawsuit is dependent on a preliminary question that is the subject matter of another pending legal action, or is yet to be determined by an administrative authority. For example, if the NCA is conducting further or parallel investigations that are also of relevance to the pending lawsuit, the court proceedings may be stayed. The parties can only propose such a stay. The final decision will be made by the court ex officio at its reasonable discretion.
In Germany, class actions in which a representative requests a remedy on behalf of an anonymous group of individuals are not formally provided for breaches of antitrust law.
Representative Actions by Consumer Organisations
As an exception to this general rule, representative actions regarding injunctive relief against infringements of antitrust law are admissible by business or consumer associations according to Section 33 (4) ARC. So far this option has, however, been of hardly any practical relevance.
With regard to actions for damages, it is highly controversial whether a means of collective redress can be created by assigning the claims of various injured parties to a litigation vehicle, backed by a litigation financier. Early attempts by litigation vehicles to bring bundled claims were dismissed (see 10.1 Litigation Funding). More recently, the model of creating a means of collective redress has been widely used in the trucks case, but was deemed to be inadmissible in early 2020 by the Regional Court Munich I due to an infringement of the German Legal Services Act and a conflict of interest between the assignors and the litigation financier. This ruling is currently under review by the Higher Regional Court Munich. Ultimately, the FCJ will have to decide whether such a model of collective redress is admissible in Germany.
Consolidation of Claims
Apart from that, Section 60 CCP allows claimants to sue jointly, if similar claims or obligations form the subject matter in dispute and if such claims are based on an essentially similar factual and legal cause. This gives victims of anti-competitive conduct an opportunity to consolidate their actions. However, according to Section 61 CCP, joined parties shall deal with their opponent as individuals in such a way that the actions of one of the joined parties will neither benefit the other joined party nor place it at a disadvantage, unless stipulated otherwise by civil law or the CCP.
Unless the assignment of claims to a litigation vehicle is deemed admissible by the FCJ, the means for collective redress in Germany are thus rather limited.
Class actions are not available for breaches of antitrust law in Germany (see 3.1 Availability).
Class actions are not available for breaches of antitrust law in Germany. However, out-of-court settlements of de facto bundled claims are viable, but much less likely than out-of-court settlements of individual claims. This is particularly true for cases where the circle of assigners and the type of procurements are heterogeneous in many respects, resulting in different interests and different chances of success of the individual claims (see 3.1 Availability).
There are no equivalents in Germany for the English strike-out rules or summary judgment to challenge a claim at an early stage. However, a court may reject an action as being inadmissible if, for example, the jurisdiction or other requirements for the admissibility of a lawsuit are not fulfilled.
Antitrust law cases are frequently multi-jurisdictional. Cartel arrangements often cover various countries and the parties involved in private antitrust litigation are, in many cases, domiciled in different countries. However, in order to establish the jurisdiction of German courts there must be a link between the antitrust law infringement and Germany.
German courts must have jurisdiction to hear the claims against foreign defendants. Establishing jurisdiction for the relevant claims is often a major pillar for determining the case prospects.
The international jurisdiction of German courts is governed by Sections 12 to 37 CCP, unless the EU law on international jurisdiction, namely 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 (Recast Brussels Regulation) is applicable, which prevails over Sections 12 to 37 CCP. For claims against defendants that are not domiciled in an EU member state, international jurisdiction is determined according to the principles laid down in the CCP.
Under the Recast Brussels Regulation, the default position is that any defendant may be sued before the court of their:
However, given the tortious character of antitrust infringements, the victim is also entitled to bring such an action in a jurisdiction where the harmful event (tort) occurred. This can be the place of the event giving rise to the damage or the place where the damage occurred. Pursuant to the Recast Brussels Regulation and in line with the European Court of Justice’s decision in the Hydrogen Peroxide case (ECJ, decision dated 21 May 2015, C-352/13 – CDC Hydrogen Peroxide SA), German courts have jurisdiction to hear claims against defendants domiciled within the EU but outside of Germany if each of the claims is directed against at least one anchor defendant (Ankerbeklagter) domiciled in Germany. However, claimants should also take into account that it might not be possible to establish jurisdiction in Germany if the relevant transaction documents (eg, a purchase or lease agreement) contain choice of forum clauses for damages claims (Gerichtsstandsklausel), which explicitly establish jurisdiction in a country or jurisdiction other than Germany.
The principles for determining international jurisdiction under the CCP are in major aspects similar to those that apply under the Recast Brussels Regulation. Pursuant to Section 17 CCP, the general place of jurisdiction of legal persons is determined by their domicile (ie, the location of their registered office). According to Section 32 CCP, for complaints arising from tort, the court in the jurisdiction where the tortious act was committed has jurisdiction. This can also be the place of the event giving rise to the tort (Handlungsort) or the place where the harm resulted (Erfolgsort).
