Availability of civil claims
Scope for civil claims in Germany
Stand-alone and follow-on claims are available in Germany.
Any market participant that may have been negatively affected by an infringement of the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen “GWB”) and/or Articles 101/102 TFEU may bring an action for damages against the infringing corporations or individuals. This general rule has been confirmed by Section 33(3) GWB, which came into force on July 1, 2005 and applies for infringements that took place as from that date. However, German courts have based their judgments in private competition litigation cases on this general rule even where the infringements took place before July 1, 2005.
A finding of infringement by a competition authority is not a precondition to a civil damages action. In practice, some claimants have even tried to recover damages before the investigation of the Federal Cartel Office (Bundeskartellamt, the “FCO”) has been completed. However, in this case, the burden of proof is completely with the claimant (see below).
Applicable limitation periods
According to Sections 195 and 199 of the German Civil Code (Bürgerliches Gesetzbuch, “BGB”), the standard limitation period for bringing a claim is three years.
The limitation period commences at the end of the year in which the claimant obtained knowledge of the circumstances giving rise to the claim and of the identity of the infringer (or would have obtained such knowledge if the claimant had not shown gross negligence in failing to do so). Often, the announcement of a cartel investigation by the competent competition authority may be sufficient to establish that the potential claimant knew or ought to have known of the event causing damage (but not necessarily of the identity of the infringer, whose involvement in the cartel may only have been published later). In Germany, the press release of the competition authority announcing the fine is often the first public document of a cartel investigation and thus serves as the triggering event for the limitation period.
If a claimant files a claim within the above limitation period, his claims would, however, normally be limited to those damages that accrued within the preceding 10 years, which is the maximum limitation period for pecuniary damage claims (Section 199(3) BGB).
For cartel infringements that took place on or after July 1, 2005, Section 33(5) GWB establishes a special rule for private competition litigation claims. According to Section 33(5) GWB, the standard limitation period will be suspended for as long as investigations of the European Commission or a national competition authority of a Member State are ongoing. The purpose of this rule is to make sure that any affected person may benefit from the binding effect that a decision by these competition authorities has on the civil courts, given that there might be quite lengthy administrative proceedings leading to the imposition of fines. Limitation of a claim occurs at the earliest six months after investigations are formally completed. Courts also tend to apply this rule for cartel infringements that have occurred before July 1, 2005 if the competition authority’s investigation was completed on or after this date.
An action will be initiated before a regional court (Landgericht), from where it can be appealed to the Court of Appeals (Oberlandesgericht) and finally to the German Supreme Court (Bundesgerichtshof). It should be noted that certain regional courts, such as Berlin, Düsseldorf and Mannheim, have greater experience of handling competition cases and are therefore preferable to courts located in other areas, provided that the respective courts all have jurisdiction to hear the case. There are also special rules providing for the exclusive competence of one regional court for cartel disputes in a certain region (Section 89 GWB).
Availability of class actions for infringement of competition law and/or damages in Germany
The German Code of Civil Procedure (Zivilprozessordnung, “ZPO”) does not provide for class action litigation. Individual proceedings may be consolidated, provided that the relevant proceedings are already pending before the same court and the court agrees to join the proceedings. Furthermore, claimants can argue that they are entitled jointly to pursue claims, provided that these are based on substantially the same factual and legal grounds (Sections 59 and 60 ZPO).
