This country-specific Q&A provides an overview to competition litigation laws and regulations that may occur in Germany.
This Q&A is part of the global guide to Competition Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/competition-litigation/
What types of conduct and causes of action can be relied upon as the basis of a competition damages claim?
The types of conduct prohibited by sections 1 and 18 et seq of the German Act against Restraints of Competition (GWB) and Articles 101 and 102 Treaty on the Functioning of the European Union (TFEU, respectively Articles 81 and 82 Treaty Establishing the European Community (EC) prior to 2009) include:
- horizontal agreements, ie fixing of prices or terms and conditions, distribution of markets (either in territorial way or concerning customers or quotas),
- exchanging sensitive market data (in particular prices) or
- vertical agreements such as rescale price maintenance.
As the GWB has undergone major changes in the last fifteen years, the relevant provision for cartel damages claims depends on when the relevant infringement has taken place and the related claims have arisen:
- Prior to 1 January 1999: section 823 para 2 of the German Civil Code (BGB) in conjunction with sections 1 and 18 et seq GWB and Articles 81 and 82 EC;
- Between 1 January 1999 and 30 June 2005: section 33 sentence 1 GWB in the version of 26 August 1998 for infringements of sections 1 and 18 et seq GWB and section 823 para 2 BGB in conjunction with Articles 81 and 82 EC for breaches of EC competition law;
- Between 1 July 2005 and 26 December 2016: section 33 para 3 GWB in the version of 1 July 2005 is the relevant provision.
- Finally, cartel damage claims based on conduct after 26 December 2016 - ie following the implementation of the EU Damages Directive (Directive 2014/104/EU) - are now governed by section 33a GWB.
What is required (e.g. in terms of procedural formalities and standard of pleading) in order to commence a competition damages claim?
The formalities and standards do generally not differ from “regular” claims. The essential minimum requirements for a claim to be filed with a German court are listed in section 253 of the German Code of Civil Procedure (ZPO): A statement of claim, ie a written pleading, is required to commence proceedings. It must designate the parties to the dispute and the court where the proceedings shall be initiated (para 2 no 1). Furthermore, the statement of claim must provide exact information on the subject matter and the grounds for filing the claim as well as a precisely specified prayer for relief (para 2 no 2). The statement of claim must explain what particular relief the claimant seeks the court to grant and on what facts this request is based. Whereas the claim must not be comprehensive - the claimant may generally supplement its pleading at a later stage subject to the procedural rules on preclusion -, it must contain sufficient details enabling the defendant to comprehend and to comprehensively defend against the claim.
Where a competition authority (such as, eg, the German Federal Cartel Office or the European Commission) has issued a decision, the claimant may for certain aspects, in particular the factual findings, fully refer to the findings therein (see further below question 9).
There is no mandatory initial information request stage pre-action so that the claimant can seize the German court without prior notice to the alleged cartel members.
What remedies are available to claimants in competition damages claims?
Any party that is affected by an infringement of competition law may bring claims for cease-and-desist and removal as well as claims for damages against the cartelist. Insofar as a claimant is unable to determine the precise scope of its competition damage claims, it is possible to start off the proceedings with motions for declaratory relief and for disclosure of relevant documentation or information required to substantiate or quantify its claims. In the past, disclosure request haven often proved to be unsuccessful, yet in the course of the implementation of EU Damages Directive, the German legislator introduced a ‘right to have evidence surrendered and information disclosed’ (section 33g of the GWB, see for more details question 21).
In addition, interim remedies are available, ie preventive measures and measures for cease-and-desist and removal can be brought in front of the court.
What is the measure of damages? To what extent is joint and several liability recognised in competition damages claims? Are there any exceptions (e.g. for leniency applicants)?
German law follows the principle of full compensation for damage that has actually occurred. It does not allow for punitive or treble damages.
The existence of damage itself and the causality of the alleged anticompetitive behaviour need to be proven by the claimant in accordance with section 286 ZPO. The court is to decide, at its discretion and conviction, based on rules of logic, empirical principles and natural law, taking account of the entire content of the hearings and the results obtained by evidence being taken (for more details, see question 8).
If the court is convinced that a claimant did suffer damage and the claimant provides sufficient facts that enable the court to estimate the approximate amount of damages, it will do so and thus exonerate the claimant from having to conclusively prove the specific extent (section 287 ZPO, now expressly referred to in section 33a para 3 GWB). The estimate is to be made taking into account all known facts and must represent the minimum extent of damages realistically incurred (for more details, see question 8). A claimant may still show that he has actually incurred larger damage. In addition, section 33a para 3 GWB now allows courts to consider the (pro rata) profits made by the defendant when estimating the cartel-induced damage.
Since the cartel agreement and the implementation of the cartel are a jointly committed tort law infringement, the cartelists are jointly and severally liable (for conduct after 26 December 2016, this is now specifically set out in section 33d GWB; for prior conduct this follows from the general tort provisions in sections 830 and 840 BGB). A leniency applicant may benefit from liability limitations, though (see question 18).
What are the relevant limitation periods for competition damages claims? How can they be suspended or interrupted?
The relevant limitation periods for competition damages claims are complex due to several legislative changes both regarding the limitation periods as such and suspension provisions.
With regard to limitation periods, German law provides both for a knowledge-dependent limitation period as well as one that begins and ends irrespective of anyone’s knowledge.