To the extent that claims may relate to transactions made outside of Germany, the question becomes relevant whether the German courts can apply German substantive law.
Since damages claims usually result from anti-competitive, ie, tortious and non-contractual behaviour, the question of the applicable law is governed by the Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II Regulation).
For claims that arose after 11 January 2009, the applicable law is determined pursuant to Article 6 Rome II Regulation. According to Article 6 (3) (a) Rome II Regulation, the applicable law shall in principle be the law of the country where the market is – or is likely to be – affected.
This "effects principle" also applies if the plaintiff sues more than one defendant. Thus, according to this principle, German law applies if the effects of the restriction of competition are, or are likely to be, felt in Germany. In cases affecting the markets of more than one country, the Rome II Regulation provides that a plaintiff who sues in the defendant’s country of domicile "may instead choose to base his or her claim on the law of the court seised, provided that the court of the member state is amongst those directly and significantly affected by the restriction of competition" (Article 6 (3) (b) Rome II Regulation). In such a situation, claimants can choose to base their claims on the respective national law of the anchor defendant if a number of conditions are met:
However, uncertainties can result in cases where the infringement affected different transactions by different claimants in different jurisdictions. In such cases, it may well be that the right to choose the applicable law under Article 6 (3) (b) Rome II Regulation must be assessed individually and separately for different claims, transactions or claimants/assignors.
Following the 9th Amendment to the ARC, the regular limitation period for private antitrust damages claims has been extended from three to five years (Section 33h ARC). The new rules apply to all claims which were not already time-barred at 27 December 2016.
The five-year limitation period begins at the end of the year in which:
While it is often the case that knowledge of the relevant circumstances may already occur when inspections by a competition authority at the premises of the cartel participant are announced (at least, in cases of press releases by the competition authority and comprehensive media reports), German courts tend to require the publication of the decision by a competition authority to start the limitation period.
Other Limitation Periods
A second (absolute) limitation period of ten years (regardless of any knowledge of the claim) starts when the claim arises and the infringement on which the claim is based has come to an end.
The maximum limitation period, however, is 30 years after the date on which the act causing the injury was committed (Section 33h (4) ARC).
In principle, the shorter limitation period precedes the longer limitation period.
The limitation period is suspended during the investigation by the EC or an NCA (Section 33h (6) ARC). The claims will expire no earlier than one year after the final and binding (rechtskräftig) decision of the respective authority or court. In case of an investigation by the EC, it can be argued that the suspension only starts upon the issuance of a formal "Decision to Initiate Proceedings", ie, not by a previous investigation means such as an unannounced inspection (dawn raid). So far, the FCJ has not had an opportunity to decide on this question.
Other popular tools often used by plaintiffs to suspend the limitation period without being required to prepare and submit a (costly and burdensome) lawsuit are applications to start mediation proceedings or limitation waiver agreements with potential defendants.
Following the implementation of the 9th Amendment to the ARC, a limited disclosure procedure in connection with antitrust damages claims has been established. While there were (and still are) general procedural rules which allow specific documents to be disclosed, these rules have very rarely been applied in antitrust cases (since they require the defendant to identify specific documents).
Section 33g ARC, introduced in June 2017, includes a new (substantive) right for access to information required to seek damages. According to a 2018 ruling by the Higher Regional Court Düsseldorf, this right to access to information only applies to claims that originated after 26 December 2016.
Access to Information from Defendants or Other Third Parties
In order to claim (pretrial) access to information from either the potential defendant or another third party, a plaintiff has to demonstrate probable cause that they have a right to seek damages and indicate the information they require as specifically as possible. This right is not limited to the plaintiff. The defendant can also claim the right to access to information from either the plaintiff or a third party, if an action for damages is already pending (ie, not pretrial). In particular, a defendant could request access to data and documents in order to be able to quantify a pass-on by the plaintiff.
In general, a disclosure is excluded if and to the extent that it is disproportionate, taking into account and balancing the interests of the party claiming access to information and the interests of the party that is in (alleged) possession of such information. Factors to be taken into account in this context include:
Many procedural aspects, such as the protection of business secrets or the reimbursement of costs associated with the disclosure, are unclear since precedents and an established decision practice do not yet exist.
Access to Records
In addition to requests brought against third parties, the plaintiff can request access to the records of the FCO or other relevant competition authorities according to Section 89c ARC. However, pursuant to Section 89c (1), sentence 1, No 1 ARC, access to the records of competition authorities is only granted if the requested information cannot be obtained with reasonable effort from another party.
