Limitation of cartel damage claims: “Grauzementkartell II”

On 12 June 2018 the German Federal Supreme Court issued its long-awaited decision on the applicability of Sec. 33 (5) ARC [Act against Restraints of Competition = GWB] in the version of 1 July 2005 on so-called old cases.

• The Court has ruled that Sec. 33 (5) ARC, according to which the limitation period for a claim for damages pursuant to Sec. 33 (3) ARC shall be suspended if proceedings are initiated by the German Federal Cartel Office or the EU Commission, applies to cartel damage claims which had arisen before the 7th amendment of the ARC came into effect on 1 July 2005 and which had not become time-barred at that point in time.

The decision is highly relevant for a considerable number of pending but also future cartel damage litigations, e. g. regarding potential damages resulting from the cartels in the areas of sugar, trucks, food packaging or aluminium and tantalum electrolytic capacitors, as the respective potential damage claims have not become time-barred.

And the decision is not only relevant with regard to the limitation of cartel damage claims. It contains further highly relevant findings for the enforcement of cartel damage claims under German competition law, partly by confirming former judgements:

• A plaintiff claiming damages due to a cartel must file an action for performance, i.e. it must request the compensation of a certain amount of damage and, therefore, substantiate its alleged damage (usually with the help of an economic expert opinion). Conversely, a – less costly – declaratory action, where the plaintiff’s request is restricted to the court’s declaration that the defendant is liable for damages, is in principle inadmissible.
• There is a high probability that a cartel is formed and continued because higher prices on the market could be reaped and it is, at the same time, probable that the cartel members’ buyers suffered damages.
• Damages due to a cartel can also occur if the cartel has already been dissolved for a certain period of time (it was left open in the decision as to whether after-effects of a cartel on prices cease one year after its dissolution).
• It is also probable that indirect purchasers have suffered damages due to a cartel.
• If the price level on a specific market is influenced in a significant manner, market participants outside the cartel can adjust their prices to the increased level (umbrella pricing). Cartel members are liable for damages due to umbrella pricing. The German Federal Supreme Court further ruled that damages due to umbrella pricing were possible in the case at hand because the cartel covered 71,3 % of the market and the market was transparent.
• By reference to the ECJ decisions in Manfredi and Marshall, the German Federal Supreme Court ruled that the payment of interest is an essential component of compensation and that the payment of interest is necessary from the date the cartel damage claim had arisen.