Claims that have arisen after 26 December 2016
- Knowledge-dependent limitation period (section 33h paras 1 and 2 GWB): Claims are subject to a 5-year limitation period that starts to run at the end of the year in which (i) the claim arose, (ii) the infringement ceased and (iii) the claimant obtained knowledge (or ought to have obtained knowledge but for its gross negligence) of (a) the circumstances giving rise to the claim and (b) the fact that these constitute a cartel infringement as well as (c) the identity of the infringer.
- Knowledge-independent limitation period (section 33h para 3 GWB): Irrespective of any knowledge or grossly negligent ignorance of the circumstances set out above, claims become statute-barred 10 years after the claim arose and the infringement ceased.
- As a general rule, the new limitation rules apply (i) to claims that have arisen since 27 December 2016 and (ii) to claims that arose prior to this date provided that they were not time-barred before the new limitation provisions entered into force (section 186 para 3 GWB).
Claims having arisen until 26 December 2016
Until 26 December 2016, there were no competition-law specific provisions on limitation so that the general provisions of German civil law apply. With regard to these, one needs to distinguish between claims having arisen before and after 1 January 2002.
- Claims having arisen since 1 January 2002 (section 199 BGB old version): Since 1 January 2002, claims, including cartel damages claims, are subject to a standard 3-year knowledge-dependent limitation period. Notwithstanding knowledge or a grossly negligent lack of knowledge, claims become statute-barred ten years after they arise.
- Claims having arisen before 1 January 2002 (section 852 BGB old version): Before 1 January 2002, damage claims based on a competition infringement were subject to a limitation period of three years. Irrespective of the knowledge, there was an objective maximum period of limitation of 30 years from the claim’s arousal. If, however, the limitation period had not elapsed by 1 January 2002, the new law (see bullet above) applies, ie the limitation period started anew on 1 January 2002. However, there is also a reverse exception: The old regime needs to be applied in case it leads to an earlier expiration.
Suspension or interruption of the limitation period
First of all, the limitation periods can be suspended by general means available under German civil law, most noteworthy initiating court proceedings (Section 204 para. 1 no 1 BGB) and by starting negotiations regarding an amicable settlement of the claims (Section 203 BGB). In addition, there are specific suspension provisions for cartel damage claims:
- Current law: Section 33h para 6 GWB provides for the suspension of either limitation period during the course of national or European competition authority proceedings on the subject matter, ie the suspension commences with the competent authority initiating measures of investigation. The suspension ends one year after the infringement decision has become final or after the proceedings are otherwise terminated. It applies to claims arisen prior to the implementation of the 9th amendment if these claims were not time-barred by 9 June 2017 (section 186 para 3 GWB). Uncertainties exist as to whether the scope of suspension is affected by the subject matter of regulatory proceedings (eg changes regarding the products or time period concerned in the course of the investigation).
- Previous law as of 13 July 2005: With an effective date of 13 July 2005, the German legislator had introduced a similar rule for the suspension of applicable limitation periods during the course of proceedings by competition authorities (Section 33 para 5 GWB old version). Unlike the current suspension provision, the old suspension ends already six months after the infringement decision has become final or after the proceedings were otherwise terminated. Since its introduction, there have been controversial discussions among legal scholars and practitioners concerning several issues which the new provision does not specifically address: (i) One of the most heated debates revolved around whether the new suspension provision introduced with an effective date of 13 July 2005, could be applied retroactively to claims that had already arisen before this date. In 2018, the Federal Court of Justice (BGH) rendered a long-awaited decision on this topic, holding that the suspension provision applies retroactively to those competition infringement claims which had already arisen but were not yet time-barred on 13 July 2005 (BGH, decision of 12 June 2018, case ref KZR 56/16 – Grey Cement II). This decision has a massive impact on numerous pending proceedings. (ii) Furthermore, there are different views regarding the interpretation of the starting point for suspending the limitation period: the ‘initiation of proceedings’ (formal initiation of proceedings by the relevant competition authority or proceedings being initiated as of the first measures which unfolded external effects). (iii) Regarding the scope of the suspension, the same uncertainties apply as under the current law.
- Previous law before 13 July 2005: The GWB before 13 July 2005 did not provide for a rule on suspension. Therefore, only the general provisions of the BGB applied, ie there was no suspension until the final decision of the competent cartel authority. As stated above, only those claims having arisen before 13 July 2005 and not being time-barred yet, benefit from the suspension provision in section 33 para 5 GWB old version.
Which local courts and/or tribunals deal with competition damages claims?
International jurisdiction is determined pursuant to the Brussels Ia Regulation if the defendant is domiciled in a EU member state. In such case, three potential venues are of great importance for antitrust litigation proceedings: the general place of jurisdiction at the defendant's domicile (article 4 para 1 Brussels Ia Regulation), the place of jurisdiction for torts (article 7 no 2 Brussels Ia Regulation), ie the place where the harmful event occurred - which includes both the place where the harmful act was committed and where it unfolded its damaging effect - , and the place where any one of a number of defendants is domiciled (Article 8 no 1 Brussels Ia Regulation). For those European countries which are not EU member states, ie Norway, Switzerland and Iceland, the Lugano Convention provides similar rules. If no EU Regulation or international agreement applies, international jurisdiction of German courts is determined by application of the rules on local jurisdiction (‘dual function’, see below).