Despite the fact that class actions in private competition litigation are not known in Germany, there is the possibility of “bundling” damages claims together. However, this possibility has been severely restricted by a decision of the Regional Court of Düsseldorf in December 2013. In that case, the FCO uncovered a cartel in the cement sector relating to the setting of sales quotas as well as price-fixing going back to the early 1990s. A Belgian company named Cartel Damage Claims SA (“CDC”) was specifically incorporated to bundle various damages claims against the cement producers. CDC acquired the damages claims of many affected companies by way of purchase and assignment, and then filed a claim before the Regional Court in Düsseldorf. The first hearing on the case took place in December 2006 and the Regional Court established the admissibility of the claim by way of a partial decision. The defendants appealed this decision to the Higher Regional Court. In May 2008, the Higher Regional Court rejected the appeals and confirmed the admissibility of the claim. A request for a legal review of the appeals decision was rejected by the German Supreme Court in April 2009, who confirmed the admissibility of the claim as well. The proceedings continued before the Regional Court of Düsseldorf in the first instance, which ended with a decision on December 17, 2013. The claim was rejected as the regional court came to the conclusion that CDC was not the owner of the damage claims. According to the regional court, this resulted, inter alia, from the invalidity of the assignments by the damaged companies to CDC due to a violation of bonos mores. The court reasoned that the primary aim of the assignments was to deprive the defendants of the possibility to claim their legal costs in case of a loss of CDC. In comparison to the damaged companies, CDC was only a special purpose vehicle without assets. The assignors had no obligation to provide CDC with further capital injections. Therefore, the regional court qualified the assignments as abusive and contra bonos mores because their purpose was to shift the risk of having to bear the costs of the proceedings unilaterally to the defendants. This decision was confirmed by the Higher Regional Court in 2015 and the judgment is final. This judgment does not exclude the bundling of claims by assignment in general. However, there are no clear lines as to the funding required for a company to enforce claims in court. There are several ongoing actions brought into court by CDC or similar companies.
Apart from the bundling of claims, Sections 33(2) No. 1 and 34a GWB allow consumer associations and other professional associations to request cease-and-desist orders and to request that the infringer has to transfer any financial gains it obtained from the infringement to the federal budget (Vorteilsabschöpfung). This possibility was extended with the last amendment to the GWB with effect from June 30, 2013.
Conduct of proceedings and costs
Burden of proof
In general, the claimant has to prove the infringement of competition law, the individual damages suffered, and the causal link between the two.
Where a final decision of a national competition authority in any Member State or a final decision of the European Commission has identified an infringement, German courts are bound by such finding so that no further proof is necessary regarding the existence of an infringement (Section 33(4) GWB). This rule is much wider than in other jurisdictions, in not being limited to the decisions of the German authority/European Commission. It also applies to infringements that took place prior to the coming into force of Section 33(4) GWB (i.e., prior to July 1, 2005), but only if a final decision of the competent competition authority has been rendered after July 1, 2005.
Joint and several liability of cartel participants
Cartel members/parties to an anti-competitive agreement or arrangement are jointly liable for all damages caused by an infringement of Section 1 GWB or Article 101 or 102 TFEU (Section 830(1) BGB). Hence, according to Section 421 BGB, each claimant (“obligee”) may at his discretion demand full or part performance from each of the potential defendants (“obligors”). This rule was confirmed explicitly by the German Supreme Court in June 2011.
In terms of civil proceedings, each claimant may sue any member of the cartel separately or sue all or some of them at once (Section 59 and 60 ZPO). If more than one cartel member is sued, the court generally does not need to apportion the damages awarded to each individual defendant. This is due to the fact that each defendant will be liable for the full damages granted anyway (Section 421 BGB). It is up to the defendants to apportion the damages granted to the claimants among themselves.
The ZPO does not allow a defendant who is exposed to joint and several liability to directly sue other members of the cartel and thus force them to become co-defendants. However, according to Sections 72 et seq. ZPO, a defendant can issue a third party notice to any other person who might be held liable by way of recourse (e.g., on the basis of joint and several liability of joint tortfeasors). As a result of such third party notice, the third party is free to join the lawsuit in support of any party and any findings of the court against the defendant will be binding against the third party in case of later recourse proceedings initiated by the defendant, provided that the third party could have joined the lawsuit and could have argued against such findings in the main lawsuit.
Documents and evidence that can be used by claimants (for example, investigation evidence) and legal privilege
The ZPO provides for five different types of evidence that may be used, either in combination or separately, in order to prove the factual basis relevant for deciding the case. These are as follows: (i) statement of an expert (Section 402 et seq. ZPO); (ii) legal inspection (Section 371 et seq. ZPO); (iii) hearing of the parties (Section 445 et seq. ZPO); (iv) documentary evidence (Section 415 et seq. ZPO); and (v) hearing of witnesses (Section 373 et seq. ZPO).
