The Middle Ages are regarded as the golden age of the kin liability (Sippenhaft) in Germany. According to the principle of kin liability, family members had to stand up for the actions of their relatives, regardless of whether they were involved or not. Thus, kin liability was a form of collective liability. A family member was liable even if it had done nothing wrong. This principle was so far unknown to the German law of regulatory offences and law of torts. In these areas of law it was undoubtedly the principle of separation of legal entities (Trennungsprinzip) that ruled. Pursuant to such principle, a legal entity is only liable for such antitrust violations that have been committed by its organs or employees in an attributable manner. Not for more. The 9th GWB-amendment now applies the ax to this basic principle. Is there a relapse into dark medieval times? This blog post is devoted to the question what the new German law has to say on the issue of corporate collective liability in the field of competition law.
At first glance, not a stone seems to be left standing. The new sec. 33h ARC hardly bears any resemblance with the old sec. 33 para. 5 ARC, the to date only special limitation rule applicable to cartel damages claims in the ARC. What appears tremendous – the new sec. 33h ARC comprises eight paragraphs in total – proves also on closer consideration quite far-reaching – even though perhaps not quite as far-reaching as the multiplication of the number of paragraphs by eight may suggest. The extension of the provision text is to a large extent due to the fact that a comprehensive special limitation regime for cartel (damages) claims has been introduced into the ARC which, while primarily meant to transpose the special requirements stemming from the cartel damages directive 2014/104/EU into national law, largely reconstructs the general limitation rules as contained in the German Civil Code previously applicable to cartel (damages) claims. In that regard, the German legislator aimed at attaining consistency with the general limitation rules, and quite successfully at that. As a result, the differences are in many ways hidden in the details – which by no means is to say that they weren’t fundamental. Apart from that, the newly introduced sec. 33h ARC brings some real novelties. One thing, however, is common to (almost) all changes: they strengthen private enforcement by cartel victims.
Where is no plaintiff, there is also no judge: Private enforcement of competition law presupposes that there are plaintiffs who take a cartel to court. Plaintiffs exist where actions are worth it. Cartel victims may obtain compensation of many millions or even billions. In general, however, the hurdles in the German Code of Civil Procedure (ZPO) are high as the plaintiff must demonstrate and prove all the facts substantiating the claim. If the legislator wants to have as many plaintiffs as possible he must therefore reduce the burden of proof. Already under the rules previously applied there were some alleviations of the burden of proof. With the 9th amendment of the German Act against Restraints of Competition (GWB) the legislator has removed another hurdle. The following article provides an overview of what is certain, what is presumed and what can be estimated in cartel damage litigation after the 9th amendment of the GWB – and therefore does not need to be proven (any more).
Cartelists facing damage claims by their customers regularly defend themselves with the objection of the so-called passing-on defense. According to such objection, a purchaser of the cartel cannot claim damages in so far as it has passed on the cartel surcharge to its customers. This follows from a general principle of tort law according to which the injured party should not be entitled to claim more damages than what is necessary in order to compensate it for the actual damages it has suffered. In other words: the injured party should not be overcompensated. In turn, indirect customers at the downstream market level, who bear the actual damage, should be entitled to a claim for compensation against the cartelists. This principle (passing-on defense admissible, in turn indirect buyers can assert their own claim for compensation) is now regulated by the 9th amendment of the GWB in § 33c GWB. The German legislator thus transposes the EU damage action directive into the German law. But is this really new? After all, in its ORWI decision of 2011 the German Federal Supreme Court (BGH) had already generally endorsed the passing-on defense, as well as the entitlement of indirect purchasers to bring their own damages claims against the cartel (here). So business as usual in Germany? This blog post tries to give an answer to this question.
Bye bye trade secrets?
In the new ARC, confidential information and trade secrets still enjoy special protection. The reason is clear: as soon as secret information is revealed, it becomes obvious and, as such, is no longer protected as confidential. The defendant that is sued for disclosure of information may therefore reply with a confidentiality objection against the request. But it does not stop short at objecting with confidentiality: the claimant may still apply for judicial review according to para 89b(6) ARC. In the course of this review – which will probably be modeled in camera similar to para 99(2) of the Rules of the Administrative Courts (“Verwaltungsgerichtsordnung”, VWGO) – the court decides, after having heard the parties, whether the information is indeed confidential. If this is the case, the court may still disclose the confidential information on a case-by-case basis and only if the interest in the disclosure of the information outweighs the interest in keeping the information secret. Whether these documents will be handed over to the claimant directly, whether the court may impose an obligation of secrecy on the lawyers vis-à-vis their clients – all of this is not explicitly spelled out in the new Act.
The 9th amendment of the ARC aims at increasing the effectiveness of private antitrust enforcement. This aim does not stop short of obtaining information. In order to strengthen the injured party’s position, the information asymmetry between the injured party and the infringer is to be remedied. Almost reflexively, the new rights to obtain information have been labeled “German Discovery” or “Discovery Light”. So what about these new rights? Are they improving the enforcement of cartel damage claims? Are they going to transfer an Anglo-American legal status into German law?
One of the primary aspects covered by the 9th reform of the German Competition Act that has just entered into effect is the transposition of the EU Cartel Damages Directive into German law. The preparatory works in the draft bill as well as the government draft thereby come to a conclusion.
