Last week, the ECJ ruled in a preliminary ruling procedure pursuant to Art. 267 TFEU on the requirements of EU competition law regarding the legal possibilities for bundled enforcement of cartel damages claims in the Member States (Case C-253/23).
Background to the decision
The ECJ ruling is based on an action brought by a claims vehicle before the Regional Court Dortmund. This claims vehicle had claims for cartel damages against the state of North Rhine-Westphalia assigned to it by sawmills due to a competition restricting agreement in the sale of round wood. There is no decision of the German Federal Cartel Office with regard to the competition infringement which is binding for the Regional Court Dortmund. It is therefore a so-called stand-alone action, in which a breach of competition law must be proven (in contrast to a follow-on action, in which the breach of competition law is established on the basis of a legally binding decision).
The assignments to the claims vehicle are fiduciary, as the sawmills only receive payment in return for the assignment if and when the claims have been successfully enforced by the claims vehicle.
The Regional Court Dortmund took the view that the assignments were invalid due to a breach of Section 3 of the Legal Services Act (RDG). In the case of a stand-alone claim, it was not just a matter of pursuing civil law claims on the basis of purely civil law assessments. Rather, aspects not primarily being part of civil law must also be examined (the Regional Court Dortmund seems to have a breach of EU and German competition law in mind). In such a case, the limit of what a legal service provider licensed under the RDG is permitted to provide is exceeded. As a consequence, the assignments were invalid and the action was therefore unfounded (Regional Court Dortmund, 13.3.2023, 8 O 7/20, para. 112 et seqq.).
However, in the view of the court, this result is not compatible with EU competition law, because parties allegedly harmed by competition law infringements must be able to effectively enforce their claims (principle of effectiveness). There are no alternative models for the enforcement of claims. In particular, neither a factoring, where the assignee pays directly for the acquisition of the claim, nor a joinder of parties, i.e. a joint action by several injured parties, are suitable options (Regional Court Dortmund, 13.3.2023, 8 O 7/20, para. 118 et seqq.).
Decision of the ECJ
The ECJ comes to the conclusion that EU competition law, in particular the principle of effectiveness, precludes the invalidity of assignments of cartel damages claims without a binding decision by a competition authority (stand-alone case) due to an infringement of the RDG if
- national law does not provide for any other way of grouping the claims of injured parties which is capable of ensuring effective enforcement of the claims, and
- an individual action would be impossible or excessively difficult for the injured parties, with the result that they would be deprived of their right to effective judicial protection.
If the RDG cannot be interpreted in accordance with EU law, the national court may not apply the RDG.
Conclusions
1. The judgment expressly only concerns the stand-alone scenario. However, there is no reason why, in the follow-on scenario, in which allegedly injured parties can rely on a binding decision of a competition authority to substantiate their claim, different, in particular less strict requirements for national law follow from EU competition law. Should a national court come to the conclusion that assignments of claims for damages due to a bindingly established infringement are invalid due to an infringement of the RDG, it would therefore also have to conclude that the RDG is inapplicable if the requirements set out by the ECJ are met.
2. Irrespective of this, there is no infringement of the RDG in the case of a fiduciary assignment of cartel damages claims. This holds true in both, the follow-on as well as the stand-alone situation:
- In the financialright decision, the Federal Court of Justice stated that the RDG does not contain any restriction on the collection of claims that can be assigned to a specific area of law. No restriction follows from the systematic interpretation of the RDG either. (Federal Court of Justice, 13.6.2022, VIa ZR 418/21, para. 25 f.).
- In addition, the German legislator has also clearly indicated in the reform of the RDG that the enforcement of cartel damages claims is admissible under the RDG (BT-Drs. 19/27673, p. 62, the state of Baden-Württemberg, which is also sued in the round wood case, had tried in vain via the German Bundesrat to include a provision in the RDG that excludes cartel damages claims from the debt collection license).
- Finally, both the Higher Regional Court Munich in an action relating to the truck cartel (follow-on) and the Higher Regional Court Stuttgart in parallel proceedings relating to the round wood case (stand-alone) confirmed the compatibility of fiduciary assignments to claims vehicles with the RDG (Higher Regional Court Stuttgart, 15.08.2024, 2 U 30/22, para. 106 et seq.; Higher Regional Court Munich, 28.3.2024, 29 U 1319/20 Kart, para. 285 et seq.).
3. Against this background, the impact of the ECJ ruling in Germany is likely to be limited. This applies all the more if the Federal Court of Justice should explicitly confirm the compatibility of fiduciary assignments of cartel damages claims. This would be only consistent with the cited decision.
4. One can only hope that in practice the courts will not deal with the requirements established by the ECJ with regard to the invalidity of an assignment, i.e. whether injured parties could enforce their claims in an alternative bundled manner, e.g. by way of a joinder of parties, and when the damage amount of a assignor appears so high that this justifies an individual action. This would help to ensure the effective (and efficient) enforcement of EU competition law and claims for damages based on it.