The burden of proof also requires the claimant to make the respective evidence available to the court (e.g., by providing the contact details of a witness or by presenting the documentary evidence); procedural discovery (as per the US or English model of litigation for instance) does not exist.
As regards documentary evidence, the claimant may ask the court, by way of reasoned submissions, to oblige the defendant (or a third party who has a certain document to hand) to present it to the court. This is possible if the document is necessary for deciding the case (Sections 422, 428, 142 ZPO). In contrast to procedural discovery in, for example, the US or England and Wales, this does not provide for “discovery” of facts that are not already known to the claimant and thus need to be investigated.
Rather, it is limited to simply overcoming the mere fact that a particular document relevant to the case is not in the possession of the claimant. Thus, the claimant has to give a detailed explanation as to: (a) the evidence that is contained in the document; (b) the facts that will be proven by that document; (c) the place where the document is located and the responsible person; and (d) the document’s relevance to the ultimate decision. Hence, in most cases this procedural option will not be relevant since the claimants are not in a position to provide the detailed information required for a reasoned submission. However, in cases where the claimants have been granted access to the files of a responsible competition authority, the position may be different. In any event, it can be expected that the number of documents affected by this procedural possibility is limited.
In terms of legal privilege, it should be noted that the defendant has to provide the document requested by the court even if the relevant documents are part of his correspondence with his external attorney. This is because there is no general concept of legal privilege in the ZPO in Germany. In addition, third parties are also generally obliged to provide documents upon the request of the court unless they can claim a right to refuse to give evidence (cf. Section 142(2) ZPO). Attorneys do not need to provide documents and may also refuse to appear as a witness. The position may be similar with respect to officials of the competition authorities, at least as regards those facts that do not fall under the claimant’s right of access to the file and records (see below). However, the situation will be different should the claimant have the attorney’s document already; if so, the claimant is allowed to present it to the court unless it has been obtained through illegitimate means.
German law does not provide for pre-trial or procedural discovery (this is one of the reasons why there is no underlying concept of legal privilege). However, potential claimants may be able to gather evidence to substantiate their damages claims in one or more of the following ways:
i) After an EU investigation is concluded, potential claimants may apply for access to the file of the European Commission (cf. Regulation (EC) No. 1049/2001 of the European Parliament and of the Council of May 30, 2001 regarding public access to European Parliament, Council and Commission documents – the “Transparency Regulation”).
ii) If the FCO has been involved in an investigation, potential claimants may apply for access to the files and records after conclusion of the investigation (under Section 406e of the German Code of Criminal Procedure, which is applicable to cartel investigations). In deciding whether access has to be granted and, if so, to what extent, the FCO has to consider the conflicting interests of the parties. The decision of the FCO may be appealed. Taking into account the reasoning of the European Court of Justice in the Pfleiderer case, the Local Court of Bonn, which is competent to rule on an appeal against a decision of the German FCO, decided in January 2012 that a potential claimant has the right to obtain access to the file and records as well as to the seized documents, but that leniency applications, internal notes of the investigating authority or business secrets need not be disclosed. A similar decision was made by the Higher Regional Court of Düsseldorf in August 2012.
iii) The Regional Court of Hamm had to decide in a special case in November 2013. In this case, the civil court with a pending damage claim requested access to the files of the public prosecutor (including the leniency applications). The access was granted under the following conditions:
a) Criminal proceedings had been initiated against the cartel members.
b) The court itself (eventually on request of the claimant) has to seek access to the files of the public prosecutor by specifying the facts that should be proven by the documents and the nature of the documents. It is not sufficient to request the court to access the file as a whole, as this would be rather qualified as “discovery” which is not permitted under German procedural rules.