Local jurisdiction (örtliche Zuständigkeit)
Insofar as the Brussels Ia Regulation is not applicable or does not designate the local jurisdiction as well (for instance in case of article 4 jurisdiction), local jurisdiction is determined pursuant to the general rules of the ZPO. Section 21 et seq ZPO stipulate several special places of jurisdiction besides the general place of residence (section 12 ZPO). These provisions include especially defendant’s place of business (Section 21 ZPO) and the place where the harmful act unfolds its damaging effect (Section 32 ZPO). It is furthermore important to note that section 89 GWB empowers state governments to assign cartel disputes to a regional court for the districts of several regional courts by ordinance. With the exception of Saarland, Thuringia and the city states Berlin, Bremen and Hamburg, all state governments have made use of this authorisation.
Subject-matter jurisdiction (sachliche Zuständigkeit)
All legal disputes based on GWB provisions fall into the exclusive jurisdiction of the regional courts regardless of the respective amount in dispute (Sections 87 and 95 GWB). The exclusive jurisdiction in cartel matters prevails over any other potential exclusive jurisdiction.
Functional jurisdiction (funktionelle Zuständigkeit)
The Regional Courts often have particular divisions that are functionally competent to hear cartel damage claims. The judges assigned to these division often have a particular experience in commercial matters and are specialised in cartel damage litigation.
How does the court determine whether it has jurisdiction over a competition damages claim?
The court determines its jurisdiction over a competition damages claim pursuant to the applicable rules on international, subject-matter, local and functional jurisdiction (see question 6). It is in the court’s discretion whether to (i) deal with this question upfront as a preliminary matter and deliver a partial judgment (Teilurteil) or (ii) decide on the issue when rendering the final judgment (Endurteil).
How does the court determine what law will apply to the competition damages claim? What is the applicable standard of proof?
Since entry into force of the Rome II Regulation on 11 January 2009, the law applicable to competition damage claims is the law of the State where the market is, or is likely to be, affected. If the market is affected in more than one country, the claimant may opt to base its claim on the law of the court seized if (i) he has brought his claim before the courts of the state where the defendant is domiciled and (ii) the market in that EU member state is affected as well (Article 6 para 3 Rome II Regulation).
Outside of the scope of the Rome II Regulation, the applicable law is determined pursuant to section 185 para 2 GWB (current version) or by section 130 para 2 GWB (version as of 13 July 2005). Each is a mandatory conflict of laws rule and precedes over any other of the general conflict of laws rules. Pursuant to this stipulation, German law is applicable to all restraints having an effect within the scope of the GWB, irrespective of whether the infringement was initiated outside of Germany.
With respect to claims that arose prior to 13 July 2005, Article 40 para 1 sentence 1 EGBGB specifies that tort claims are governed by the law of the country in which the liable party has acted. Yet, the injured party can demand that instead of this law, the law of the country in which the injury occurred is to be applied; in cartel damage cases, this is the law of the state where the market is affected by the competition law infringement. The option can be used only in the first instance court until the conclusion of the pretrial hearing or until the end of the written preliminary procedure.
Standard of proof
As a general principle, the claimant bears the burden of proof for all beneficial elements of a claim, ie those that establish his claim, whereas the defendant bears the burden of proof for all those elements which destroy and impede the claim. Sections 286 and 287 ZPO contain the basic rules addressing the standard of proof:
- Section 286 ZPO stipulates that the evaluation of evidence is at the court’s discretion (freie Beweiswürdigung). It provides for the so-called full proof (Vollbeweis), meaning all elements need to be shown to the extent of full judicial conviction. Pursuant to the established case law by the BGH, this requires a degree of certainty suitable for practical life, which puts a stop to doubts, yet without necessarily excluding them completely. Section 286 ZPO applies to all circumstances giving rise to the claim, unless the court is bound by law to take certain facts as given, either because of findings of competition authorities (see below question 9) or because alleged facts have not (sufficiently) been disputed by the opposing party (cf section 138 para 3 ZPO).
- Section 287 ZPO reduces the requirements relating to the burden of proof and to the conviction of the judge with respect to damage occurrence and the extent of damage. It is sufficient if the harmed party shows and proves facts which offer sufficient indication for the court’s assessment. A considerable amount of probability based on a secure basis is sufficient for a court to form its conviction. The provision applies as well to other cases if the amount of a claim is in dispute and clarification of circumstances entails difficulties that are disproportionate to the significance of the disputed portion of the claim.
Moreover, there are several alleviations of the burden of proof. In its current version, the GWB provides for the following alleviations that are applicable to claims having arisen after 26 December 2016:
- Section 33a para 2 sentence 1 GWB contains a rebuttable presumption that a cartel causes damage.
- Section 33b GWB provides for a binding effect of the competent competition authority’s decision concerning the existence and scope of the cartel infringement (see also below question 9).
- Section 33c para 2 GWB stipulates the presumption in favour of an indirect customer that the price overcharge has been passed on to him if (i) there is a cartel infringement within the meaning of section 1 or 19 GWB or Article 101 or 102 TFEU, (ii) the infringement causes a price increase for the direct customer and (iii) the direct customer has acquired goods or services that were affected by the cartel infringement.
- Section 33g GWB provides for information and disclosure requests that a party may file in order to obtain information needed for the cartel damage claim (see also Question 21). To make use of these rights, the requesting party only needs to credibly demonstrate (“glaubhaft machen”) to the satisfaction of the court that it has such a damage claim.