Possible Effects of Access to Information
Whether the extended rules on access to information will actually facilitate or hamper damages claims, remains to be seen. Enforcing (pretrial) disclosure will likely result in significant delays and may therefore not always be attractive. This is especially true as Section 89b (3) and (4) ARC provide for the possibility of a stay of proceedings and an interlocutory judgment regarding access to information. Furthermore, the implementation of confidentiality protection for business secrets and other confidential information can further delay the proceedings. While the ARC acknowledges such protection, it does not provide any assistance as to how to actually ensure the protection of such information (eg, through redaction of the relevant documents or a confidentiality ring similar to what is current practice in English proceedings).
Unlike other jurisdictions, the concept of legal privilege does not exist in Germany. However, under the new Section 33g (6) ARC, documents can be withheld from inspection if they are in the possession of an external lawyer. Whether this also applies to documents in the possession of a client remains unclear.
In general, both (potential) claimants and defendants can request access to information in the possession of others. Restrictions only apply to leniency statements and acknowledgements in connection with settlement discussions with competition authorities.
The same applies to access to the records of a competition authority. Communications between the defendant and its in-house counsel or external lawyers can be found in the FCO’s file because the concept of legal privilege does not exist in the event that the FCO conducts cartel investigations and seizes documents. The FCO is entitled to seize all the documents in the possession of the in-house counsel unless they concern "defence correspondence". This is correspondence that is prepared with awareness of, and relating directly to, the actual defence in quasi-criminal cartel investigations or other antitrust proceedings that could lead to the imposition of a fine.
Documents in the possession of the defendant’s external lawyer are protected by attorney privilege and cannot be seized. This is confirmed by Section 33g (6) ARC.
Trade secrets and other confidential information are generally not privileged under German civil procedural law. However, confidentiality aspects have to be considered in relation to a request for disclosure of information pursuant to Section 33g ARC. If access to the information is granted, the court has to ensure that trade or business secrets will be protected, although there is no established practice in this regard as yet (see 5.1 Disclosure/Discovery Procedure).
Both the right of access against defendants and third parties, as well as against a competition authority (Section 89c ARC), does not grant access to leniency statements and acknowledgements in connection with settlement discussions with competition authorities. Such documents are explicitly exempted from the right of access to information. However, information in the possession of leniency applicants, other than leniency statements, can be accessed.
Under German civil procedural law, the following types of evidence are admissible:
Evidence gathered by hearing witness testimony (Section 373 CCP) is admissible in private antitrust damages proceedings. The party that wishes to submit the evidence must apply to the court for the witness to be heard. The witness is questioned by the court. Cross-examination does not take place. The legal counsels of the parties are, however, permitted to put questions directly to the witness. If a witness invited to testify before the court fails to appear, they may be fined or – in rare cases – even imprisoned.
In antitrust damages actions, which very often relate to events in the distant past, evidence gathered by hearing witness testimony on individual, specific transactions within an undertaking, eg, on specific procurements, often plays a secondary role, due to the long amount of time that has passed.
In procedural terms, it is necessary to differentiate between expert witnesses commissioned by the parties, and expert witnesses appointed by the court.
Expert Witnesses Commissioned by the Parties
In antitrust damages proceedings, it is common practice for the plaintiff to submit an economic expert opinion on the question of whether, and to what extent, harm has occurred; this practice is not obligatory, however. The defendant then usually submits a countering economic expert opinion, which serves to describe the weaknesses in the plaintiff’s expert opinion and/or to undertake its own damages analysis. Expert opinions submitted by the parties are part of the parties’ pleadings. Economic experts commissioned by the parties are usually expert witnesses (as per Section 414 CCP), and the rules governing witness testimony are applicable here as well.
Quantification of Damages
To date in Germany, there have been very few cases in which damages had to be quantified, which explains why at present there is only limited experience with the expert assessment of damages resulting from violations of antitrust law. The reason for this is that the vast majority of courts hear claims for damages in the form of actions for performance by way of a basic judgment (Grundurteil). For a basic judgment, the court only has to determine whether it is at least likely that the claim does exist in any amount. Thus, at this stage of the proceedings, the court does not need to involve an economic expert. The court has to decide on the exact amount of any damages only in the subsequent quantifications procedure. In the past few years in Germany, a number of damages claims have been granted, but the subsequent quantification proceedings have not taken place as yet.
Expert Witnesses Appointed by the Court
In practice, it is evident that those courts which are already dealing with the quantification of damages – in particular, those courts which do not choose the described two-stage procedure but conclusively decide on the claims in a single procedure – do regularly appoint an economic expert witness. The expert witness is selected by the court. The court also gathers the questions to be addressed to the court-appointed expert. The court-appointed expert witness is not cross-examined, but the parties’ legal counsel may ask them questions. The opinion of the court-appointed expert is not binding upon the court, but usually the court will follow its opinion.