Once the civil court has received the requested files, it has to decide on a case-by-case basis whether it can use them as a basis for its decision and make them available to the claimant. This assessment has to take into account the constitutional right of the claimant for effective legal protection and the aim to reduce cartel infringements, but also the constitutional right of the defendant regarding its business secrets. The seniority of the concerned data can especially play a decisive role. Therefore, the court has to apply the considerations stated in the Pfleiderer case.
iv) Potential claimants might attempt to use information that they received in discovery proceedings before foreign courts in a competition litigation action in Germany. It is unclear whether the German courts are allowed to accept such documents as evidence in German competition litigation.
Average length of time from issue of claim to judgment in Germany
Depending on the complexity of the case, a claim for damages will take between one and four years in the first instance. The period may be longer if complex substantive issues need to be examined.
An appeal will generally take another one to two years. A further appeal to the German Supreme Court, if admitted, will add another two or three years. For the time being, the risk of proceedings going before all three courts is high as many legal and procedural questions in the field of private competition litigation are not yet decided. In view of the limited case law on private competition litigation proceedings in Germany to date, a very rough estimate for the average length of proceedings might be four to nine years from the first instance up to the Supreme Court.
Average cost from issue of claim to judgment in Germany
The costs likely to be incurred in pursuing or defending a claim for damages will depend on the value and the complexity of the case and the number of instances in which it will be tried. The costs (legal and court fees) generally have to be borne by the losing party but, as regards legal fees, only to the extent such cos
Third-party/alternative funding of litigation
The ZPO does not prohibit the funding of litigation by third parties. Moreover, it may even be possible to file a representative action if: (i) the rights owner and the defendant agree; and (ii) the representative has a valuable interest in claiming a right. Also, as noted above, it appears possible to sell and assign rights to third parties merely for the purposes of pursuing a combination of claims. However, it has not yet been settled how a sufficient financing for pursuing a combination of assigned claims can be secured in the interest of defendants.
Alternative methods of dispute resolution
If the private competition litigation arises from prior contractual relations and if the parties had already entered into an arbitration agreement that extends to such a dispute, arbitration proceedings are possible. Arbitration proceedings could also take place if the parties concluded an arbitration agreement after a dispute had arisen, but this rarely ever happens. However, the parties have to be aware that an arbitral award might later be put under the strict scrutiny of a German state court as the German and European competition rules are considered part of the German public policy that must be observed, even in arbitration.
Mediation is also an option in Germany at any point, as is settlement through any other means.
Availability of damages and quantification
Affected market participants have the right to sue for damages. Each cartel member, whether such cartel member has acted deliberately or negligently, is obliged to compensate any loss that an affected person suffered as a result of the infringement (Section 421 BGB).
According to Section 249 et seq. BGB, damage claims are restricted to the compensation of actual loss, i.e., the claimant has to be put into the (hypothetical) situation the claimant would be in if the infringement of competition law had not happened (known as “compensation by restoration of the previous situation”). Thus, in private competition law proceedings, claimants can only claim compensatory damage. This includes the compensation for lost profits (Section 252 BGB).
As regards the determination of damages, it should be noted that damages to be compensated by a cartel member/infringer are to be calculated according to the “difference criterion” (Differenzhypothese), which is similar to the “but for” rule in other jurisdictions. In line with this principle, the financial situation of the claimant after the infringement has to be compared with the financial situation the claimant would have been in if the infringement had not happened (the “counterfactual”). Thus, for example, the cartel price has to be compared with the competitive selling price, i.e., the price that would have been achieved under competitive conditions. As a first indication of the loss suffered, the court may compare the turnover actually realized by the cartel member against the hypothetical turnover that would have been generated in case of lawful behavior of the cartel member, i.e., pursuant to competitive selling prices.
As determining the competitive selling price may be very difficult, Section 287 ZPO provides a mechanism by which the judge can estimate the amount of damages based on the merits of the case. German courts have regularly applied this provision in private competition litigation and awarded an estimated amount of damages to the claimant. The German Supreme Court generally approved this practice, as long as sufficient facts have been established that form a reliable basis for such an estimate.