For claims that arose until 26 December 2016, Section 33 para 4 GWB provides for a binding effect of the competent competition authority’s decision concerning the existence and scope of the cartel infringement. In addition, the instance courts accepted for a long time prima facie evidence in favour of the claimant regarding the questions whether (i) the cartel led to higher prices in general and (ii) the individual transactions with the direct customers in question were affected by the cartel agreements. With decision of 11 December 2018 (case ref KZR 26/17 – Railway Tracks) the BGH rejected this jurisprudence and ruled that cartel claims do not benefit from a prima facie presumption regarding price and quota cartels as well as customer protection agreements regarding both questions. Instead, the courts must assume a high likelihood that (i) the cartel led to an increased price and (ii) the individual transactions were affected by the cartel.
To what extent are local courts bound by the infringement decisions of (domestic or foreign) competition authorities?
Pursuant to section 33b GWB (respectively section 33 para 4 GWB as of 13 July 2005), the court is bound by a finding that an infringement has occurred, as made in a final decision by the national competition authority, the European Commission, or the competition authority in another Member State of the European Union where damages are claimed for an infringement of a provision of the GWB or of Articles 101 or 102 TFEU. The binding effect comprises the infringement as it was determined in its material and temporal scope, ie the factual and legal findings of the cartel authority.
To what extent can a private damages action proceed while related public enforcement action is pending? Is there a procedure permitting enforcers to stay a private action while the public enforcement action is pending?
Even though stand-alone cartel damage claims are uncommon because claimants usually prefer to base their claim on the cartel authority’s final decision since it is binding for the courts in several aspects (see above question 9), it is possible to initiate and proceed a private action whilst public enforcement is pending. There is no procedure permitting enforcers to stay a private action while the public enforcement action is pending. In practice, the defendants often request for a stay of the proceedings while a related public investigation or proceedings, including appeals against the resulting decisions before courts, are pending. It is at the court’s discretion to grant such a stay of proceedings.
What, if any, mechanisms are available to aggregate competition damages claims (e.g. class actions, assignment/claims vehicles, or consolidation)? What, if any, threshold criteria have to be met?
Model action for a declaratory judgment (Musterfeststellungsklage)
Generally, German law does not allow for class actions in the sense that one lead claimant pursues the action on behalf of other claimants from the class, which join the proceedings but remain idle. The basic principle in Germany requires every claimant in proceedings to have an active role in fostering the outcome of the case. The German legislator made, however, a cautious step towards mass litigation in November 2018 when it implemented the so called ‘model action for a declaratory judgment’ (Musterfeststellungsklage). The circle of potential claimants is limited to qualified associations acting on behalf of consumers, though. The Higher Regional Courts (Oberlandesgerichte) have exclusive jurisdiction for the model action. If the court considers the model action admissible, other consumers can file their own complaint with the Federal Office of Justice, who provides an official register for such model actions. Upon registration, the limitation period is suspended. As in regular litigation, the model action can either lead to a settlement or a judgment. The consumers that have registered their own claims can then either refer to the settlement or the award to pursue their individual damage claims. Nevertheless, each consumer must still exercise and enforce its claim individually, if necessary by bringing its own action before a court, which allows for different outcomes despite a positive decision in the model proceedings.
As in other EU countries, third-party funders have used individual legal entities as ‘claims vehicles’ in German cartel damage cases, especially German limited liability companies, which file the lawsuit in their own name after having been assigned the competition damage claims by the cartel victims. This is admissible if the use of the claim vehicle does not conflict with the rules of the German Legal Services Act (Rechtsdienstleistungsgesetz) that is aimed to protect clients seeking legal advice but also the legal profession from unqualified legal services. Violations of these rules may also lead to the nullity of such a setup. In addition, the assignments will be declared null and void because of a violation of public policy pursuant to section 138 BGB if the claim vehicle is not sufficiently funded to allow a prevailing defendant to recover its litigation fees afterwards.
Are there any defences (e.g. pass on) which are unique to competition damages cases? Which party bears the burden of proof?
Under German law, the alleged cartel members may invoke the passing-on defence, ie argue that the claimant is not entitled to damages insofar as the cartel overcharge was passed on to its customers. The BGH allowed for the passing-on defence in its ORWI decision (decision of 28 June 2011, case ref KZR 75/10, para 55 et seq (juris)) under general principles of German law on damages, namely the setting-off of benefits (Vorteils¬aus-gleichung). The defence is now codified in section 33c GWB.
For claims that have arisen until 26 December 2016, the BGH held in its ORWI decision that the defendants bear the burden of proof for the defence. Whether or not surcharges were actually passed on depends on a number of factors, including the type of costs, the competitiveness of the market, the elasticity of demand and the market coverage of the cartel. In addition, the cartel members need to show that the claimant, when passing on surcharges, did not suffer a decrease in demand, which set off any benefits received through higher prices charged to the indirect customers (volume effects).
Given that the relevant facts to determine the extent of pass-on are usually inaccessible for the defendants, it would be hardly possible for the defendants to ever meet the burden of proof. However, as the BGH underlined it its OWRI decision, the defendants can usually not rely on a special procedural instrument - the so-called ‘secondary burden of allegation’ (sekundäre Darlegungslast) - in cartel damage cases in order to force claimants to disclose the relevant information. According to the BGH, placing a secondary burden of proof on the claimant requires a comprehensive assessment of necessity and reasonableness. There is regularly no need to grant the defendant such a special right to disclosure because the indirect purchasers will also have to prove the extent of pass-on if they decide to sue the defendant, and thus the relevant information is made available to the defendant. If the indirect purchasers decide to refrain from bringing a claim, the defendant cannot complain that he is being held liable to the full extent by the direct purchaser. In addition, a defendant can resort to third-party notices (Streitverkündungen) to avoid being held liable twice for the same damage by indirect and direct purchasers. Only if the defendant is unable to do so, the court could consider carefully to allow him to rely on a secondary burden of allegation (in particular including whether the injured party can be required to disclose circumstances that have an impact on competition and that are covered by a particular interest of confidentiality).
