By judgment of 23 September 2020 (KZR 35/19, translation into English) the German Federal Court of Justice (‘Bundesgerichtshof’, ‘BGH’) provides detailed guidance on legal principles and standards of proof regarding several key aspects of actions for damages resulting from the European trucks cartel. The Bundesgerichtshof confirms that the scope of the infringement established in the binding European Commission’s (‘Commission’) settlement decision is significantly broader than a mere exchange of information. Further, the BGH confirms that a factual presumption for higher prices caused by the trucks cartel applies.
Factual Background
The judgment concerns a damage action brought by the parent company of two construction companies against Daimler AG. The subsidiaries purchased trucks from Daimler AG during the cartel period and had assigned their cartel-related damage claims to the plaintiff. According to the findings of the Commission in its settlement decision of 19 July 2016, Daimler and at least four other truck manufacturers had infringed Article 101 TFEU and Article 53 of the EEA Agreement by agreeing on prices and list price increases for medium- and heavy-duty trucks, as well as on the timing and passing-on of costs for the introduction of emission technologies in accordance with the EURO emission standards. The EEA-wide infringement covered 14 years, from 1997 to 2011. Based on the findings of the Commission, the plaintiff claimed that its subsidiaries had to pay inflated purchase prices and higher risk premiums due to the cartel. It seeks compensation amounting to a total of EUR 305,000, plus interest.
The first and second instance courts decided in favour of the plaintiff and dismissed compensation only for one truck purchased in 1997. Daimler challenged the second instance judgment of the Court of Appeal to the BGH, in particular in relation to the application of the factual presumption that the trucks cartel resulted in higher prices and hence a damage.
The Bundesgerichtshof held that the Court of Appeal was right to find that such presumption exists. But the BGH found that the Court of Appeal did not sufficiently consider the application of the presumption in the case at hand, taking into account the nature of the cartel as established by the Commission in its settlement decision. On that ground, the Bundesgerichtshof annulled the first appeal judgment and referred the case back to the Court of Appeal as second instance court. However, the BGH in its judgment provides the Court of Appeal with clear guidance on the standards for applying the presumption of damages in the trucks case that are also relevant beyond the individual case.
Findings of Commission in settlement decision and binding nature for national court
At the outset, the Bundesgerichtshof confirms that Daimler infringed Art. 101 TFEU and acted deliberately wrongful in this respect. It summarises the findings of the infringement as established by the Commission with a focus on price collusion and on how the infringement was implemented by the trucks manufacturers.
a) Infringement consists of collusive arrangements on pricing and gross price increases, not a mere exchange of information
Pursuant to the Bundesgerichtshof, the infringement as found by the Commission consists of “collusive arrangements on pricing and gross price increases for medium and heavy duty trucks and in the coordination of their market behaviour on the timing and passing on of the costs of introducing emission technologies for such trucks according to the EURO 3 to EURO 6 emission standards” (para. 19). The BGH rejects the truck manufacturers’ argument that these findings would merely concern an exchange of information: “As stated above (recitals 19 et seq.), the cartel participants discussed their future list prices and their increases with each other and coordinated their future pricing both through agreements and through concerted practices. (…) [S]uch behaviour is fundamentally different from a mere exchange of information” (para. 42 et seq.).
According to the Bundesgerichtshof, the agreements as set out in the Commission decision enabled the companies involved to take the information exchanged into account in their internal planning processes and in planning future list price increases for the coming calendar year. The truck manufacturers’ coordination of list prices were the starting point for any individual pricing at the end customer level: “The list prices set by the respective headquarters were the starting point for pricing for all truck manufacturers involved in the agreements; then the invoice prices for importing the trucks into different markets by own or third party distributors and then the prices to be paid by the dealers on national markets were set. Finally, the retail prices were negotiated and set either by a dealer or, in the case of direct sales to dealers or fleet customers, directly by the manufacturer” (para. 22).
b) Binding effect extends to all findings of fact and law
With reference to its established case law (judgment of 12 July 2016, KZR 25/14), the Bundesgerichtshof (para. 24) stresses the binding nature of the findings of the Commission: “The binding effect therefore extends to all findings of fact and law with on which the competition authority bases its reasons for the infringement of substantive competition law.” It rejects the defendant’s argument that this binding effect is excluded or limited in the case at hand because the Commission decision of 19 July 2016 was issued in the context of settlement proceedings. Also, the Bundesgerichtshof refers to paragraph 3 of the settlement decision from which follows that all addressees “accepted” the findings of the Commission.
Trucks purchasers were affected by the infringement
The Bundesgerichthof then confirms that the claimant’s subsidiaries as purchasers of trucks were affected by the cartel, and – thus – are entitled to claim damages. It held that “the precondition for a claim for damages under antitrust law (…) is that the opponent of the claim is guilty of conduct restrictive of competition which – by concluding transactions or in another way – is capable of directly or indirectly causing damage to the claimant (…). Nothing else applies to a claim based on a violation of Article 101 TFEU or Article 81 EC respectively. However, the further question of whether the cartel agreement actually had an adverse effect on the purchase in question, on which the claimant bases his claim for damages, and whether the transaction was thus ‘cartel-affected’ or ‘cartel-concerned’ in this sense, is not relevant in the context of the examination of the causality giving rise to liability.”
