After Heureka (ECJ, C-605/21) – on the knowledge-independent limitation period for cartel damages claims under German law

Issue

Cartels are secret and often last for many years (e.g. the truck cartel from 1997 to 2010).

At the same time, in Germany, claims for damages arising from infringements of competition law are time-barred, independent of knowledge or grossly negligent lack of knowledge (Sec. 199 (3) no. 1 Civil Code [“CC”]) ten years after they arose. In addition, according to the case law of the Federal Court of Justice, claims for damages due to cartels arise at the time when the overcharged purchase price was paid. As a result, in the case of cartels that last longer than ten years, claims are time-barred before injured parties can assert them.

In Art. 10 (2) Cartel Damages Directive 2014/104 the EU legislator provided that the limitation period for cartel damages claims shall not begin to run before the infringement of competition law has ceased and the claimant knows, or can reasonably be expected to know (i) of the behaviour and the fact that it constitutes an infringement of competition law; (ii) of the fact that the infringement of competition law caused harm to it, and (iii) the identity of the infringer. The German legislator implemented Art. 10 (2) of the Directive in Sec. 33h Act against Restraints of Competition [“ARC”]).

Since Art. 10 (2) Cartel Damages Directive is a substantive provision within the meaning of Art. 22 (1) Cartel Damages Directive, this provision has no retroactive effect (i.e. claims that are time-barred under the applicable national limitation statute remain time-barred). This means that for many of the currently pending cartel damages actions, the problem remains that the claims for damages could be time-barred pursuant to Sec. 199 (3) no. 1 CC.

ECJ ruling in Heureka

In the preliminary ruling proceedings pursuant to Art. 267 TFEU in the Heureka case (C-605/21), the ECJ ruled that a national limitation period that begins to run before the infringement came to an end and the injured party did not know, or could not reasonably have been expected to know, the information necessary for bringing its action for damages is contrary to EU competition law. Otherwise, the right to assert claims for damages arising from competition law infringements would be practically impossible or excessively difficult (principle of effectiveness, para. 55 of the judgement; cf. ECJ, C-267/20 – Volvo and DAF Trucks, para. 56). In this context, the ECJ also emphasised the deterrent effect of private enforcement, which serves to ensure compliance with the EU competition law prohibitions (para. 61 of the judgement).

Consequences for the knowledge-independent limitation statute for cartel damages claims under German law

The ECJ continues to shape national cartel damages law. The ECJ's decisions in Heureka and Volvo and DAF Trucks have far-reaching consequences for the national statute of limitations for cartel damages claims in Germany.

As explained above, based on the wording of Sec. 199 (3) CC, claims for damages would be time-barred ten years after they arose (i.e. the date of payment of the excessive prices due to the cartel), even if it is practically impossible for injured parties to assert these claims before the limitation period has expired, as it is the case of cartels with a duration of more than ten years. In the light of the ECJ case law, it must be concluded that the provision of Sec. 199 (3) CC is incompatible with EU competition law.

The fact that, according to recital 36 Cartel Damages Directive, knowledge-independent (absolute) limitation periods are not per se contrary to EU competition law does not contradict this conclusion. In this respect, recital 36 Cartel Damages Directive also stipulates that an absolute limitation period shall not render the exercise of the right to full compensation practically impossible or excessively difficult. If a limitation period begins to run before the end of the competition law infringement, this boundary is exceeded.

First court reactions after Heureka

The ECJ's decisions are beginning to have an impact on national cartel damages proceedings. In a court order (available only in German), the Regional Court Dortmund indicated that it will interpret the provision of Sec. 199 (3) CC to the effect that the limitation period only begins to run when the infringement ended. The Regional Dortmund case concerns cartel damages claims due to the pesticide cartel. This cartel existed between 1998 and 2015 and the German Federal Cartel Office had initiated the first investigative measures which led to the suspension of the limitation period in 2015. In the case before the Regional Court Dortmund, the claimant had asserted claims inter alia for damages from 2004. Claims from these purchases would be time-barred pursuant to Sec. 199 (3) no. 1 CC, if the commencement of the limitation period were based on the date the claim arose.

With convincing arguments, the Regional Court Dortmund comes to the conclusion that the prerequisites set out by the ECJ require an amendment to Sec. 199 (3) no. 1 CC to the effect that the limitation period does not begin to run until the competition law infringement has ceased. The Regional Court Dortmund rightly states that neither the fact that the Heureka decision concerned a knowledge-dependent limitation statute nor the fact that the Heureka case concerns an infringement of the prohibition to abuse a dominant position precludes an application of the ECJ decision to the knowledge-independent limitation statute in Sec. 199 (3 ) no. 1 CC and to claims due to infringements of the prohibition of restrictive agreements. On the contrary, the ECJ's requirements for national limitation law apply a fortiori to the knowledge-independent limitation period.

Outlook

In the past, the expiry of the ten-year period following the occurrence of the damage was seen as the turning point for the assessment of the prospects of success of cartel damages claims. This is likely to have changed with the ECJ's decision in Heureka (although this conclusion could also be drawn from the Volvo and DAF Trucks decision). Albeit a decision by the German Federal Court of Justice on the interpretation of Sec. 199 (3) no. 1 CC could take a while, there are strong reasons to assume that the limitation of cartel damages claims before the end of the cartel is history.

In light of the Heureka decision, it is also questionable whether the new provision in Sec. 33h (3) no. 1 ARC on the knowledge-independent limitation period is compatible with the requirements of EU competition law. The ECJ stated in Heureka that the national law on the limitation must require both the end of the infringement and the knowledge (or the knowledge to be expected) for the limitation period to commence. This second requirement is missing in Sec. 33h (3) no. 1 ARC. In the case of anticompetitive conduct that ended more than ten years ago, without the conduct being known or recognisable as an infringement, injured parties are left empty-handed. This shows that the current German statute of limitations does not fulfil the requirements of EU primary law either.