For claims that have arisen after 26 December 2016 (current law), section 33c GWB now contains particular rules on pass-on, clarifying that damage of the direct customer is not excluded per se if the cartel affected goods were resold. Yet, unlike the previous legal situation, section 33c para 2 GWB provides for a presumption in favour of indirect customers: it is presumed that cartel surcharges were passed on to the indirect customer if (i) there is a cartel infringement within the meaning of section 1 or 19 GWB or Article 101 or 102 TFEU, (ii) the infringement caused a price increase for the direct customer and (iii) the indirect customer has acquired goods or services that were affected by the cartel infringement, either directly or as products made from or containing cartel affected goods or services. However, this presumption may be rebutted pursuant to section 33g para 3 GWB if the respective party can credibly show that the surcharges were not or at least not completely passed on to the indirect customer. In addition, the parties can make use of the information and disclosure claims stipulated in section 33g para 2 GWB to gather information needed to defend themselves with the passing-on defence (defendant) or rebut the presumption (claimant) respectively.
Is expert evidence permitted in competition litigation, and, if so, how is it used? Is the expert appointed by the court or the parties and what duties do they owe?
German civil procedure generally permits invoking expert evidence. Especially in competition litigation, the parties and the court often rely on experts, in particular with regard to the occurrence of a loss, the causal nexus, quantum and the passing-on defence. The ZPO contains provisions on expert evidence in section 402 et seq. Unlike in other jurisdictions, an “expert” within the meaning of the ZPO is only a court-appointed expert. In cartel damage litigation, the parties often submit individual expert opinions by their own experts to substantiate their arguments. These expert opinions are considered a substantiated party submission, ie they fall under the same procedural rules as any other submission or pleading by the parties.
Experts within the meaning of section 402 et seq ZPO are appointed by the court in consultation with the parties. Therefore, the expert needs to be impartial and independent from the parties. He is obligated to act diligently and to apply the required duty of care whilst not being restricted by the party-experts’ methodologies or findings. The ZPO considers the expert as a regular means of evidence, ie the expert and its report are subject to the general evidentiary rules. The parties can challenge the expert’s findings both with the help of submissions and during an evidentiary hearing. It is then upon the court to finally assess the evidence. In practice, the courts tend to follow the neutral expert rather than any of the party experts unless it can be shown that its report is fundamentally flawed.
Describe the trial process. Who is the decision-maker at trial? How is evidence dealt with? Is it written or oral, and what are the rules on cross-examination?
A cartel damages claim will be decided by the court, ie by one professional judge or by a panel of three professional judges.
German civil procedure provides for several types of evidence: expert testimony, witness testimony, evidence taken by visual inspection, records and documents as well as - under very narrow conditions and with less probative value - hearing the parties. Documentary and expert evidence are the most common forms of evidence in German cartel damage proceedings. Generally, German law does not provide for any form of compulsory production of documents by one party to another (for the exceptions with regard to cartel damage claims, see question 21) and witnesses do not provide written statements of their testimony. The evidence is introduced by ‘offering’ witness testimony in a written submission, and it is then upon the court to decide whether to admit the evidence whilst taking into account its relevancy for the outcome of the case. If admitted, the court appoints an expert or questions witnesses at the hearing with respect to particular facts for which their testimony has been ‘offered’. Cross-examination does not exist in German proceedings. The court is in charge of the examination of witnesses. The parties and their counsels may only request the court to ask additional questions or ask additional questions themselves if so granted by the court. The evidence is then subject to the free assessment of evidence at the court’s discretion (freie Beweiswürdigung) (see question 4).
How long does it typically take from commencing proceedings to get to trial? Is there an appeal process? How many levels of appeal are possible?
The duration of proceedings before German courts depends on various circumstances (including workload of the court, number of defendants etc). As a general rule, cartel damage proceedings usually take at least about two years in the first instance, but often significantly longer, especially if there is taking of evidence involved or if the court opts for a staggered approach of resolving the dispute, eg by means of
- an interlocutory judgment (Zwischenurteil concerning preliminary questions which arise in the course of proceedings, eg jurisdiction),
- a judgment on merits (Grundurteil, ie an interlocutory judgment with substantive legal content, eg, liability and quantum; the benefit of such approach can be that the final assessment concerning damages is only made once the liability questions have finally been ruled upon) and/or
- a partial judgment (Teilurteil; if only one independent claim among several claims can be decided or if only an independent part of an individual claim is ripe for decision, eg, because the court lacks jurisdiction or part of the claims are statute-barred).
Furthermore, the proceedings are prolonged significantly if cartel victims file an action by stages (Stufenklage; section 254 ZPO). This model allows the claimant to submit several claims at once, which are then decided in different stages. Such approach is often used if the claimant does not yet have sufficient information to file a claim for damages directly, thus requesting disclosure of information from the defendant in a first step. Once the information has been disclosed, the claimant requests the defendant to be ordered to pay a certain amount of money, to be specified after receiving the information or at the court’s discretion. By virtue of the action for stages, all claims become pending immediately, thus allowing claimants to suspend the limitation period not only for the claim for information but also for the actual claim for damages at once.
There are generally two levels of appeal after a judgment has been rendered in the first instance by the Regional Court. The competent court of appeal on the first level is the Higher Regional Court (OLG) which decides on appeals on points of fact and law.