Damages are awarded based on the principle of natural restitution – compensatory damages, according to Section 249 German Civil Code (GCC). The harm caused to a plaintiff by an antitrust law infringement is calculated by comparing the current situation in which the plaintiff finds itself, given the infringement, and the hypothetical situation in which the plaintiff would have been, but for the infringement, also known as the "counterfactual scenario".
Potential losses also include lost profits (Section 252 GCC). The damages may also include the after-effects of the cartel and the price increases of outsiders caused by the cartel (umbrella pricing). Exemplary or punitive damages are not available.
Provisions in terms and conditions that suppliers who took part in a cartel have to pay a certain sum (eg, 10% of the purchase price) have been considered by the FCJ in its second railway cartel decision to merely modify the burden of proof rather than to determine the amount of damage.
According to Section 33a (3) ARC, the amount of profit procured by the infringement may be taken into account in determining the amount of damage caused. The plaintiff may demand disclosure of the defendant’s profits according to Section 33g (1), (10) ARC or Section 242 CCP.
There is no standing case law yet on the methods to be applied for the quantification of cartel damages. In most cases, expert opinions submitted by the parties adopt a comparison-over-time approach. Section 33a (3) ARC allows for reasonable estimates by the court, according to Section 287 CCP.
The pass-on defence is available to defendants in Germany.
Section 33c (1) sentence 2 ARC regulates the pass-on defence for claims arising after 26 December 2016. According to this provision, any harm that occurred to the purchaser is compensated to the extent that the purchaser passed on that cartel-induced price overcharge to its own customers (Schadensabwälzung). With regard to claims arising on or prior to 26 December 2016, under the previous legal situation, the pass-on defence was permissible in terms of the adjustment of benefits, but German courts tended to apply this general principle rather restrictively.
The burden of proof regarding passing-on lies with the party that caused the harm; ie, the infringer must demonstrate and prove that its customers passed on any overcharge to the next market level, and to what degree. If, however, an indirect customer claims a cartel-caused damage, Section 33c (2) ARC assumes (under certain conditions) that the overcharge was passed on to the indirect customer (see 2.5 Direct and Indirect Purchasers).
Interest is payable on damages. Interest includes pre-judgment interest, which is awarded from the time the damages occurred. In the case of cartel damages brought by a customer, the damages typically occur at the time the customer orders/buys the product at the price affected by the infringement, ie, interest is in principle payable from the time the product was ordered by the customer.
The statutory interest rate is five percentage points above the base rate per annum, as published by the German central bank, for damages that occurred on or after 1 July 2005 (Section 33a (4) ARC, in conjunction with 288 (1) 2 GCC). For damages that occurred before 1 July 2005, the FCJ holds that interest is payable in the amount of 4% per annum.
The participants in a cartel are jointly and severally liable for the entirety of the harm that was caused by that cartel (Section 33d ARC). Defendants may assert claims for all damages in one single action against one or more cartel members. Alternatively, they can bring a number of separate actions asserting the entire sum of damages against various cartel members; if they are successful, however, they can only enforce the damages sum to which they are entitled once.
The internal settlement between joint and several debtors depends on the circumstances of the specific case and, in particular, on the extent to which they caused the damage (Section 33d ARC); other than this, the general rules for total debt equalisation apply (Section 421 et seq GCC).
Exceptions to these principles apply to claims which have arisen since 26 December 2016 with respect to leniency applicants, which received full immunity under the applicable leniency programme. Thus, leniency applicants are only liable for compensation for the loss suffered by their direct and indirect customers or suppliers resulting from the infringement (Section 33e ARC), and the same applies to the internal equalisation between joint and several debtors. Under certain conditions, with regard to claims arising after 26 December 2016, small and medium-sized enterprises may also only be obliged to compensate for the damages suffered by their direct and indirect customers or suppliers (Section 33d ARC).
Contribution claims against other infringers can only be brought in separate proceedings that are subsequent to the main proceedings, ie, the initial action for damages. A jointly liable infringer may also bring an indemnification claim against the other infringers, prior to making payment to the successful claimant.
Against this background, it is common practice for the defendants in German antitrust damages actions to issue third-party notices to the other cartel members, asking for those other cartel members to join the proceedings. As a result of these third-party notices, the outcome of the litigation in the main proceedings will be binding for the recipients of the third-party notices in a potential subsequent contribution litigation. Even if the third party decides not to join the proceedings, it has to accept the factual and legal findings of the court and cannot refute them in any subsequent litigation.
Injunctive relief is principally available and usually based on Section 33 ARC (typically aimed at getting a supply from a dominant supplier).
