The German cement cartel – a landmark decision for private damages actions

The German cement cartel has been occupying German courts of all levels for some time. From the feasibility of the assignment of claims to a third party (see here), or a reduction of fines by nearly 50% by the Higher Regional Court Düsseldorf (OLG Düsseldorf; in German see here) to the recent decision of the Federal Court of Justice (Bundesgerichtshof or ‘BGH’) regarding the scope of the limitation period of cartel damage claims earlier this month (decision in German here). The latter has been hailed a ‘landmark judgment’ with an impact far beyond this particular case and therefore merits some further discussion in this blog post.

Background – the cartel

The firms involved had, in separate agreements in four different regional markets all across Germany, agreed on market allocation and quotas. In some cases, these agreements were put in place as early as the 1970s in some cases. The cartel had been detected around the year 2002, solely because of information from within the market, originating in the construction sector, which was then confirmed by nation-wide searches at cement manufacturers’ premises and confessions by the largest manufacturers involved. This lead to the German competition authority – the Federal Cartel Office (FCO) – imposing a fine of around EUR 660 million on six of the largest cement manufacturers in 2003. The fine constituted the highest fine the FCO had imposed until then and is to this day among the highest fine the authority has imposed. This holds true even after the OLG Düsseldorf reduced the fines in 2013 (see above).

The case gained further attention after the Belgian company CDC (Cartel Damage Claims) acquired private damage claims amounting to around EUR 176 million from several customers of the cement manufacturers who had been damaged by the higher prices the cartel enabled. CDC sought to enforce the damage claims in its own name before the German Courts. The general concept behind this ‘business model’ has been hailed by some as an important development in addressing practical concerns of time- or administrate burdens which may prevent private individuals to bring damages actions to recover any money they overpaid because of a cartel, despite them having the right to do so (see e.g. here). Ultimately, CDC’s action was dismissed by the OLG Düsseldorf in 2015, as it considered the assignments of claims by the damaged companies to CDC to be immoral and void in line with §138 BGB. The court found that CDC would be unable to meet a potential future litigation cost order and that, therefore, the assignment shifted the risk of the litigation costs to the defendant (for the decision in German see here). (For a more detailed discussion of the CDC proceedings in English see here from 11.261)

The recent Federal Court of Justice’s decision

The recent Federal Court decision ties in with the CDC subject matter of private damage claims and another question which to some extent arose during the CDC proceedings. The core question the BGH had to decide on was when private claims become time-barred and how long the limitation period is suspended. The particular issue regarding this question was that the relevant competition law norm (§33 V ARC 2005; corresponding norm in the current ARC amendment: §33h VI ARC 2017) had been introduced in 2005. The damage proceedings, however, had already commenced before the introduction of the norm.

33 V ARC 2005 essentially declares that damage claims do not become time-barred if infringement proceedings have been initiated. The question was, therefore, whether the scope of the norm would also apply retroactively to proceedings which started before 2005, like the ones started in 2003 by the FCO.

The BGH decided that §33 IV, V ARC 2005 do indeed apply to proceedings which started before the introduction of the norm (§ 33 IV ARC 2005 concerning the related declaratory effect of an authority’s decision about the existence of the infringement in question). Further, the court also decided that the norm applied to damages claims based on infringements which occurred before the introduction of §33 V ARC 2005, as long as these had not become time-barred by the time the provision was introduced (paras 30 et seq and 65 et seq).

Comment and outlook

The BGH’s decision has rightfully been called a ‘landmark judgement’. In the press release accompanying the decision, the BGH itself points out the relevance of this decision not only to the cement cartel, but to other ongoing proceedings as well, such as the truck-, the railway track-, or the sugar cartel. The decision is bound to give any private claimant already seeking damages certainty to the temporal scope of damages he may be able to recover. Even more importantly, the decision might encourage anyone having incurred damages from a long-running cartel to take the initiative and seek to recover those damages in court.

Further, the decision gives an important indication to the relevance the court attaches to private damages actions and contributes to legal certainty for anyone seeking or considering to seek damages because of a long-running cartel. The court stretched the wording of the norm in question in favour of anyone seeking private damages and, in doing so, sent an important signal that it is inclined to favour the enforcement of anti-cartel action and the attempts of individuals to recover damages. The court interpreted the wording of § 33 V ARC 2005 broadly to also extend to any damages incurred because of infringements before the introduction of the norm (paras 70 et seq). The court explains this broad approach with the relevance the legislator attached, in the court’s opinion, to securing the enforcement of cartel damages claims.
The effect of this particular part of the decision is welcome for two reasons: firstly, it will obviously facilitate private claimants’ recovery of the damages they did incur as well as, hopefully, motivate more private claimants to come forward and seek damages in the first place (see above). The further effect of the BGH’s broad approach to the enforcement of private action is likely to be a further increase in deterring undertakings from engaging in a cartel to begin with – the BGH is unlikely to abandon its pro-private damages actions stance in other decisions and lower courts are likely to pick up on this general position. Therefore, any cartel can expect to face more and more determined private damages actions in addition to any fines the authorities might impose.