Decisions by the OLGs may be appealed to the BGH. In this final instance, the court only reviews the proceedings with respect to points of material or procedural law. Thus, the BGH only verifies whether the appeals court applied the law correctly. A final appeal to the BGH is admissible only if the second instance court allows for it in its decision or if the BGH allows it by virtue of a complaint against denial of leave to appeal (Nichtzulassungsbeschwerde). The latter approach is only successful in a fraction of cases. The final appeal has to be permitted if (i) the case is of fundamental importance or (ii) a decision of the BGH is necessary for the development of the law or (iii) for the safeguard of a uniform jurisprudence.
Do leniency recipients receive any benefit in the damages litigation context?
For claims that have arisen until 26 December 2016, there were no benefits for leniency applicants with regard to private enforcement. Since the respective competition authorities’ decisions became frequently final and binding upon the leniency applicants first and they had contributed significant contemporaneous documents and corporate statements to the competition authority, they were the most obvious and attractive target for follow-on claims and often faced damage claims considerably sooner than other cartel members.
To sooth this tension between leniency cooperation and the risk of private follow-on damage claims in cartel cases, the implementation of the EU Damages Directive brought with it a number of changes. Under the current law (claims that have arisen after 26 December 2016), a privileged treatment of leniency witnesses is now explicitly set out in section 33e GWB. According to this provision, the liability of the immunity recipient, ie the cartel member who has received immunity from fines under a leniency programme, is limited to the harm caused to its own direct or indirect purchasers or providers. Beyond this, cartel victims may only turn to the leniency recipient if they have not been able to obtain full compensation from the other infringers.
The non-privileged infringers continue to be jointly and severally liable towards any cartel victim (see section 33d GWB). If a direct or indirect supplier or customer of the privileged leniency applicant or any of the other cartel members sues a non-privileged cartel member, this cartelist can afterwards take recourse against the leniency applicant in the amount of the latter’s share of liability, yet only up to the amount of harm the leniency applicant caused to its own direct or indirect purchasers or providers (see section 33e para 4 GWB). Recourse is excluded if the cartelist is sued by its own customers or supplier or those of another non-privileged cartel member. If the claimant is no direct or indirect supplier or customer from any cartelists but suffered a damage due to umbrella effects, the cartel member may take recourse against the leniency applicant even if the applicant cannot be held liable directly by the cartel victim.
How does the court approach the assessment of loss in competition damages cases? Are “umbrella effects” recognised? Is any particular economic methodology favoured by the court? How is interest calculated?
Assessment of loss
Under German law, loss in competition scenarios is assessed pursuant to the general standards in sections 249 et seq BGB. Damage is therefore calculated by comparing the actual, cartel-affected price and the hypothetical price that would have been charged in absence of the cartel (‘but-for price’). The difference between those two prices constitutes the loss.
A cartel can be accompanied by a so-called umbrella effect, ie due to inflated prices, suppliers not participating in the cartel may consciously or unconsciously raise their prices “under the umbrella of the cartel” to a level that would not be attainable in the case of undistorted competition (so-called umbrella pricing). Hence, a buyer also pays excessive prices not only to the cartel members but also to cartel outsiders and thus suffers a cartel damage as well when buying their products. The BGH recognized the possibility of umbrella effects (decision of 12 June 2018, case ref KZR 56/16, para 39 – Grey Cement II) and specified the elements for determining an umbrella effect more precisely in a later decision: (i) the degree of market coverage, (ii) the duration of the infringement and (iii) the homogeneity of the products (decision of 9 October 2018, case ref KZR 51/16, para 71 Liquid Gas I), yet the case law is far from fully developed.
Favoured economic methodology
The BGH favours methodologies which compare other, cartel free markets to the particular market affected by the cartel, eg the market of the same product in another geographic region or at another time or the market of a comparable product.
Interest is calculated pursuant to section 33a para 4 GWB in conjunction with sections 287, 288 BGB. Competition damage claims are usually subject to an interest rate of five percentage points above the base rate of the European Central Bank (ie the interest rate applied by the European Central Bank to its main refinancing operations). The GWB as of 13 July 2005 had similar rules in section 33 para 3 and also referred to sections 287, 288 BGB.
Prior to 13 July 2005, the GWB did not contain any particular provision regarding interest to be paid by a cartelist. Hence, interest has to be calculated pursuant to the general provisions of the BGB (which provided for an interest rate of four percent per annum as of the occurrence of a loss. This interest rate increases to 5 percentage points above base rate if the obligor is in default with the damage claim).
Can a defendant seek contribution or indemnity from other defendants? On what basis is liability allocated between defendants?
Until the implementation of the EU Damages Directive, there were no specific rules on joint and several liability of cartel members, yet the legal situation did not change with the 9th Amendment to the GWB: Regarding claims that have arisen until 26 December 2016, joint and several liability was recognized pursuant to the general rules in sections 830, 840 and 421 BGB. Thus, each cartelist may be held responsible for the whole damage caused by the competition law infringement.
At the same time, it was generally accepted that he can take recourse against the other cartelists pursuant to Section 426 BGB. Under this provision, the joint and several debtors are obliged in equal proportions in relation to one another “unless otherwise determined”. When deciding whether there is another determination, the courts need to assess all circumstances of the individual case, in particular: (i) the level and nature of contribution to the illegal conduct, (ii) the level of fault in relation to the illegal conduct, (iii) the profits and other benefits derived from the cartel arrangements, (iv) the economic capacity of the companies involved and (v) the amount of sales affected by the cartel, as has been held by the BGH in relation to recourse claims concerning the internal allocation of an EU fine (decision of 18 November 2014, case ref KZR 15/12 – Calcium Carbide II).