German procedural law provides for different interim measures pursuant to Sections 935 and 940 CCP. In the event of an immediate risk that the financial situation of the defendant will deteriorate, the plaintiff can request that the court seizes assets of the defendant. Furthermore, courts can issue interim measures ordering the defendant to perform a certain action, such as supplying the plaintiff with certain goods, if the plaintiff would otherwise lose important customers. The standard of proof is lower than for the principal claim on the merits. An applicant for interim relief must provide prima facie evidence that they have a claim and that the realisation of such claim is impossible or severely jeopardised without the interim remedy (urgency). As a general rule, an interim remedy shall not result in the fulfilment of the final remedy.
Under the new rules implemented by the 9th Amendment to the ARC, access to information and documents can also be pursued by seeking an interim measure.
In principle, arbitration proceedings are available under German law but are not mandatory before trial. However, such proceedings are only admissible if an arbitration clause in relation to antitrust damages has been validly agreed between the parties.
In practice, however, it is very common that cartel members and their respective customers will reach confidential out-of-court settlement agreements in order to prevent court proceedings or arbitration proceedings.
In Germany, external funding of private antitrust cases is legally permissible. While in previous years litigation finance providers usually came from the insurance sector and often made the funding of antitrust cases dependent on the outcome of extremely thorough analyses of the prospects for success, the range of funding models has noticeably increased since that time. A growing number of litigation finance providers from the private equity sector have entered the German market in recent years, often displaying a greater level of risk tolerance than many traditional litigation finance providers when making funding commitments. Thus, the litigation funding market is also rapidly evolving.
However, it still constitutes a major problem to bundle various claims into one action for damages in a legally viable way. A major action for damages backed by the Belgian Cartel Damage Claims in the cement case was lost in 2015 on formal grounds and an improved model backed by a British litigation financier in the trucks case may face a similar fate after a ruling by the Regional Court Munich I in early 2020. An appeal is currently pending at the Higher Regional Court Munich (see 3 Class/Collective Actions).
The costs of private antitrust litigation comprise the court fees and the attorneys’ fees. The court fees generally depend on the value of the claim and whether the case ends after the first instance or after an appeal.
Adjusting the Value of the Matter
In order to somewhat attenuate the cost risks involved in bringing private damages claims to court, the German legislator has introduced Section 89a ARC, which provides for the possibility of adjusting the value of the matter if certain conditions are met. If a party substantiates that its economic situation would be seriously jeopardised if it had to bear the costs of litigation calculated on the basis of the full value in dispute, the court may, at the party’s request, order that the obligation of this party to pay the court fees be assessed on the basis of a reduced value in dispute.
Who Bears the Costs?
As a general rule, the legal costs for private antitrust litigation have to be borne by the losing party. However, it should be noted that there is a statutory limitation as regards the amount of attorneys’ fees that are recoverable. Such fees can only be recovered within the limits of the German Lawyers’ Fees Act. If the actual fees charged by the attorney of the winning party exceed the statutory fee (which will typically be the case), the excess amount must be borne by the winning party itself.
Appeals against the decisions of the regional courts are made before the competent higher regional court on the facts and on the law. The higher regional courts, which are designated to be competent by the respective German federal states, have specialised antitrust law panels. Decisions of the higher regional courts may be appealed on points of law before the FCJ, which has also established a special antitrust law panel.
Cartel damages litigation is a major trend in Germany and has picked up considerably. There are hundreds of cases pending, for example, in the aftermath of the rail, cement, sugar, trucks, payment cards, confectionery and drugstore products cases of the European Commission and the Federal Cartel Office. The legal market has changed, with claimant firms and foreign litigation funders entering the scene. Many legal questions arising in cartel damages litigation have not yet been clarified by the higher courts. Current hot topics include the legal standard for establishing liability, the role of factual presumptions, the passing-on defence, disclosure of documents in civil litigation, and the availability of assignment models for mass litigation, to name a few. During 2019/2020 interesting developments and some major judgments contributed to shaping cartel damages litigation in Germany.
Affected Without Effect – Federal Court of Justice on Liability and Harm
In two ground-breaking judgments on the rail cartel, the Federal Court of Justice (FCJ) has resolved key contentious issues relating in particular to the proof of liability and harm. In the rail cartel case, manufacturers and dealers in train tracks, switches and sleepers had practised price and quota fixing as well as customer protection. In the Rail Cartel I judgment, the FCJ rejected prima facie evidence of having been affected by the cartel and the occurrence of harm. In the Rail Cartel II judgment of 28 January 2020 (KZR 24/17), the FCJ confirmed its case law, removing further uncertainties in relation to being affected by the cartel and the occurrence of harm.
