26 August 2016

An attractive jurisdiction for cartel damages claims - Class actions in Germany

While Germany does not have a general class action regime, collective redress is available for claimants by other means and Germany continues to be considered an attractive place for claimants to bring cartel damages actions in particular. In addition to the general procedural right to join parties (on both the claimant and defendant side), additional mechanisms for cartel damages claims include:

  • a right on the part of certain registered trade associations and consumer protection organisations to file group actions where a breach of competition law affects their members; and
  • the use of special purpose entities which aggregate and take assignment of cartel damage claims and then litigate them to recover damages. While this practice of collective enforcement of claims has been subject to some criticism, the standing of such claims vehicles has been confirmed, subject to having sufficient funding to pay the defendant’s costs if the claim fails as otherwise the vehicle’s mechanism for assigning and collecting claims could be regarded as illegal.

The position of claimants will be strengthened by amendments that implement the EU Directive on Antitrust Damages into German law by the end of 2016. Among other changes, the new rules:

  • enable claimants to benefit from the binding effect of decisions of competition authorities across the EU (along with final appeal decisions),
  • introduce a rebuttable presumption to the benefit of the claimants that any cartel infringement leads to higher prices for direct purchasers, and provide explicit standing for indirect purchasers if they can establish they have suffered damage, with a presumption that damages have been passed on to them (requiring a passing-on scenario on the part of the direct purchasers),
  • provide that cartelists are jointly and severally liable for damages (as in Australia),
  • limit cost risks for claimants as statutory refunds are available,
  • set a relatively high rate of interest, available from the date of the first occurrence of the damage,
  • introduce new rules on the disclosure of documents, which will dramatically improve the ability of claimants in German courts to access documents to substantiate their claim, given traditional restrictions on pre-trial discovery, and
  • extend the statutory limitation period to five years, and suspend the limitation period while competition authorities are investigating the infringements.

These changes are expected to further enhance Germany’s status as an attractive jurisdiction for the prosecution of cartel damages claims.

Want to know more?

The Review: Class Actions in Australia 2015/2016 examines key class action decisions from July 2014 to June 2015 as well as current proposals for reform. It provides an analysis of how these decisions are likely to affect future proceedings for both plaintiffs and defendants, and also looks at emerging trends in class action regimes around the world. 

This is the fifth annual report released by King & Wood Mallesons’ Class Actions & Regulatory Investigations Practice, which has worked on some of the largest and most complex class action matters in Australia.

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