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).
What must the plaintiff prove under the general rules?
In general, the plaintiff shall demonstrate and prove all the facts supporting his claim. The right to compensation for cartel damages exists if the defendant has culpably infringed competition law, if the plaintiff has suffered a damage as a result of the infringement and if the damage conforms to the claimed amount (previously Sec. 33(3)(1) in conjunction with Sec. 33(1), now Sec. 33a(1) in conjunction with Sec. 33(1) GWB). The cartel victim should therefore prove the cartel infringement, the culpability, the occurrence and the extent of damage.
What does the plaintiff have to prove under the special cartel damage litigation rules?
From this general burden of proof the GWB and the current case law make some exceptions:
The cartel infringement is certain
The cartel infringement is neither subject to evidence nor to counterevidence if the EU Commission, the German Federal Cartel Office or another competition authority of an EU Member State has decided that the defendant has infringed competition law and the decision is definitive, i.e. has either not been contested or been confirmed by court (previously Sec. 33(4), now Sec. 33b GWB). In such a follow-on litigation the Court is bound by the authority’s decision even if it would have decided otherwise.
The 9th amendment of the GWB has remained this binding effect unaffected. In its Lottoblock II decision, the Federal Supreme Court (BGH) made clear that the binding effect does not only mean that the cartel infringement per se is certain, but that the court must base its decision on all the findings which relate to the cartel infringement. What is not entirely clear is whether the binding effect also includes so-called double-relevant findings which, like the market definition, relate to the cartel infringement and a further element for the cartel damage claim (e.g. the occurrence of damage). The reasoning of the 9th amendment of the GWB seems to imply this. It remains to be seen how the courts will judge in the future.
The culpability is (relatively easy) to prove
As for the culpability, the plaintiff still has the full burden of proof. If, however, in a follow-on litigation the cartel infringement is clear proving culpability will be relatively easy. A negligence claim is excluded only if the defendant unavoidably erred in law which is subject to high standards. Thus, the old legal framework has not changed in this respect.
The occurrence of damage is (predominantly) presumed
The 9th amendment of the GWB brings changes with regard to proving the occurrence of damage. There are two questions to be distinguished as cartel members sometimes exclude some business relations from the cartel agreement or, in breach of the agreement, demand the competitive price: Did the plaintiff buy goods or services which are covered by the cartel agreement (“cartelization”)? Did the cartel infringement have an upward effect on price (damage in the stricter sense)?
For the “cartelization” the prima facie evidence rule still applies, i.e. all products and services which are purchased on the relevant market are initially deemed to be covered by the cartel. Only when the defendant presents and proves facts which substantiate an atypical case the plaintiff bears the full burden of proof.
According to the BGH’s Lottoblock II decision, the occurrence of damage in the stricter sense was subject to the alleviation of evidence under Sec. 287 ZPO in conjunction with Sec. 33(3)(3) GWB. The court did not have to consider the occurrence of damage as real, but only as very probable. With the 9th amendment of the GWB the plaintiff’s burden of proof has now been completely dropped. In the case of horizontal cartels, i.e. cartels between competitors, the occurrence of damage will now be presumed by law (new Sec. 33a(2) GWB). It can, however – and this distinguishes the presumption from the binding effect – be refuted by the defendant, for instance through the evidence that the plaintiff has passed on the increase in price to the purchaser (so-called “passing-on defense”).
A presumption of the occurrence of damage in the stricter sense applies not only to the benefit of the direct but also to the benefit of the indirect purchaser. Up to now, the indirect purchaser-plaintiff had to prove that cartel-related price increases were passed on to him through the direct purchaser. With the 9th Amendment of the GWB the legislator has now significantly reduced the burden of proof. If the indirect purchaser-plaintiff proves that the cartel infringement resulted in an increased price for the direct purchaser and that he purchased cartelized goods and services, a passing-on of the increased price is refutably presumed (new Sec. 33c(2) GWB).
The extent of damage can be estimated
As for the extent of damage there are no changes to the previous legal framework. It is still left to the estimation of the court (previously Sec. 33(3)(3), now Sec. 33a(3)(1) GWB in conjunction with Sec. 287 ZPO). The plaintiff must, at least, present indications of the amount of damage which usually requires an expert opinion. A minimum damage estimation, as suggested in the literature so as to make a reliable calculation easier for the plaintiff, has been rejected by the legislator. It remains to be seen whether a minimum damage estimation will be developed in case law.
Private enforcement will be thus further strengthened
The changes implemented with the 9th Amendment of the GWB to the burden of proof will further strengthen private enforcement of competition law. The courts will continue to deal with specific issues such as the scope of the binding effect in the case of double-relevant findings or a minimum damage estimation. Things certainly remain exciting!