On June 28 2011 the Federal Supreme Court ruled that indirect purchasers (ie, those that purchased products from direct purchasers or other indirect purchasers) of a cartel are entitled to bring damage claims against members of the cartel. Defendants in private antitrust actions are allowed to invoke the passing-on defence.


A savings bank raised damage claims assigned to it by an insolvent printing shop against a manufacturer of carbonless paper which had been fined by the Competition Commission for taking part in price-fixing and market-sharing agreements in the carbonless paper industry between 1992 and 1995.(1) The Mannheim District Court dismissed the action since the printing shop had procured the carbonless paper from a wholesaler rather than directly from the defendant, notwithstanding the fact that the wholesaler was a subsidiary of the defendant.(2)

The Karlsruhe Court of Appeals partially allowed the appeal.(3) It held that the defendant was not allowed to plead that the claimant had passed on cartel-related price increases to its own customers, as the availability of this defence would prejudice the deterrent effect of private antitrust enforcement. It also found that in exceptional cases where the direct supplier was a wholly owned subsidiary of a cartel member, indirect purchasers should be allowed to seek damages in order to prevent cartel members from avoiding damage claims by distributing their products through subsidiaries.


The Federal Supreme Court annulled the court of appeals' judgment and referred the case back to the court. It held that indirect purchasers which are further along the supply chain must be entitled to claim damages for price increases resulting from cartel activity which do not materialise at the level of direct customers since, in accordance with the purpose of German cartel law, the law of torts and European Court of Justice (ECJ) case law, all parties which have suffered harm from a cartel's violation of Community law must be entitled to compensation. However, in order to prevent multiple claims against cartel members and the unjustified enrichment of direct customers, a cartel member must be allowed to plead that the customer has not suffered damage since it has been able to pass on the related price increases to its own customers.


The judgment sets a precedent regarding questions on which the German courts have thus far taken divergent positions. While the Supreme Court's approach embraces the principles set out by the ECJ in Courage(4) and Manfredi,(5) and is consistent with the general concept of damages actions under German law, the practicability of this approach has been questioned, since indirect customers may be unable to provide the necessary evidence to enforce their claims while direct customers may be deterred by the risk that the defendant may successfully invoke the passing-on defence.

Nevertheless, in practice it can be extremely difficult for the defendant to prove passing on, as for this purpose it must demonstrate not only that the claimant has been able to charge a higher price to its own customers, but also that the higher price was not the result of other factors (eg, increased marketing efforts) or negatively affected product sales.

First insights into the practical consequences of the Supreme Court's new approach may be expected from several decisions in private enforcement actions which are pending before the German courts.

For further information on this topic please contact Stefan Lehr at CMS Hasche Sigle by telephone (+49 69 717 010), fax (+49 69 717 40410) or email ([email protected]).


(1) See the Competition Commission's decision in Carbonless paper, December 20 2001, Case COMP/E-1/36.212. The appeal against this decision was dismissed by the General Court on April 26 2007 – see Bolloré v Commission (T-109/02) – and by the ECJ in September 3 2009 in the joined cases Papierfabrik August Koehler AG, Bolloré SA, Distribuidora Vizcaína de Papeles SL v Commission (C-322/07 P, C-327/07 P and C-338/07 P).

(2) 22 O 74/04 Kart, April 29 2005.

(3) 6 U 118/05 June 11 2010.

(4) Courage, Case C-453/99.

(5) Manfredi, Case C-295/04.