Interpretation of “being affected” by the cartel in line with European law
Prior to the second judgment there were doubts not resolved by earlier FCJ jurisprudence – whether “being affected” means that the claimant must show that particular transactions were influenced by the cartel conduct in order to establish liability. The FCJ answers this question by basing its definition of the group of entitled persons on recent case law of the European Court of Justice (ECJ), where it was found that “all harm having a causal link to an infringement of Article 101 TFEU [must] be recoverable”. The ECJ consequently assumes that the group of entitled persons is broad-based.
The FCJ implements the requirements under EU law as part of the criterion of “being affected by the cartel” that gives rise to liability under German law. As a result, competition law infringers are liable to everyone who, viewed in abstract, is likely to have been harmed by the conduct in question. The claimant is required to demonstrate and prove such abstract likelihood in full (Section 286 German Code of Civil Procedure).
A claim will therefore only fail because the claimant was not affected by the cartel where a causal link between the restrictive practices and harm to the claimant is not reasonably conceivable based on the facts established. This may be, in particular, the case where the cartel arrangement concerns a market or a group of customers that differs from that of the claimant’s purchase transactions, or where the challenged concerted practices were of limited intensity. In the FCJ’s decision, the criterion of being affected by the cartel was readily met since goods that were the subject matter of the cartel arrangement were purchased directly from a cartel member.
Following the decision of the FCJ, the issues of whether and how the cartel conduct influenced the terms of specific purchase transaction (most importantly prices), relates to the harm suffered. This is important because the standard of proof for establishing causal harm is less strict under German law.
Proof of harm – overall assessment required
The FCJ also confirmed that there is no prima facie evidence in the claimant’s favour as regards the question of whether a price, quota or customer allocation cartel has caused any harm at all. However, full proof is not required. Instead, there is a reduced standard of proof, which also allows the deciding court to estimate the harm (Section 287 German Code of Civil Procedure).
The FCJ gets right to the heart of the difficulty of determining harm in cartel damages proceedings: the deciding courts must determine the hypothetical price in the absence of the cartel. In the vast majority of cases there is no direct proof of this and the courts must resort to circumstantial evidence. The deciding courts are required to undertake a comprehensive evaluation. The standard of proof is a predominant likelihood based on reliable information that some degree of harm has occurred.
On top of the established circumstances, the overall assessment must also take into account any circumstantial evidence for or against price effects, provided it can be proven. The deciding court must also take account of experience. In this respect, the FCJ repeats its previous case law, according to which a “factual presumption – in the sense of an empirical principle – supports the argument that the prices achieved within the framework of the cartel are higher on average than those which would have been achieved without the agreement restricting competition”. According to the court, this presumption becomes stronger the longer the cartel has been in operation and the more established it is, as this suggests it is more probable the cartel has had an impact on prices. The influence of these empirical principles on the overall assessment will depend on the specific form of the cartel, its practice and the further ascertainable circumstances that speak for or against a price effect. In the case of the rail cartel – a hardcore cartel – the FCJ assumed the empirical principle to be of great significance.
The FCJ’s comments regarding the consideration to be given to expert opinions within the scope of the overall assessment are of great practical relevance. According to the FCJ, the deciding court must look in depth into an expert report submitted by a party. However, the submission of such reports does not necessarily oblige the court to obtain the opinion of a court-appointed expert. The court may refrain from doing so where it already has sufficient grounds for a judgment based on likelihood. The plausibility of a private expert report should be assessed by the deciding court based on two points:
Admissibility of interim judgments limited to the question of liability
The FCJ’s guidance on how to pass an interim judgment on the basis of the cause of action without procedural errors is of great significance for the practice of the courts of first instance. The current practice of many courts of merely delivering interim judgments on the question of liability leaving the amount of damages open is now likely to be inadmissible, at least in most cases.
A first instance court can deliver an interim judgment on liability only if it finds that there is a likelihood that any harm has arisen. Yet here, too, the court must perform a comprehensive assessment of all relevant circumstances of the individual case in accordance with the criteria set out above, although the necessary degree of the judges’ conviction is slightly relaxed compared to when deciding about damages. At the same time, the passing of an interim judgment must not run counter to procedural efficiency by causing an unjustified delay or an increase in the cost of the proceedings. This is the case in particular where “the facts for reason and amount are approximately the same or are so closely connected that the extraction of a decision on the basis of the cause of action would be impractical and confusing”. This is usually the case in practice.
Judgments on Cases Involving an Anti-competitive Exchange of Information
Following the FCJ’s Rail Cartel II ruling, the courts dismissed several cartel damages actions in cases involving an anti-competitive exchange of information.
In the body care products ruling of Frankfurt Higher Regional Court dated 12 May 2020, the court rejected at second instance a claim for cartel damages by the claimant, applying the Rail Cartel II criteria for determining damages. On an overall assessment, harm that was causally linked to the competition law infringement could not be established with the necessary likelihood. The basis of the claimant's allegation was an exchange of information from 2004 to 2006 as part of meetings of a working group, which had been identified by the German Federal Cartel Office as infringing competition law.