Despite their long tradition and intended relevance, the rules on cartel damages claims in the Competition Act have been rather dormant for quite some time. However, in recent years, the topic gained in importance considerably. Now, the legislator stays abreast of this trend. The competition law reform significantly supplements the rules dedicated to private cartel damages claims, providing a legal basis upon which both claimants and defendants can rely upon in cartel damage proceedings. By further improving the legislative base, the reform will contribute to the reputation of Germany as a preferred venue for cartel damages litigation.
The 9th reform of the German Competition Act is due to take effect on 9 June 2017. It primarily transposes the EU Cartel Damages Directive into German law. On top, it brings a number of other amendments. Here is a summary of the reform’s highlights. 5:00 New rules for enforcing cartel damage claims It is the reform’s
In recent years competition authorities in a number of EU Member States have stepped up in their pursuit against companies active in the Life Sciences sector for excessive pricing. Last week, the European Commission issued a press release signalling that it will not be left behind on the action when it launched a probe into
The Federal Trade Commission (FTC) reminded celebrities, social media influencers, and marketers that failing to disclose material connections to the products they endorse is #notokay.
Despite a recent decision by the Second Circuit suggesting that anti-steering contractual provisions in other industries may not be anticompetitive, DOJ’s lawsuit (United States v. Carolinas HealthCare System) against Carolinas HealthCare System’s (CHS’s) contracting practices continues forward after surviving a motion for judgment on the pleadings.
M&A Activity in the Connect Vehicles sector: More Antitrust Filings on the Horizon? M&A activity in the connected vehicles sector might need to be notified to antitrust authorities, even when the target has limited revenues, as shown by the recent Intel/Mobileye deal. Connected vehicles (or, taking it one step further, self-driving cars) are computers on
Will Germany establish a “Digital Agency” to monitor compliance with competition law rules in digital markets? Will a German “Digital Antitrust Enforcer” become a role model for a European protectionist approach against American and Asian platform providers?
The German Federal Ministry for Economic Affairs and Energy seems to see a pressing need for regulation in digital markets. The White Paper “Digital Platforms”, published on the 20 March 2017, provides an outlook on possible forms of digital regulatory policy in Germany and potentially also in Europe. Of particular interest from a competition law perspective is the proposal to establish a new “Digital Agency”.
With the departure of now former Chairwoman Edith Ramirez earlier this month, among the most discussed vacancies in the new administration these days is the post of permanent Chair of the Federal Trade Commission. According to reports, one leading candidates is Acting Chairman Maureen Ohlhausen, and her selection could also have significant implications for FTC
When a parliamentary report cites Mary Shelley’s Frankenstein in its recitals and proposes new regulation for robots with artificial intelligence (“AI”), one cannot be sure whether the 19th or the 21st century has inspired the legislator. Last week, the European Parliament took a step to introduce new regulation of robots in Europe. Declaring that the
In September 2016, the European Commission granted a 30% fine discount to Altstoff Recycling Austria for cooperating with an investigation into its alleged abuse of a dominant position in the Austria waste management market (see our previous post here). The discount was granted on the basis of Paragraph 37 of the 2006 Fining guidelines, which allows
In June 2015, the Federal Trade Commission (FTC) held a workshop on The “Sharing” Economy: Issues Facing Platforms, Participants, and Regulators. The Commission also solicited public comments on the topic, receiving more than 2,000 comments in response. On 17 November, the Commission issued a report summarizing the issues explored in the workshop and the public comments. The report emphasized that the workshop (and its ensuing summary) was not intended “as a precursor to law enforcement” but “an opportunity to learn more” about this rapidly evolving business model and to aid “the Commission, as well as regulators, consumer groups, platforms, participants using the platforms, incumbent firms, and others” to address the unique issues raised by sharing economy platforms.
Many digital platforms attract consumers and businesses on a global basis. It is a challenge for national regulators to enforce competition law and other regulatory provisions against such international players. Germany´s Federal Minister of Justice, Heiko Maas, argued in a similar way in an interview with the German newspaper Handelsblatt on 5 October 2016.
On 20 September 2016, the European Commission fined Altstoff Recycling Austria (“ARA”) under Article 102 TFEU for abusing its dominant position in the Austrian waste management market by blocking its downstream competitors from reasonable access to its necessary upstream infrastructure. What’s unique in this case is that the EC granted ARA a 30% discount for
Liability for anti-competitive behaviour by your employees and outside contractors: when you are off the hook and when you are not In its recent VM Remonts judgment, the Court of Justice of the EU has confirmed the strict liability of companies for the anti-competitive behaviour of their employees, even if the employee was acting contrary to
This week the request for a preliminary ruling (C-191/16) by the Regional Court of Berlin (RC Berlin) in the topical case Romano Pisciotti v. Germany was published in the Official Journal.
After the implementation of the new EU Directive on antitrust damages actions into German law it will be much easier for cartel victims to pursue their claims. The position of indirect customers of cartelized products or services will be strengthened, the limitation period will be extended and most of all the German legal system will see the implementation of a German version of disclosure.
After the UK Brexit referendum of 23 June the implications on the political, economic and legal relations between the UK and the EU have been discussed from many angles. But what about one of the main pillars for the successful integration of the European Single Market: State aid law? Does the end of EU membership
How well are European national judges trained in EU competition law?