Private Antitrust Litigation In Germany

An extract from The 2009 European Antitrust Review - a

Global Competition Review special report - www.globalcompetitionreview.com

With the Seventh Amendment to the German Act against Restraints

of Competition (ARC), effective from 1 July 2005, the German

legislature amended the ARC with the specific intention to

facilitate private antitrust enforcement. Until then, private

antitrust enforcement focussed mainly on anti-competitive behaviour

by dominant undertakings, whereas hard-core cartels were rarely

subject to private-party claims. Although private damages actions

based on cartel infringements are still not widespread, they have

become more common and it is to be expected that in particular

follow-on actions will become well established within the German

civil law system.

This chapter deals with private actions in Germany based on

cartel infringements and on anti-competitive behaviour by dominant

undertakings. Since EC rules provide neither for private antitrust

claims as such nor for the relevant procedural rules for such

claims under articles 81 and 82 of the EC Treaty, private antitrust

litigation in Germany is governed by national provisions.

Types Of Action

Action To Refrain From A Certain Conduct

The party affected by the breach of competition law (the party

concerned) may apply to the relevant regional court for an order

that the party in breach refrains from such conduct.1

This applies to a breach of both national provisions and articles

81 or 82 of the EC Treaty. Applicants may also be associations with

legal capacity representing professional interests.2 The

party concerned has standing to sue and may require the party in

breach to refrain from taking certain action even when there is

only a threat that an infringement will take effect.

The most common causes of action for an injunction concern

abusive or discriminatory practices by dominant undertakings or by

undertakings with superior market power in relation to small or

medium-sized undertakings. The obligation to refrain from such

conduct can also include a positive obligation towards the party

concerned. If, for example, a dominant undertaking ceases to supply

a customer contrary to the prohibition preventing it from abusing

its dominant market position, the party concerned may insist on

being supplied.

Moreover, the party concerned may apply for interim measures.

This is, again, of particular importance in cases in which an

undertaking abuses its dominant market position. The court may

issue a preliminary injunction provided that the party affected by

the anticompetitive behaviour is able to provisionally substantiate

with evidence that the party in breach abused its dominant position

and, in addition, that there is a particular urgency which requires

interim measures. The injunction may be issued without an oral

hearing. In practice, in urgent cases the injunction may even be

issued on the same day as the application.

Damages Claims

Section 33(3) of the ARC provides that whoever commits an

infringement of the provisions of the ARC or articles 81 or 82 of

the EC Treaty shall be liable for damages arising therefrom. The

breach of competition law must have been committed intentionally or

negligently3. However, there is only very limited scope

to argue that an infringement was not committed in such a manner.

In particular, errors of law do not fall outside the scope of this

provision unless the defendant can rely on legal advice from a

specialist external competition lawyer.4

Damages claims may either be filed as an action for affirmative

relief or as an action for a declaratory judgment. The action for

affirmative relief may be the appropriate type of action if the

plaintiff ? at the time the claim is made ? is

able to calculate the exact amount of damages suffered as a result

of the infringement. If the plaintiff is not able to determine the

exact amount of loss suffered and the claim runs the risk of being

barred on limitation grounds, the plaintiff may apply for a

declaratory judgment, which if successful will give rise to the

opportunity to sue the defendant for the exact amount of money

corresponding to the loss at a later date. Moreover, a declaratory

judgment often forms the basis for a settlement.

Course Of Action

Cartel Infringement

A private action against members of a cartel may be based on

national competition law, section 33 of the ARC in conjunction with

section 1 of the ARC, or on European law, section 33 of the ARC in

conjunction with article 81 of the EC Treaty. In line with article

81 of the EC Treaty, section 1 of the ARC prohibits agreements

between competing undertakings, decisions by associations of

undertakings and concerted practices that have as their object or

effect the prevention, restriction or distortion of

competition.

Private actions in relation to cartel infringements, in

particular hard core cartels, will most often be damages actions.

However, the party concerned may also seek to prevent the party in

breach from applying the agreement, eg, the price

scheme.5 This will most likely be the case when there is

doubt as to whether section 1 of the ARC or article 81(1) of the EC

Treaty are applicable to the agreement in question.

Abuse By Dominant Undertakings Or Undertakings With

Superior Market Power

In line with article 82 of the EC Treaty, undertakings holding a

dominant market position must not abuse their dominant

position.6 The notion of dominance within the ARC

essentially follows the principles as set out by European

competition law. An abuse exists, inter alia, if a dominant

undertaking refuses to allow another undertaking access to its own

networks or other infrastructure facilities in return for adequate

remuneration. Moreover, it is prohibited for dominant undertakings

to discriminate against or hinder another undertaking in an unfair

manner.7

In addition to the prohibition laid down in article 82 of the EC

Treaty, the ARC contains even stricter rules on unilateral conduct

for undertakings. According to these rules, the concept of

dominance is extended to undertakings with superior market

power.8 Undertakings with superior market power are

undertakings on which small or medium-sized enterprises depend as

suppliers or purchasers of goods or services in such a way that

sufficient or reasonable possibilities of resorting to other

undertakings do not exist.

Violation Of The Boycott Prohibition

A further special provision in German antitrust law is section

21(1) of the ARC, which prohibits undertakings from requesting

another undertaking to refuse to sell or purchase goods or services

to or from third companies with the intention of unfairly harming

certain undertakings.

Parties Entitled To Claim

According to section 33(1), sentence 1 of the ARC, the party

entitled to claim is the party concerned. Sentence 3 of the same

provision defines the notion of the 'party concerned' as

the person who is affected by the breach as a competitor or as

another market participant. There is no statutory limitation on the

parties entitled to claim damages suffered as a consequence of a

competition law infringement. According to the legislative history,

even end-users are considered to be included in this definition.

Moreover, legislative history confirms that the legislator extended

the notion of a party concerned, pointing out that an action for

damages should not be excluded on the sole ground that the claimant

participated in the infringement.

Party Directly Affected By The Illegal Behaviour

It is undisputed that the party concerned includes any person or

undertaking directly affected by the illegal behaviour. In most

cartel cases, these are persons or undertakings which are either a

direct supplier or a direct purchaser of the undertaking in breach.

Competitors of the parties to an agreement which infringes section

1 of the ARC or article 81(1) of the EC Treaty can also be directly

affected if they might lose business due to the cooperation within

the cartel. In cases of discriminatory or abusive...