June 12, 2018

Federal Court of Justice decides on admissibility of declaratory actions and on limitation periods in antitrust follow-on proceedings


On June 12, 2018, in its decision regarding the so-called grey cement cartel (case no. KZR 56/16), the German Federal Court of Justice (Bundesgerichtshof–BGH) resolved fundamental legal questions on antitrust damages that previously had been controversial among experts, thus putting an end to the legal uncertainty caused by the previous inconsistent case law in Germany. The decision now announced by the BGH alleviates the assertion of claims for damages under antitrust law and continues the plaintiff-friendly course recently emerged in German court rulings.

The decision was expected with particular anticipation with regard to the limitation period for damage claims. In addition, the BGH has now also taken a stand on procedural questions.

Today's BGH decision was preceded by years of litigation between a building materials dealer and a cement manufacturer. The latter had participated in anticompetitive territorial and quota agreements in the so-called grey cement cartel. The plaintiff's legal predecessor had purchased cement from the defendant between 1993 and 2002 and is now claiming damage compensation in light of the delivery prices that were achieved in violation of antitrust law.

The Regional Court of Mannheim and the Higher Regional Court of Karlsruhe had already been involved in the case before it was escalated to the BGH. In 2016, the Higher Regional Court of Karlsruhe published a much-noticed appeal decision (judgment of 9 November 2016, case no. 6 U 204/15 (Kart)), in which it had already dealt in depth with legal questions regarding antitrust damages that were controversial at the time. Both parties appealed against this decision so that the BGH now decided in last instance.

The plaintiff had left the amount of his claims unspecified and instead filed for declaration that the defendant cement manufacturer was responsible for damages incurred due to the defendant’s participation in the cartel and the resulting price distortions. According to established case-law, such a declaratory action is only admissible if the damage is still in development and the injured party is therefore not able to quantify the exact amount of damage. In the opinion of the Higher Regional Court of Karlsruhe, there should be an exception to this principle at least in cartel matters, as the calculation of cartel damages is generally very complex and involves disproportionate time and cost. In view of this expenditure, the injured party may initially only bring a declaratory action in order to prevent a possible limitation of the claims, irrespective of the completion of the damage development. The exact amount of damage would then be clarified once the liability of the cartelist has been established – who would consequently have to bear the costs for the necessary economic expert opinions.

This view was now supported by the BGH. The judges followed the arguments of the lower court and upheld the action for a declaratory judgment.

However, the main topic of today's decision was the limitation of claims for damages. The Higher Regional Court of Karlsruhe had dismissed the action to a large extent because it had considered a great portion the plaintiff's claims to be time-barred. This happened against the background of a dispute about the interpretation of sec. 33 para. 5 of the German Act Against Restraints of Competition (ARC). The provision was introduced on 1 July 2005 and provides for the suspension of the limitation period for antitrust claims during the period in which the European Commission or national antitrust authorities of EU member states investigate the case. For a long time it was disputed whether this tolling effect also covered claims that arose before the introduction of the rule. If this was not the case, all claims that had come to be before 1 July 2005 would have become time-barred on 30 June 2015 at the latest due to a maximum limitation period of 10 years that applies in German civil law. The Higher Regional Court of Karlsruhe had declined the retroactive application of the rule and held that the antitrust investigations could only suspend the statute of limitations with regard to such claims that arose after the regulation was introduced.

The BGH now overruled this conclusion and ended the dispute over the suspension of the statute of limitations. The judges clarified – in favor of cartel injured parties – that sec. 33 para. 5 ARC has to be applied retroactively and thus the suspension also takes effect in cases prior to the rule’s introduction. The practical relevance of this finding can hardly be overestimated since it means that injured parties can still hope for compensation even if the antitrust infringements date back a long way. After all, the numerous courts in Germany currently dealing with antitrust follow-on lawsuits might base their judgments on the current BGH ruling and award damages for antitrust violations committed before July 2005.

Although the complete reasons for the judgement have not yet been published, the press release of the BGH on today's decision does not contain any surprises. Court rulings of the recent years have shown a tendency in favor of cartel victims. For example, only about two years ago, the BGH published its "Lottoblock II" decision (judgment of 12 July 2016, file no. KZR 25/14; see Jungermann, in: Compliance-Berater 2016, p. 440) in which it shaped plaintiff-friendly requirements for the proof of cartel damages. The current decision continues this development and accommodates cartel victims.

© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.
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