Cartel damage claims: Federal Court of Justice corrects understanding of 'affected' goods

Introduction
Background
Cartel affects do not require proof that cartel had actual impact on purchase
Actual impact of cartel agreement is relevant only for damage assessment
Benchmark: Section 287 of Code of Civil Procedure and actual presumption
Comment

Introduction

In its decision of 28 January 2020, the Federal Court of Justice readdressed fundamental questions of cartel damage law in connection with claims for damages resulting from the so-called 'rail cartel'.(1)

The question of whether goods are affected by the cartel is not covered by the strict standard of proof under Section 286 of the Code of Civil Procedure. Under certain circumstances, that question may even remain open. Against this background, injured parties will in future be able to claim damages more easily. It can be expected that the number of cartel damage claims before German courts will continue to increase.

Background

In the underlying case, a regional transport company claimed damages from the manufacturers and suppliers of track superstructure materials participating in anticompetitive agreements of the rail cartel. The Federal Cartel Office had fined manufacturers and suppliers of track superstructure materials in 2013 and 2016 in the three-digit millions of euros range for price, quota and customer protection agreements in violation of antitrust laws. The Erfurt District Court(2) and the Jena Higher Regional Court(3) had ruled in favour of the plaintiff in the first instance. The Federal Court of Justice has now rescinded the decision because it did not follow the prima facie evidence assumed by the Jena Higher Regional Court.

Cartel affects do not require proof that cartel had actual impact on purchase

According to Section 33(1) of the Act Against Restraints of Competition Goods, goods are 'affected' by a cartel where the defendant can be accused of a conduct restricting competition that, through a sales contract or in any other way, can directly or indirectly result in damage to the claimant. It is sufficient that the claimant purchased goods subject to the cartel agreement from a company participating in the cartel. However, at this point, no proof that the cartel agreement had an actual impact on the individual acquisition is required. The Federal Court of Justice stated explicitly that, insofar as its previous rail cartel ruling(4) indicates otherwise, this would not be upheld.

Actual impact of cartel agreement is relevant only for damage assessment

Whether the cartel had an actual impact on the acquisition in question is thus relevant in the context of determining whether a damage occurred and especially in connection with the requirement of causality between the infringement of the law (cartel agreement) and the occurrence of damage. Where it appears that the claimant has suffered damage because of the cartel agreement, the illegal agreement clearly had a detrimental effect on the purchase and in particular on the purchase price. In some cases, the question of whether the cartel agreement had an actual impact on the individual purchase can be left open. That is, when the judge is convinced that the cartel agreement had an effect not only on individual purchases, but also on the entire market.

Benchmark: Section 287 of Code of Civil Procedure and actual presumption

Whether damage occurred must be decided under Section 287 of the Code of Civil Procedure. There is no prima facie evidence of the price-increasing effect of a cartel. However, the Federal Court of Justice again held that there is an actual presumption of a cartel-related price increase. Such presumption speaks in favour of customers of companies participating in the cartel, as it can be assumed with a high degree of probability that the prices achieved within the framework of a cartel are higher than prices, which would have been achieved without the cartel. The court held that, the longer the cartel lasted and the more persistently the agreements were practised, the more likely it appears that prices included a cartel-related overcharge.

The court also provided valuable advice on the application of Section 287 of the Code of Civil Procedure and the use of expert opinions.

Comment

In its decision, the Federal Court of Justice distanced itself from previous case law of the German courts.(5) The decision clarifies open questions relating to cartel damages and simplifies the presentation of claims by plaintiffs, as it will no longer be necessary to present and prove that a cartel agreement had an actual impact on an acquisition transaction in question under the requirements of Section 286 of the Code of Civil Procedure. It is to be expected that the number of cartel damage actions pending before the German courts will continue to increase.

Further, the court provides advice regarding the use of economic expert opinions – for instance, that it is not mandatory to appoint a court expert. Time will tell how the courts will implement these indications and whether the proceedings will become shorter and simpler as a result.

For further information on this topic please contact Catharina Richter at Fieldfisher (Germany) LLP by telephone (+49 211 950 749 0) or email (catharina.richter@fieldfisher.com). The Fieldfisher (Germany) LLP website can be accessed at www.fieldfisher.com.

Endnotes

(1) Federal Court of Justice, decision of 28 January 2020, KZR 24/17 – Rail Cartel II.

(2) Decision of 3 July 2015, 3 O 1050/14.

(3) Decision of 22 February 2017, 2 U 583/15 Kart.

(4) Federal Court of Justice, decision of 11 December 2018 – Rail Cartel I.

(5) See OLG Nuremberg, decision of 8 July 2019, 3 U 1876/18 and OLG Düsseldorf, decision of 23 January 2019, VI-U (Kart) 18/17).