Bundled debt collection for cartel damages: With the round timber cartel "out of the woods"?

With its ruling of 27 August 2024 in the so-called round timber cartel case, the Higher Regional Court (Oberlandesgericht – OLG) of Stuttgart has given an important ruling on the admissibility of bundled debt collection (Sammelklage-Inkasso) for cartel damages claims.¹ This decision follows a series of earlier rulings by the Federal Court of Justice (BGH) and – subject to confirmation by the Federal Court of Justice – will influence the practice of enforcing antitrust damages claims.

Facts

The plaintiff, a special-purpose vehicle, is asserting bundled claims in a mass claim against the state of Baden-Wuerttemberg, which were assigned to it for these purposes by 36 sawmills. The claims asserted are based on the allegation that the state violated the ban on cartels by jointly marketing round timber from 1978 to 2015. The damages claimed amount to around EUR270 million plus around EUR200 million in interest.

The regional court as the court of first instance had still dismissed the action as it considered the assignment of the claims to the plaintiff to be a violation of the Legal Services Act (Rechtsdienstleistungsgesetz – RDG), under which the vehicle was registered as a debt collection agency. On the one hand, the court was of the opinion that the special-purpose vehicle exceeded the limits of the services it was permitted to offer under the RDG. On the other hand, it held the assignment model involving a third-party litigation funder led to conflicts of interest that were inadmissible under the RDG. The Higher Regional Court of Stuttgart has now overturned this decision on appeal and confirmed the fundamental admissibility of the mass claim.

As an earlier decision by the Federal Cartel Office, following an investigation and establishing a cartel infringement, had been overturned by the Federal Court of Justice on formal grounds, no so-called follow-on action with the binding effect of an already established cartel infringement could be used by the civil court. Hence, the Higher Regional Court had to establish the cartel infringement itself and indeed found a cartel infringement by the state of Baden-Wuerttemberg. It confirmed that the state's agreements with municipalities on the joint marketing of timber violated Article 101 (1) of the Treaty on the Functioning of the European Union (TFEU).

Previous case-law of the Federal Court of Justice

The plaintiff is asserting the claims assigned to it by the sawmills as a special-purpose litigation vehicle supported by a third-party litigation funder. The admissibility of such bundled debt collection was very controversial for a long time. Outside of antitrust law, the limits of a debt collection registration under the RDG have already been the subject of a number of judgments of the Federal Court of Justice, in particular (i) LexFox (BGH, judgment of 27.11.2019 – VIII ZR 285/18); (ii) Airdeal (BGH, judgment of 13.07.2021 – II ZR 84/20); and (iii) myRight (BGH, judgment of 13.06.2022 – VIa ZR 418/21). In this jurisprudence, the Federal Court of Justice stated that a rather generous standard should be applied. In the judgments on Airdeal and myRight, it also ruled fundamentally on the admissibility bundled debt collection ie business models in which claims are bundled and typically asserted by way of assignment of claims funded by third parties. By way of a case-by-case assessment, it stated, among other things, in accordance with the underlying RDG that registration as a debt collection agency under the RDG also covers the assertion of claims in court. In addition, structural conflicts of interest could not generally be assumed in bundled third-party-financed mass debt collection. Furthermore, for the legal assessment of a specific business model courts must consider whether the advantages of the bundling of claims outweigh the correlated risks.

The Higher Regional Court of Stuttgart takes up these principles and applies them to the specific facts of an antitrust law case. Its judgment suggests that the instrument of bundled debt collection, in addition to the previous cases that typically concerned standardized consumer claims arising from air passenger rights, “rent control” (Mietpreisbremse), or the “diesel complex”, can also be used in more complex commercial disputes with high amounts of damages at stake and a large number of potentially affected parties.

Practical takeaways

The judgment of the Higher Regional Court of Stuttgart could have far-reaching consequences for the enforcement of cartel damages claims. It makes it easier for affected parties to assert their claims in a bundled manner, which is particularly important when many potential claimants each have suffered minor individual damages only. In such a scenario, the bundling of claims increases the chances of enforcement and reduces the individual litigation risk. However, the decision also underlines the need for careful legal examination and transparent structuring of the relationship between the litigation vehicle, the assignors of the claims, and other parties such as litigation funders. In any case, companies as potential defendants face new challenges due to an increased risk of legal action.

In individual cases, however, the courts’ (wood) mills grind slowly: the action before the Regional Court was filed around five years ago and the current ruling by the Higher Regional Court of Stuttgart is so far only a base judgment (Grundurteil), which has not yet ruled on the quantum of the claims that have been recognized in principle. In addition, the decision is not yet legally binding; due to the fundamental significance of the case, an appeal to the Federal Court of Justice has been permitted. The Federal Court of Justice will therefore have the opportunity to further specify the principles of bundled debt collection for cartel damages claims. Only then will the amount of potential claims over the round timber be disputed in the so-called amount proceedings in the lower instances. Even in case of success for the plaintiff, it will therefore still be several years before damages would be payable.

In principle, however, the Higher Regional Court’s ruling shows that claim bundling for debt collection purposes is continuing to grow in importance in general and in antitrust law in particular.