Another aspect that could make it easier for the claimant to pursue damages claims before the German courts is Section 33(3) GWB. According to this provision, even if a claimant was able to pass on the cartel prices to his customers by adding its own margin to the cartel price, the claimant is still considered to have suffered damages.
However, this rule does not exclude the so-called “passing-on defense” in practice. When it comes to the actual calculation of the damages suffered, the court may still apply the so-called “set-off of benefits” rule, a legal concept that may result in a similar outcome as the passing-on defense. Similar to the passing-on defense, the burden of proof for the conditions under which the set-off of benefits applies lies with the defendant and not the claimant. Nevertheless, compared to the passing-on defense, the criteria are much stricter and thus, are less likely to be proven. According to the common practice of the courts, the applicability of this rule requires the following (apart from the causal link that is also required by the passing-on defense): (i) its application does not interfere with the purpose of awarding damages; (ii) it does not unacceptably burden the affected market participant; and (iii) it does not lead to an unjustified relief of the originator of loss. The German Supreme Court confirmed in a judgment of June 2011 that, while “set-off benefits” are a valid defense, the defendant will have to show in detail that the claimant actually had passed on a cartel price to his customers due to the individual market conditions. The fact that the defendant typically does not have access to information about the market conditions between the claimant and his customers only reduces the burden of proof for the defendant in limited cases, provided that the passing-on of the cartel price has been shown to be sufficiently likely.
At least for infringements that took place on or after July 1, 2005, Section 33(3) GWB entitles an affected person to claim interest from the defendant starting at the occurrence of the damage. The default rate of interest per year is 5% above the basic rate of interest (Section 288(1) BGB). The basic rate of interest is periodically adjusted by reference to the rate of interest for the most recent main refinancing operation of the European Central Bank (Section 247(1) BGB).
Punitive and exemplary damages
German law does not allow for punitive or exemplary damages.
Availability of interim or final injunctions in respect of an alleged competition law infringement
Generally, two types of interim measures might be relevant in private competition litigation. The court may grant an interim injunction to: (i) maintain the status quo (e.g., to cease further damages); or (ii) freeze assets of the defendant to ensure the enforcement of a potential judgment ordering payment of damages. While interim injunctions can be obtained in both cases in ex parte proceedings (on the basis of affidavits evidencing a valid substantive claim as well as the urgency of the matter), freezing injunctions are only rendered in practice if it can be proven that the other side is just about to leave the country or remove its assets. As a rule, interim injunctions will not be granted with respect to the payment itself.
In Germany, as throughout Europe, the enforcement of civil damages claims for breach of competition law is being strengthened in many ways. The German legislator facilitated the enforcement of private damages claims with the reform of the GWB by the 7th Amendment, which applies to infringements that took place on or after July 1, 2005. Since then, and as described above, the GWB provides several incentives for claimants, for example: (i) final decisions of cartel authorities throughout the EU have a binding effect before the German civil courts; (ii) interest has to be paid from the date of occurrence of the damage; and (iii) the limitation period stops running as long as investigations proceed.
The 8th Amendment of the GWB, which came into force on June 30, 2013, i.e., extended the possibilities of consumer associations and other professional associations to request cease-and-desist orders and to request that the infringer has to transfer any financial gains it obtained from the infringement to the federal budget (Vorteilsabschöpfung).
Additionally, public awareness of cartels and potential damage claims has been raised. German courts have repeatedly demonstrated their willingness to follow the legislator’s intention to strengthen the claimant’s position and have rendered several damage awards in favor of claimants, mostly based on an assessment of damages pursuant to Section 287 ZPO.
In June 2011, the German Supreme Court issued its first main decision on the calculation of damages in private competition litigation, which confirmed the right of indirect purchasers to claim damages against any member of a cartel and recognized the defense of “set-off benefits,” for which the defendant generally has the burden of proof. This decision is a landmark case that set the rules of private competition litigation in Germany for the future. Together with the decisions on access to files and records (including leniency applications) of public authorities on cartel members, the legal framework for such cases in Germany is gaining more and more shape.