In its ruling, the Frankfurt Higher Regional Court comprehensively assessed the individual circumstances in order to ascertain whether harm had been caused. The decisive factor for the court was the fact that, unlike the rail cartel, the conduct in violation of competition law was only an exchange of information and not a hardcore infringement. No decisive weight could be attached to this exchange of information and the court left open whether experience argued for a price-increasing effect. In any event, there were numerous indications that spoke against an occurrence of harm (specific market conditions, co-ordination and the object of the information exchange, legal objectives of the working group, lack of cartel discipline, and the strong negotiating position of the claimant). The court also assessed the expert reports submitted by the parties themselves without obtaining a court expert report. In particular, the court considered the claimant’s expert report to be insufficient because it contained methodology mistakes, as well as contradictory analyses and calculations.
Prior to the publication of the FCJ’s judgment, the Nürnberg-Fürth Regional Court issued a ruling on the trucks case which also concerned the exchange of gross price lists. The court rejected a factual presumption for a cartel effect on the vehicles purchased by the claimant. According to the court, acceptance of a factual presumption must be based on a comprehensive assessment of the facts and circumstances of the individual case. However, the information exchange in question was structurally different from price, quota and customer allocation cartels, so a factual presumption had to be rejected. The participants in the information exchange were free to set their own prices and solicit customers. The gross prices exchanged differed significantly from the net prices actually paid on the market. Moreover, the exchange only took place at intervals and not extensively.
However, other first instance courts such as the Stuttgart Regional Court continue to hold that the exchange of gross price lists in the trucks case is sufficiently likely to have caused harm. Overall, it appears that different first and second instance courts interpret the FCJ’s guidance slightly differently. Therefore, on these and other issues, further FCJ jurisprudence will be necessary to achieve a higher degree of legal certainty.
Litigation Vehicles under Attack – Assignments of Claims Invalid
Since there is no dedicated collective action procedure available under German law for cartel damages litigation, claimants have to resort to the generally available instruments. Mass litigation is mainly organised by professional claimants, sometimes supported by litigation funders, by having the actual claims assigned to special purpose entities (litigation vehicles) acting as the claimant on behalf of sometimes thousands or more individual claims. It is settled law that debt collection service providers need to register under the German Legal Services Act (Rechtsdienstleistungsgesetz) because they assist third parties in enforcing their rights. Where this is done by non-lawyers, certain quality standards shall be ensured in the public interest.
In one case regarding the European truck cartel, a legal services provider supported by a litigation funder bundled potential claims by more than 3,200 logistics companies and brought an action before the Regional Court of Munich. The statement of claim alone is 18,000 pages long, excluding annexes. When it was served upon the defendants, they literally received a truckload of paper. Only in December 2019, the Federal Supreme Court had held that the Legal Services Act needed to be construed, in general, in favour of the admissibility of legal services by non-lawyers. Therefore, it came as a surprise when the Regional Court of Munich I (judgment of 7 February 2020, 37 O 18934/17) rejected the claim entirely. It found that the assignment contracts between the litigation vehicle and the allegedly harmed logistics companies were considered void because of an infringement of the Legal Services Act.
First, the court held that the legal services provided by the claimant were not limited to “collection services” within the meaning of the Act and were, therefore, illegal if provided by non-lawyers. Referring to the legal service providers general terms and conditions as well as its homepage, the court found that the claimant’s contractual obligations, from the outset, exclusively aimed at judicial enforcement of the claims and that out-of-court settlement of the claims – the essence of “collection services” – was visibly unrealistic. In addition, the court found another infringement of the Act in that the service provider – when bringing the action indirectly on behalf of many potentially harmed persons – acted in an inherent conflict of interest towards them. The court argued, firstly, that the claimant combined several claims, which had very different chances of success. Within this combination, each assignor, and in particular the ones with more promising claims, shared the risk involved in pursuing the claims with little chance of success. Especially in the case of a settlement, there would be a conflict, as the contractual agreement only provided a proportional payment, regardless of individual chances of success and, naturally, the settlement amount would be impaired by less promising claims. Secondly, the court argued that the claimant’s obligation towards the litigation funder had direct influence on the fulfilment of its obligation towards its clients and jeopardised the due provision of the legal services. According to the agreement, the claimant was completely exempted from all costs of litigation. Due to the claimant’s dependence on litigation financing, there was supposedly a concrete risk that the claimant would structure the litigation according to the litigation funder’s interests instead of those of the injured persons.
