Recently, the Court of Justice of the European Union (“CJEU”) rendered a judgment on the requirements of EU competition law regarding the legal possibilities for the bundled enforcement of cartel damage claims in Member States. The ruling confirms that the Dutch legal practice is on the right track by providing injured parties with effective and accessible protection, not only with the assignment model but also with the option of the collective action.
The decision of the CJEU
The proceedings that led to the judgment, was initiated by 32 sawmills from Germany, Belgium and Luxembourg and directed against the initiated German region of North Rhine-Westphalia. The dispute arose over an agreement that restricted competition in the sale of round wood. The sawmills believed they suffered damages because of the excessive prices applied by the region of North Rhine-Westphalia from at least 28 June 2005 to 30 June 2019.
Each of the sawmills assigned its claims to ASG 2 Ausgleichsgesellschaft für die Sägeindustrie Nordrhein-Westfalen GmbH (“ASG 2”), a German legal service provider. As a legal service provider, ASG 2 is subject to the German Legal Services Act (“RDG”). According to the region of North Rhine-Westphalia, the RDG did not allow ASG 2 to bring a class action for damages in the context of a breach of competition law. In that regard, the Regional Court in Dortmund states that in German law, as regards collective or low-value damages concerning a large number of persons, actions of individuals may be brought together through the claim assignment model (Abtretungsmodell). This practice, however, is not accepted by (lower) regional courts when it comes to compensation for harm caused by an alleged infringement of competition law, specifically in stand-alone actions. Even though the Federal Court of Justice (Bundesgerichtshof) has not yet had an opportunity to rule on this matter, the region of North Rhine-Westphalia finds that the assignments are invalid and thus the claims should be dismissed.
The Regional Court in Dortmund agreed that the claims indeed must be dismissed, but doubted whether EU law precludes this interpretation of the RDG. The court opined that the class action for damages was the only real possibility for the sawmills to get compensation for their damages as a result of the breach of competition law under German law. Therefore, the court referred preliminary questions to the CJEU and essentially asked whether EU law should be interpreted in such a way that it can hinder the interpretation of a national law that prevents allegedly injured parties from assigning their rights to compensation in case of cartel damage claims.
First of all, the CJEU states that the rules governing the exercise of the right to compensation for damages caused by an infringement of competition law are not regulated by EU law. It is, therefore, up to the Member States to adopt those rules in compliance with EU law.
The CJEU concludes that EU competition law precludes the invalidity of assignments in cartel damage claims (in stand-alone actions) due to an infringement of national law if:
- the national law does not specify any other way of grouping the claims of injured parties that would protect the effective enforcement of the claims, and
- an individual action would be impossible or excessively difficult for the injured parties, which would mean that they would be deprived of their right to effective judicial protection.
In that case, the national court must attempt to interpret the national provisions in accordance with EU law. If this proves to be impossible, the national court must disregard the national provisions prohibiting the collective recovery of the individual damage claims in question. Thus, it is up to the German court to assess whether national law gives the sawmills sufficient opportunity to exercise their claims.
Cartel damage claims in the Netherlands
Where the assignment model (cessie model) seemed to be unfit for cartel damages claims in Germany – at least until the judgment we discussed above - the assignment model under Dutch law is widely accepted by Dutch courts in cartel damage cases. It is, however, not the only way to bring together individual claims in case of harm by cartels; a collective action on the basis of the Act on Settlement of Mass Damages in Collective Action (Wet afwikkeling massaschade in collectieve actie, “WAMCA”) is also possible. Both routes will be discussed below.
Assignment
The first way to collectively claim cartel damages is through assignment (cessie, Article 3:94 of the Dutch Civil Code, “DCC”). Assignment means the transfer of a claim from the injured party to a third party. This transfer takes place publicly or silently (openbare of stille cessie). Public assignment requires a private or authentic (notarized) deed and communication thereof to the debtor so that the debtor knows he or she must now pay to another party. Silent assignment does not demand such declaration, but is stricter with regards to the deed as it must be authentic or registered privately. In practice, assignment often consists of a mandate (lastgeving, Article 7:414 DCC). The agent (lasthebber) is then assigned to collect in its own name the principal’s (lastgever) claim without the actual transfer of the claim.
For cartel damage cases, assignment means that individual parties that have suffered harm from a cartel can transfer their claim to another party, often a claim vehicle. This claim vehicle then starts the procedure for damages before the court on behalf of the individuals. There are multiple cases in which a cartel damage claim was successfully based on the assignment model. In 2022, for example, the District Court of Amsterdam ruled in a cartel damage case regarding the Trucks cartel that the injured parties could transfer their claim to the claim vehicle via the assignment model. Another example is the Aviation cartel. This illustrates that the assignment model under Dutch law is an effective method to assert damages in competition law cases.
Collective action (WAMCA)
Secondly, cartel damage claim cases may be commenced by means of a collective action (Article 3:305a DCC). Since the implementation of the WAMCA in 2020, it is possible to claim damages in collective proceedings as well. These claims can be brought to court by a foundation or association that protects the similar interests of others, provided that these interests are sufficiently safeguarded in its bylaws. This article elaborates on other admissibility and quality requirements that must also be met by these representative bodies.
Claims brought before a court on the basis of the WAMCA are less common than those based on assignment. To date, there is no case law in which it was done successfully. In two cases, compensation claims pursuant to Article 3:305a DCC were found to be inadmissible because the cartels had been active before 15 November 2016, in which case the WAMCA does not apply (the Trucks cartel and Consumers’ Association/Philips N.V.). Given its relatively recent implementation, it is likely that cases based on the WAMCA will follow in the near future.
Comparison assignment and collective action
Based on the above, it is clear that successful cartel damage claims are primarily based on the assignment model. Both models, however, have their advantages and disadvantages.
The main advantage of the assignment model is that it is more manageable than the collective action via the WAMCA. With assignment, the claim solely revolves around those claims that have been transferred (or assigned) to the claim vehicle, whereas the amount of claimants may be unclear for claims based on the WAMCA. This is because representative bodies under the WAMCA litigate in their own name. This also has an advantage; the procedure may be less complicated and less lengthy than procedures based on the assignment model, provided that the admissibility of the individual claims must be tested for assignment. In that regard, claims constructed through mandate are also less complicated, because this allows an agent to act on behalf of a group of principals without the transfer of their claims.
Key takeaway
The recent judgment of the CJEU confirms that the legal practice for the right to compensation in cartel damage cases in the Netherlands can pass muster and Dutch courts are still an attractive forum for such cases. Such cases can effectively be brought to court through the assignment model or the collective action codified in Article 3:305a DCC. If you would like to claim compensation for loss suffered by cartels, do not hesitate to contact us.
