Cartel damages: Germany moves to encourage action against cartel members

Europe’s largest economy will soon expand opportunities for claiming damages from cartel members.

The German government has started to unveil its plans for the national implementation of the EU Directive on Damages Actions, with amendments to the German competition statute expected to be passed later this year. Whilst those entangled in anti-competitive conduct will need to consider greater risks of actually having to pay compensation, claimants will welcome a fresh choice of strategic options. 

• Limitation periods: These will be extended from three years to five, allowing more time for economic and legal analysis. The German competition authority will need to publish the key elements of its decisions, which up to now it has not been obliged to do.

• Indirect purchaser claimants: The new rules benefit indirect purchaser claimants, which in the future can rely on an assumption that direct purchasers of cartelized goods passed on the overcharge. Up to now, indirect purchasers can already assert claims but carry a larger burden of proof. 

• Collective claims: The Directive does not require the EU member states to introduce class actions. However, under German case law injured parties can team up by assigning their respective claims, which can then be brought jointly. According to a controversial decision of a regional court in Düsseldorf, an exception may apply where the sole purpose of the assignment was to disadvantage the cartelists by shifting the adverse cost risk to an underfunded entity. The Directive welcomes the right of standing for entities that acquired claims from cartel victims.

• Nature of liability: The cartelists will be jointly and severally liable, with limited carve-outs for SMEs and leniency recipients. Assets of parent entities will form part of the liability mass available to successful claimants. The new law is also expected to expand the liability for fines to corporate entities that are part of the same undertaking. Recent case law provides that managing directors and others who formed the cartel are also liable to third-party claimants. The new rules will also amend the limitation periods related to contribution claims – this will make it easier for a cartelist, who was ordered to pay damages, to make its co-conspirators share the burden. 

• Information and disclosure: Courts will be able to access the files of the competition authority. They will also be able to order the disclosure of relevant materials which cartelists or third parties may have in their possession. To initiate this discovery process, it would seem inefficient to require the filing of a full-fledged damages action where the claimant merely seeks to verify whether the anti-competitive conduct actually concerned goods it procured during the cartel period. Hence, this will likely be in the form of a separate, pre-trial discovery process – a novelty in German civil procedure. Up to now, follow-on claimants have had to seek access to documents from the files of the competition authority. Whilst the government may want to reduce opportunities for doing the latter (in an effort to minimize the administrative burden for the Bundeskartellamt) constitutional principles of transparency and the right to effective redress will still require the legislator to take proper account of all interests involved.  

• Leniency documents: Under the Directive, certain leniency documents may not be discoverable and leniency recipients benefit from an exception to the principle of joint and several liability. This is designed to protect whistleblowers, who benefit from leniency from fines in return from blowing the whistle on the cartel and/or cooperating with the authority. So awarding amnesty will have consequences for third-party claimants, which may make it necessary to introduce procedural safeguards or even possibilities of appeal. In any event, the German legislator will need to formalize the national amnesty programme which, like the European Commission’s leniency programme, so far only has the form of a notice. 

The German government is expected to publish the draft legislation officially this spring, with parliamentary votes anticipated in the autumn.