Tags

Über

Anja Naumann

Blog Editor

Graduate Teaching Associate, Queen Mary University, London

>> learn more >>

Hinterlasse eine Antwort

Ähnliche Beiträge

06. Apr 2020
Feature von Rita Paukste

EURIBOR Cartel: Features of Collusion and Detection of Cartel

A colleague of mine (kudos for you know who you are) once told me that in his competition law class he has a part called “how to make a good cartel?” A thought-provoking academic exercise in many aspects, indeed. When analyzing cartels in the financial sector this popped in mind to raise other questions – how participants in cartels in […]
16. Mrz 2020
Feature von Friso Bostoen

Corona and EU economic law: Antitrust (Articles 101 and 102 TFEU)

By Friso Bostoen and Liesbet Van Acker As the corona pandemic instils more and more fear in the population, some of its economic effects are immediately noticeable. Two items—hand sanitizer and facemasks—have been in particularly high demand (and short supply). This has driven prices up to a level where one may wonder whether they are abusive in the sense of […]
18. Jul 2019
Feature von Friso Bostoen
online shopping cartoon

Amazon cases on the move: Bundeskartellamt closes proceedings while European Commission opens formal investigation

The 17th of July has been quite the day for Amazon, at least when it comes to antitrust. Firstly, the German Competition Authority (Bundeskartellamt) has closed its abuse of dominance proceedings against Amazon in return for concessions from the online marketplace. Secondly, the European Commission announced that it was opening a formal investigation into possible anti-competitive conduct by Amazon. This blog post takes a closer […]
17. Okt 2019
Feature von Rita Paukste

Competition law and public procurement – an easy catch for competition enforcers?

If you ask what the common recent trends are among EU Member States in competition law enforcement, the answer surprisingly (or not) would be related not to digital economies but to public procurement. Lately national competition authorities had quite a fruitful harvest investigating competition law infringements in public procurement markets. Among them are, for example, the French, Italian, Dutch, Hellenic, […]
12. Nov 2019
Feature von Friso Bostoen
Lady Justice

Abuse of relative dominance in the platform economy: a French court finds Amazon’s contracts with third-party sellers significantly imbalanced

Two years ago (before Amazon became entangled in a patchwork of investigations by competition authorities), Reuters reported: ‘France files complaint against Amazon for abuse of dominant position’. The news report did not garner a lot of attention. More surprisingly, neither did the recent judgment of the Paris Commercial Court on the complaint. As the judgment offers insight into several pressing questions presented by platform competition […]
07. Sep 2018
Feature von Anja Naumann

New momentum for abandoning the 50+1 rule of the German Bundesliga?

Have you recovered from the World Cup yet? Whether or not, it is now time to focus on the national football leagues again and support the football club of your choice (for better or worse). With regard to the German Bundesliga, the old issue of club-ownership has come back into focus over the summer when the Deutsche Fußball Liga (‘DFL’ […]
16. Aug 2018
Feature von Anja Naumann

Cartel deterrence through cartel enforcement – a discussion of recent research

With the buzz surrounding the EU Commission’s recent Android decision (read about our take on it here) still very much ongoing, we will turn our focus to something a little different this week. This post discusses a recently published article ‘Does enforcement deter cartels? A tale of two tails’ by Iwan Bos, Stephen Davies, Joseph E. Harrington Jr, and Peter […]
07. Aug 2018
Feature von Lexxion Publisher

Price monitoring software and competition – new possibilities for RPM in absence of sufficient deterrence

Shortly after the dropping the A-bomb on Google for its alleged tying practices, the Commission imposed fines of over €111 million on Asus, Denon & Marantz, Philips and Pioneer for fixing the minimum resale prices of their online retailers. This recent case shows that the Commission is serious about taking on competition law infringements in the online sphere, however, it […]
07. Jun 2018
Feature von Daniel Mandrescu

When Algorithmic Pricing meets Concerted Practices- the case of Partneo

Algorithmic collusion, algorithmic cartels, AI price fixing cartels and many other pseudo computer science themes have become a source of great interest for competition law authorities, practitioners and academics. The allure of these topics is understandable; the idea that cartels can come into existence without human intervention is a fascinating matter despite the fact that fully automated (not to mention […]
06. Apr 2018
Feature von Daniel Mandrescu

Online platforms and abuse of dominance – the case of Funda Real Estate

The application of EU competition law to online platforms has been subject to much debate in the course of the past two years. The EU Commission and several national competition law authorities have launched multiple studies in order to identify the possible challenges in this context and establish an action plan. The distinguishing characteristics of online platforms including: the reliance […]

Nutzen Sie unseren Newsletter, um sich regelmäßig über Konferenzen, Workshops, Trainings und die  neuesten Ausgaben unserer Fachzeitschriften u.a. aus den Bereichen des europäischen Wettbewerbs- und Vergaberechte, Datenschutzrechte, Abfallrecht, Umwelt- und Planungsrecht sowie Chemikalien- und Pharmarecht zu informieren.

Verpassen Sie keine Events und Publikationen. Neuigkeiten abonnieren