With the exception of benefits for the immunity recipient (see question 16) and small and medium-sized enterprises (SMEs), Section 33d GWB now explicitly provides for these rules with regard to claims that have arisen after 26 December 2016. Regarding SMEs, the legislator has implemented some alleviations in section 33d paras 3 to 5 GWB, for instance, subject to further conditions, holding them liable only towards their own direct or indirect customers and limiting their internal liability towards other cartelists to damage suffered by their own direct or indirect customers.
In what circumstances, if any, can a competition damages claim be disposed of (in whole or in part) without a full trial?
A full trial can be avoided if the parties enter into a settlement agreement at an early stage of the proceedings. Pursuant to section 278 para 1 ZPO, the court is to promote parties’ efforts to reach a settlement. In addition, a full trial on the merits is not required if the claim is dismissed for ‘technical reasons’ (eg, lack of jurisdiction, the claims being statute-barred, the set-up of a litigation vehicle being inadmissible) or the claimant withdraws its claim.
What, if any, mechanism is available for the collective settlement of competition damages claims? Can such settlements include parties outside of the jurisdiction?
The model action for a declaratory judgment (see question 11) allows a collective settlement of competition damages claims. Nevertheless, only parties that have registered their claims beforehand are included and each claimant still has to exercise its own rights, ie approach the infringer individually.
In standard competition damages litigation, collective settlements are not provided for under German law. Though, it remains possible to conclude settlement agreements with more than one infringer, this is highly unlikely since every cartelist has a valid interest in keeping the terms of a settlement, even the settlement itself, confidential. Hence, claimants usually settle the dispute with each cartel member individually in relation to their market share (whilst threatening to invoke joint and several liability).
What procedures, if any, are available to protect confidential or proprietary information disclosed during the court process? What are the rules for disclosure of documents (including documents from the competition authority file or from other third parties)? Are there any exceptions (e.g. on grounds of privilege or confidentiality, or in respect of leniency or settlement materials)?
Generally, German law does not provide for any form of compulsory production of documents by one party to another as known in common law jurisdictions. Whilst each party must provide the facts to substantiate its claim or defence and offer sufficient evidence, German procedural law contains only few procedural rights in order to collect and prove the relevant information (cf sections142 and 422 et seq). Systematic information deficits are addressed by German substantive law (eg, by acknowledging claims for information, legal and factual presumptions, prima facie evidence or the secondary burden of allegation).
Accordingly, it was recognized by established case law of the BGH that a cartel victim could request information from the infringer necessary for enforcing its claim for damages pursuant to section 242 BGB (performance in good faith) (see, eg, BGH, decision of 27 April 1999, case ref KZR 54/97 – Sitting patient transport). Yet, the prerequisites for such claim are high: it hinges on a legal infringement - which needs to be proven irrespective of the requested information - and is limited on the particular infringement.
Since the implementation of the EU Damages Directive, this basic system changed. Under certain, less strict conditions, both claimants and defendants can now request surrender and disclosure of evidence or information from the other side and disclosure of information from the authority's file.
Pursuant to section 33g GWB, each party to cartel damage proceedings may request surrender and disclosure of evidence or information from other private parties (ie the other side and third parties). As set out earlier, for claimants such a right is primarily relevant if it still lacks sufficient information to file a fully-fledged claim for damages (and thus, if directed against the opponent, often combined with an action in stages or filed as an auxiliary motion in case the court concludes that the claimant has not yet met its burden of proof). For defendants, such information claims prove helpful to substantiate potential defences if they lack sufficient information in this respect.
For the information claim to be successful, (i) the evidence must exist, be suitable to provide proof as needed and be necessary for the damage claim as well; (ii) the requested evidence or information needs to be designated as precisely as reasonably possible in light of the facts and must be in the possession of the other party and (iii) the claimant must credibly demonstrate to the satisfaction of the court that it has a damage claim (Glaubhaftmachung) (see section 33g paras 1 and 2 GWB). Surrender and disclosure of information is, however, excluded or may be refused if (i) the claim for information is disproportionate (Unverhältnis¬mäßigkeit), (ii) the requested documentation contains information on leniency statements or settlement submissions or (iii) documents in relation to proceedings by the competition authority, until the final conclusion of those proceedings against all parties involved (see section 33g paras 3 to 6 GWB). The requirements and exclusions cannot be circumvented by recourse to the procedural rights or information claim based on general principles of German civil law (see section 89d para 4 GWB).
Furthermore, a claimant may apply to the court that it requests disclosure of information from the authority's file (section 89c GWB). A party may demand that the competition authority discloses documents and items that are included in its files on a proceeding or kept in official custody during a proceeding if the party credibly demonstrates (glaubhaftmachen) that it has a claim for damages against another party pursuant to section 33a para 1 GWB and the information expected to be included in the file cannot be obtained from another party or third party with reasonable effort. Similar exceptions as for documents from private parties exist. Notably, the court shall decide on the application by decree, which is subject to immediate appeal.