The BGH confirms that these conditions are fulfilled in the case at hand, as the trucks in question were purchased from the defendant and were “subject of the exchange on future price lists and list price increases, as well as the further established anticompetitive practices, and thus subject of the cartel agreement”. In particular, the Bundesgerichtshof held that it is irrelevant in this context whether and to what extent the transaction prices of the specific, individualised vehicles were influenced by the cartel agreement (para. 33 et seq.). According to the BGH, “it is sufficient that the vehicles were based on the basic models whose list prices were the subject of the agreements”. As a result, “the distortion of the market conditions caused by the cartel was in any case capable of affecting the individual transaction prices for vehicles of the truck manufacturers involved in the cartel”.
There is a factual presumption that the infringement resulted in a damage
With regard to the compensation sought, the Bundesgerichtshof held that the reasoning of the Court of Appeal in relation to the factual presumption of a damage was not sufficient and did not meet the standards for rendering an interlocutory judgment.
a) Existence of a factual presumption of a damage in the trucks case
However, the Bundesgerichtshof clarifies that the plaintiff actually can rely on a factual presumption: ‘The Court of Appeal’s assumption that the plaintiff could rely on a factual presumption that, as a result of the cartel as practised by the defendant and the interveners, the price level for the trucks concerned was on average higher than that which would have been formed without the agreement restricting competition, is correct’ (para. 39). Based on the Commission decision, a factual presumption of a price effect on trucks and thus a damage can, according to the Bundesgerichtshof, be confirmed.
Further, the Bundesgerichtshof (para. 45 et seq.) sets out in detail why the fact that the truck manufactureres mainly coordinated list prices does not preclude the factual presumption of a damage. The BGH rejects the argument that because of the longer pricing chain in the trucks market there was no connection between the list price and the end-customer price. To the contrary, as increases of list prices mirror increases of production costs, they are capable of having an impact on the highly complex individual transaction prices. Pursuant to the Bundesgerichtshof, the list prices set by the headquarters of the truck manufacturers typically formed the starting point of pricing in the overall market.
In this context the BGH sets aside in detail the economic reports submitted by the truck manufacturers. These reports could, according to the Bundesgerichtshof, not rebut the presumption of a damage, already because they were based on the wrong facts, namely that the trucks cartel was a mere information exchange regarding list prices while it is clear from the Commission’s decision that the infringement encompassed a coordination of the list prices, future list price increases and the passing-on of cost increases.
b) Application of the factual presumption still requires case-specific reasoning
At the end of its judgment, the Bundesgerichtshof sets out why the Court of Appeal erred in one question of law and why it refers the case back. According to the BGH, the Court of Appeal did too easily confirm a factual presumption of the damage, without – as required – sufficiently appreciating the circumstances of the case at hand. Given that prices are necessarily hypothetical under competitive market conditions, the trial judge can decide on the question of whether the cartel price is higher only on the basis of all circumstances of the concrete case. “The judge has to make this finding freely under appreciation of all circumstances (…) so that a clearly preponderant probability based on a sound foundation, that damage has occurred, is sufficient for the court to form its own opinion (BGH, WuW 2020, 202, Rn. 34 et seq. – Railtrack cartel II)”. The Bundesgerichtshof stresses that the importance of the principle of experience “depends decisively on the concrete structure of the cartel and its practice and increases the longer and more sustained a cartel has been practised and the greater the likelihood that it has had an impact on the price level that has been established as a result of the elimination or at least severe dampening of competition.”
According to the Bundesgerichtshof, the Court of Appeal failed to have sufficiently embedded the principle of experience into the circumstances of the case. The BGH stresses that already the introductory formulation by the Court of Appeal – pursuant to which the defendant’s objections are “not suitable to shake the presumption” – gives rise to concern that the Court of Appeal did not apply the principle of experience sufficiently in a case-related manner. According to the BGH the trial judge when forming his conviction must and may apply a factual presumption only after having taken into account all circumstances of the case. However, the Court of Appeal “has not even exhausted” the findings of the Comission, as it wrongly characterized the trucks cartel as a mere information exchange” (para. 68). This lack of sufficient appreciation did, according to the Bundesgerichtshof, potentially result in a shift of the burden of proof in the sense that it was up to the defendant to show that the cartel could not have any price effects (para. 69). However, pursuant to the Bundesgerichtshof, it is still for the claimant to provide at least circumstantial evidence that allows the courts to confirm a factual presumption of the damage in the case at hand (para. 88). The BGH for this reason refers the case back and remands the lower court to “comprehensively and exhaustively” take into account all circumstances, in particular the findings of the Commission on the long-lasting, EEA-wide trucks cartel whose participants have a combined maket share of more than 90% (para. 89)
Comment
This recently published judgment of the Bundesgerichtshof in the European trucks cartel case provides important guidance on the scope of the findings of the Commission and the binding effect of a settlement decision in the context of damage actions before national courts. Germany’s highest civil court also confirms that claimants that have purchased trucks during the cartel period and for at least one year thereafter are affected by the cartel agreements. They can, due to the high market coverage and the long cartel period, rely on the factual presumption that the trucks cartel caused a damage. Although the judgment has been rendered in a German case, the considerations of the Bundesgerichtshof are of a fundamental nature. They can also serve as an important source of inspiration for courts from other EU Member States on how to deal with similar questions raised in damage actions concerning the trucks cartel.
Till Schreiber and Martin Seegers