In the meantime, the Regional Court of Hanover also applied the Munich court’s reasoning, dismissing a case in May 2020 relating to the German sugar cartel where a group of loosely affiliated companies that did not form a corporate group had bundled claims in one entity (judgment of 4 May 2020, 18 O 50/16). Both cases are on appeal and it is more than likely that they will finally have to be decided by the FCJ.
If the rulings stand, many of the claims bundled in the action will be time-barred because the action by a third party did not suspend the limitation period. More generally, an affirmative appellate ruling would reshape the German cartel damages litigation landscape and market. Considering the reasoning, it would be more difficult to bundle claims and litigation costs would increase. Although the rulings are based on the particularities of the case and, thus, it is possible that under other circumstances the assignment model would stand in court, the risks would be high. In terms of legal policy, these cases raise the question of whether reforms in the German litigation system are needed. Some commentators refer to these and other judgments as self-defence of the lower courts swamped with complex and extensive cartel damages actions. It would make sense for the legislator to introduce an efficient collective action mechanism and for the German federal states to strengthen the court system to support it when confronted with extensive and complex matters.
Transposing the Court’s Skanska-Judgment – Can Any Part of the Economic Unity Be Sued?
The ECJ’s Skanska-judgment (judgment of 14.03.2019, C-724/17) has fuelled the debate about which entity within a group of companies can be sued. One challenge in cartel damages litigation is to identify a proper defendant. While the infringement of Article 101 (1) TFEU is attributed to an “undertaking” that can consist of many legal entities, the damages action must be brought against particular legal entities or persons who are liable under civil law. The German courts are dealing with this predicament in different ways.
Some argue that the court in the Skanska-judgment only applied the limited cartel proceedings practice on fining certain group entities not directly involved in the infringing conduct, eg, where such entities exercised decisive influence on the infringing entity. Apart from being part of the same economic unity, the infringement must be imputable to the particular defendant (Regional Court of Mannheim, judgment of 24.04.2019, 14 O 117/18; Regional Court of Munich I, judgment of 07.06.2019, 37 O 6039/18). Others, supported by some commentators and the claimant’s Bar, argue that claims can be brought against any entity that is part of the economic unity forming the undertaking within the meaning of Article 101 TFEU having infringed competition law (Regional Court of Dortmund, judgment of 08.07.2020, 8 O 75/19 Kart). The debate is on and it is across Europe. There will hopefully be more clarity after the court’s judgment in the Spanish Sumal, SL v Mercedes Benz Trucks España, SL case (Case C-882/19).
Pass-On Defence Excluded Due to Policy Considerations?
The passing-on defence is a complex issue widely discussed, but with limited impact on cartel damages litigation in Germany so far. Some courts acknowledge the difficult situation of defendants who typically do not have access to data conclusively proving a pass-on. Sometimes, therefore, courts require claimants to argue in detail why there was no pass-on. Thanks to this procedural tool of shifting the burden of argument, applications for the disclosure of data are usually rejected or ignored.
There is also another trend to reject the passing-on defence entirely due to policy considerations. In short, where indirect purchasers – eg, in cases with dispersed, low-value damage – are unlikely to bring damages actions, the cartelists should not be unduly unburdened from liability to direct purchasers (OLG Schleswig, 17.02.2020, 16 U 43/19 Kart on trucks). It could be questioned whether this approach conforms to the EU Damages Directive. Ultimately, the FCJ and the European courts will have to decide.
Disclosure of Documents – Not (Yet) in the German Civil Procedure Genes
Access to the other parties’ documents is still a hot topic in German cartel damages litigation and the courts still apply the rules adopted in 2017 implementing the Damages Directive 2014/104/EU very cautiously. It was held that the purpose of the rules allowing access to the other party’s documents is to alleviate the information asymmetry inherent in cartel damages litigation (namely due to the secrecy of cartel conduct). Thus, contract and invoice data that the claiming party had destroyed prior to the lawsuit cannot be sought from the other party (Regional Court of Munich I, judgment of 27.03.2020, 37 O 18471/18). Another court held that the party seeking access to documents and information must precisely describe which documents are to be handed over and convincingly state why they are relevant to the case (Regional Court of Stuttgart, judgment of 12.12.2019, 30 O 27/17).
COVID-19 Challenges and Summary
During the lockdown period in Germany from March to June, the German courts postponed hearings and resolved fewer cases. Many courts introduced or revived initiatives to hold hearings remotely by video conference, though this tool was typically not used in the usually complex and multi-party cartel damages cases. As of July 2020, it appears that most courts are almost back to normal in terms of speed and scheduling hearings even though protective measures (such as face masks or glass barriers) continue to apply.
Overall, it has been an interesting year for cartel damages litigation in Germany. Important issues were clarified but there are many more to be decided by the highest courts before the vast number of pending cases can be resolved one way or the other.