Uncertainties remain, however, regarding the temporal scope of sections 33g and 89c GWB. Whereas the transition provision in section 186 para 4 GWB states that these provisions are only applicable in litigation proceedings initiated after 26 December 2016, the provision is silent as to whether the claim for information and the disclosure of information from the authority's file are available only for damage claims that have arisen after 26 December 2016. The Higher Regional Court of Düsseldorf took this particular view regarding section 33g GWB and denied information claims for claims that had arisen prior to 27 December 2016 (decision of 7 Mai 2018, case ref VI-W (Kart) 2/18 – Disclosure of Evidence II). Legal scholars take a different view that was confirmed by the Regional Court of Hanover (see eg LG Hannover, decision of 18 December 2017, case ref 18 O 8/17 – Trucks).
Under German civil law, there are no particular procedures to protect confidentiality. With regard to competition law claims, Section 89 para 7 GWB obliges the court to take the necessary measures to ensure the protection of confidential information, thus allowing for the maximum flexibility (eg for the so-called Düsseldorf procedure according to which confidential and proprietary information is only transmitted to the opposing counsels but not to their clients). The provision is, however, only applicable to proceedings initiated after 26 December 2016. Regarding proceedings initiated before, confidential and proprietary information can only be protected where the courts are asked to balance the conflicting interests of the parties (eg, when evaluating evidence in line with section 286 ZPO (freie Beweiswürdigung) or deciding on the proportionality of an information claim).
Can litigation costs (e.g. legal, expert and court fees) be recovered from the other party? If so, how are costs calculated, and are there any circumstances in which costs recovery can be limited?
If a party prevails in the proceedings, the costs of litigation can be recovered from the other party, section 91 para 1 ZPO. However, the recovery of costs is limited to the statutory court and attorney fees.
The court fees and other expenses (eg reimbursement of expenses made by witnesses) are determined in accordance with the German Court Fees Act (GKG). The claimant has to pay the court fees in advance, which are calculated based on the value dispute (the maximum being about EUR 330,000 for a value in dispute of EUR 30 million or more). During the proceedings each party bears its own costs, including advance payments for expenses by “own” witnesses. The statutory attorney fees are determined in accordance with the German Attorney Remuneration Act (RVG) and are borne by each party during the proceedings.
The prevailing party may recover its fees from the other party after the proceedings. If no party prevails fully, the court may split the costs proportionately. The prevailing party may only seek reimbursement for attorney fees to the extent determined by the RVG. Hence if, as usual, the attorney is paid by an hourly rate, the successful client can only recover the statutory fee based on the value in dispute from the other side and needs to pay any potential difference out of its own pocket.
Are third parties permitted to fund competition litigation? If so, are there any restrictions on this, and can third party funders be made liable for the other party’s costs? Are lawyers permitted to act on a contingency or conditional fee basis?
German Law does neither prohibit nor specifically regulate third party funding so that it is basically permitted. Also, as long as third-party funders are not characterised as banks or insurers, the respective legislative and regulatory frameworks for financial institutions do not apply. Pursuing cartel damage claims by way of claim vehicles is, however, only allowed if a number of conditions are met (see question 11).
The agreement between the litigation party and the third-party funder usually constitutes a partnership. Third party funders are active in the background and thus not legally required to reimburse the other party if the funded party loses at trial. However, funding agreements often oblige the third-party funder to cover the party’s litigation costs to the extent ordered by the court.
Generally, lawyers in Germany are not allowed to work on a contingency or conditional fee basis. There is only a very rare exception for cases in which - based on the individual case the client would be prevented from pursuing its rights without allowing a contingency fee basis (primarily lack of financial means). Still, the contingency fee basis must only relate to the attorney fees alone; court and administrative fees as well as costs of other participants are excluded and must be borne by the client (see section 49b para 2 Federal Lawyers’ Act (BRAO)). These strict conditions are rarely met in cartel damages litigation.
What, in your opinion, are the main obstacles to litigating competition damages claims?
One of the main obstacles is the workload of courts and in general the personal and technical staffing of court divisions and registries. At present, divisions face a heavy workload, even if the situation varies significantly between the different German states. Not every court can handle complex, multi-party cartel damages actions efficiently and fast. The number of cases has reached an unprecedented level by virtue of the sugar and truck cartel recently. On the other hand, the overall quality of German courts is still very high compared to other jurisdictions.
Furthermore, German law on cartel damages is characterized by constant legislative changes without conclusive transitional provisions. It must therefore be expected that it will (again) take numerous years until relevant cases have been brought before the BGH to finally decide on the issues (eg, the temporal scope of application of sections 33g and 89c GWB).
What, in your opinion, are likely to be the most significant developments affecting competition litigation in the next five years?
Due to the repeated legislative measures to promote private enforcement and the courts’ claimant-friendly case law, Germany is for good reason one of the favoured venues for cartel damage litigation. Due to an increasing number of (claimant) law firms - inter alia, the main players in the US have entered the German market - cooperating with process financiers and marketing cartel damage claims bundled by way of assignment and with view to the upcoming Brexit, a further boost can be expected.
With regard to German substantive law on cartel damage claims, the courts will likely further reduce legal uncertainty over the next years, particularly in the context of the several hundreds of claims that are pending in connection with the sugar and truck cartel. Yet, it remains to be seen whether there will be alternatives regarding the collective enforcement of antitrust damages. So far, the model action for a declaratory judgment is only applicable in the B2C area and only qualified associations can act as a claimant so that the new instrument has a limited scope of application in competition damages proceedings. Furthermore, the intended EU collective action is set to exclude competition law from its scope of application. Small and medium-sized enterprises in particular, are therefore likely to frequently resort to litigation vehicle to enforce their cartel damages claims.