Don’t lose sight of the wood for the trees: ECJ guarantees the right to effective judicial protection against round timber cartel
Background and case facts
The European Court of Justice (ECJ) has decided on a legal question referred to it by the Regional Court of Dortmund (Germany) in the area of bundled cartel damages claims, in particular the assignment of compensation claims to legal service providers (case no. C-253/23, decision date 28 January 2025). The ASG 2 Ausgleichsgesellschaft für die Sägeindustrie Nordrhein-Westfalen GmbH (ASG 2), a provider of legal services, sought compensation for harm caused by a cartel that allegedly inflated the prices of round timber. To this end, ASG 2 brought a group action for damages on behalf of 32 sawmills, claiming compensation for inflated timber prices due to a cartel involving the land and other woodland owners. The Federal Competition Office (Germany) had previously investigated this cartel and adopted a commitment decision in 2009. The sawmills assigned their compensation rights to ASG 2, which sought consolidated compensation in its own name but on behalf of the assignors.
Legal question
The primary legal question was whether EU law, particularly Article 101 TFEU, Directive 2014/104/EU (on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union), and the Charter of Fundamental Rights precludes national legislation that prevents the assignment of compensation claims to legal service providers for collective action. The ECJ had to determine if such national laws hinder the effective exercise of the right to full compensation for harm caused by competition law infringements.
Decision
The ECJ ruled that Article 101 TFEU, read in conjunction with Directive 2014/104/EU and the Charter, precludes national legislation that prevents the assignment of compensation claims to legal service providers for collective action. The Court emphasized that such national laws must not render the exercise of the right to full compensation practically impossible or excessively difficult. Individuals and entities harmed by competition law infringements must be able to effectively seek redress. In this context the ECJ indirectly highlighted the importance of collective actions. It stated persons allegedly harmed by an infringement of competition law shall not be prevented from assigning their rights to compensation to a provider of legal services so that it may assert them, collectively, in a stand-alone action for damages, provided that: (i) national law does not provide for any other possibility of grouping together the individual claims of those injured persons that would ensure the effectiveness of the exercise of those rights to compensation; and (ii) the bringing of an individual action for damages is, having regard to all the circumstances of the case, impossible or excessively difficult for those persons, with the result that they are deprived of their right to effective judicial protection.
National laws which cannot be interpreted in a way complying with these requirements of EU competition law, shall be disapplied by a national court. However, the ECJ leaves open whether this is the case for the German law (Rechtsdienstleistungsgesetz) in question in the referred case. It is for the Regional Court Dortmund to take this decision. However, the ECJ states that also such national provisions need to be part of the compliant interpretation which guarantee the quality of those collection services providers and their proportionate remuneration and prevent conflicts of interest and abusive procedural conduct.
A different part of the judgement confirms that commitment decisions by which a competition authority closes a cartel investigation by accepting commitments offered by the undertakings to avoid a finding of an infringement and a fine are not final decisions, on which “follow-on” damages actions can be based on with their procedural privileges for the claimant. Instead, a damages claim brought in relation to such a commitment decision needs to be treated as a “stand-alone” action with regular procedural rules to be applied, which are more burdensome for the claimant.
Practical takeaways
The decision is an additional clarification of the EU law framework for claimants of bundled damages claims against cartels. On the legal side, it does not make surprisingly new statements. However, for the direction of collective cartel damages actions in Germany it adds another piece to the puzzle. In a parallel case, recently decided by the Higher Regional Court of Stuttgart (see our blog article dated 3 September 2024), the Federal Court of Justice will soon have the opportunity to weigh in at the final instance on the question of bundled damages claims under German civil law.
Please contact the author if you would like to discuss the implications of this case further.
