German Federal Court of Justice
On the determination of causality satisfying liability in cartel damages proceedings
In its ruling of 28 January 2020 (Case No. KZR 24/17 - Rail Cartel II) the German Federal Court of Justice (Bundesgerichtshof - BGH) clarified its case law in cartel damages cases, eliminated uncertainties and clarified the relationship to current case law of the European Court of Justice (ECJ). At the same time, it has once again given the courts of first and second instance the clear requirement to give full consideration to party submissions including economic expert opinions. In doing so, the Cartel Senate has made it clear that the previous practice of many courts of issuing interim rulings on the merits of the claim (Grundurteile, i.e. “base judgments”) and postponing the discussion of possible damages does not constitute procedural economy.
The term ‘party affected’ has to be understood in the light of requirements under European law
After the ECJ recently broadly defined the parties liable for and entitled to compensation in the cases Skanska (Case C-724/17) and Otis (Case C-435/18) (see our Noerr Competition Outlook), the Cartel Senate of the German Federal Court of Justice has clarified that it follows this case law and applies the European law requirements specified by the ECJ in the case of infringements of Article 101 TFEU. The Cartel Senate of the German Federal Court of Justice has implemented this as a defining element of being a ‘party affected’ (Kartellbetroffenheit). According to this, being a ‘party affected’ within the meaning of the first sentence of section 33(1) of the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen - GWB (2005) is only of significance in the examination of the facts giving rise to liability for the question as to whether the anticompetitive conduct in the context of sales transactions or otherwise is capable of directly or indirectly giving rise to damage. This has to be proved by the claimant according to the standard of section 286 of the German Code of Civil Procedure (Zivilprozessordnung - ZPO) and was fulfilled in the case in dispute because goods which were the subject of the cartel agreement were purchased directly from a cartel member.
Cartel influence as part of causality satisfying liability
The Cartel Senate has assigned the question of cartel influence (Kartellbefangenheit) on individual purchasing transactions, which it has to date in some cases assigned to the factor of being a ‘party affected’, to the causality satisfying the liability, i.e. whether there is an actual impact on a specific transaction, meaning that the reduced standard for proof set out in section 287 of the German Code of Civil Procedure applies to this. The Cartel Senate is therefore equating cartel influence with the question of causal connection between the cartel agreement and the existence of individual damages, which is decisive for determining damages under European law. The Cartel Senate held that if it is evident that the claimant has suffered damage, it is at the same time certain that the prohibited agreement influenced the transaction.
Overall assessment of all connecting facts required
Prima facie evidence in favour of the claimants does not apply, but account must be taken of the principles based on experience already highlighted in case law. However, the Cartel Senate makes it clear that even with the reduced standard of proof under Section 287 of the German Code of Civil Procedure, it is not sufficient to rely solely on principles based on experience, since these do not have any abstractly qualifiable influence on the result of the overall assessment.
Rather, the overall assessment must take into account all circumstances that have been established or for which the party that invokes a circumstance favourable to it with an indicative significance for or against a price effect of the cartel has offered evidence. However, since the finding that the price was lower or equal during the cartel period is necessarily hypothetical, no direct proof of damage or direct evidence to the contrary can be provided. In particular, such evidence is not provided by relying on expert evidence for the occurrence or absence of damage. This is because the expert, like the court, can only derive their assessment from ascertainable connecting facts.
Consideration of court and party opinions in the overall assessment
The overall assessment must also take expert opinions into account. However, according to the statements of the Cartel Senate, these can neither replace the overall judicial assessment nor does the submission of party expert opinions prejudice the assessment in one direction or the other. The Cartel Senate makes it clear that the trial judge can obtain a court opinion within the framework of findings under section 287 of the German Code of Civil Procedure, but is not obliged to do so. Depending on the circumstances of the individual case, the obtaining of expert advice by the court could also relate to certain economic conclusions regarding the probability or amount of damage.
In any case, the trial court must also comprehensively assess party expert opinions submitted. In the view of the Cartel Senate, the plausibility of such expert opinions depends largely on the accuracy and validity of the actual observations on the cartelised market and a comparable market on which the expert opinion is based and on whether the differences between the compared markets can be established with sufficient reliability.
Questionable procedural economy of interim judgments on the merits of the claim
Finally, the Cartel Senate has indicated that the practice of many courts handing down interim judgments on the merits of the claim in cartel damages cases within the meaning of Section 304 of the German Code of Civil Procedure is likely to be inadmissible. This is because an interim judgment on the merits of the case is inadmissible if it leads to an unjustified delay and increase in the cost of the proceedings. Since, according to the statements of the Cartel Senate, the court of first instance has to deal comprehensively with the circumstances of the individual case and submitted party expert opinions even before issuing an interim judgment on the merits of the claim as part of the required overall assessment and since these facts are also material for the amount, the Cartel Senate believes that in a dispute over claims for damages under antitrust law it may be necessary for reasons of procedural economy to rule uniformly on the merits and amount of the claim in the case of a dispute over claims for damages under cartel law.
Impact and outlook
The Cartel Senate’s ruling further increases the pressure on the courts of first and second instance to deal with the individual case and the submitted party expert opinions. Although the Cartel Senate has a rather broad and schematic definition of the term ‘party affected’ in the context of European law, it also makes it clear that it is the task of the parties to the proceedings to present connecting facts to the court and that they cannot simply rely on principals based on experience or the obtaining of a court expert opinion. In this context it is particularly welcome that the often artificial deferring of the debate on economic issues and party expert opinions to subsequent proceedings on the amount of the claim is viewed critically by the Cartel Senate.
Noerr advises companies engaged in defending themselves against or asserting claims for cartel damages. We are happy to support you in this with an interdisciplinary team of experienced antitrust lawyers and litigators.
Any questions? Please contact: Dr Henner Schläfke
Practice groups: Antitrust & Competition, Litigation, Arbitration & ADR