In its much anticipated ruling of 28 January 2025 in Case C-253/23, ASG 2, the Grand Chamber of the Court of Justice of the European Union (‘CJEU’) confirmed that it is generally possible for victims of infringements of EU competition law to transfer their claims for damages to a commercial plaintiff for the purpose of their joint enforcement.
Facts of the case
32 sawmills from Germany, Belgium and Luxembourg that purchased roundwood from or via the German Land of North Rhine-Westphalia (‘NRW’) are of the opinion that they paid excessive prices because NRW is alleged to have harmonised the roundwood prices for itself and other owners of woodland in breach of the EU ban on cartels (Article 101 TFEU). The Federal Cartel Office adopted a commitment decision in this regard.
Each sawmill contractually assigned its right to compensation for the harm caused by the alleged cartel to ASG 2, a private company and provider of legal services duly authorised for debt collection services under the German Legal Services Act (Rechtsdienstleistungsgesetz, ‘RDG’). Thus, before the German Regional Court of Dortmund, ASG 2 seeks consolidated compensation for that harm, based on several hundred thousand roundwood purchases by the sawmills concerned. In doing so, ASG 2 acts in its own name and at its own expense, in return for fees in the event of success.
The Regional Court asked the CJEU whether it is compatible with EU law that – in the absence of a judgment of the German Supreme Court in competition cases – some lower courts in Germany interpret the RDG to the effect that assignments of cartel damages claims for the purpose of joint enforcement under the RDG are inadmissible. Following such case law, ASG 2 would lack standing to sue. In view of the Dortmund court, German law does not provide for any remedy equivalent to the (claims) assignment model, especially in its relevant form of a ‘group action for collection’ (Sammelklage-Inkasso) which could ensure effective compensation in cartel cases. Advocate General (‘AG’) Szpunar issued his Opinion on 19 September 2024.
Findings of the CJEU
The CJEU bases its findings on Article 101 TFEU, read in conjunction with Articles 2(4), 3(1) and 4 of Directive 2014/104/EU on antitrust damages, and Article 47(1) of the EU Charter of Fundamental Rights on the right to effective judicial protection.
Accordingly, EU law confers on any person harmed by an infringement of competition law the right to claim full compensation for that harm. The CJEU confirmed that, in accordance with Article 2(4) of Directive 2014/104/EU, an action for damages may be brought by a third person to whom that right has been assigned, and thus the active legitimation of claims vehicles in case of a full transfer of the claim.
In principle, it is for the domestic legal system of each Member State to lay down the detailed rules governing the exercise of that right to claim compensation in such a case. This also applies to both the establishment of a mechanism for a group action for damages and the conditions governing the validity of a transfer of that right to compensation to a third party with a view to situations where the latter bundles and enforces claims of multiple victims of anticompetitive practices before a national court.
However, due to the principle of effectiveness and the right to effective judicial protection under EU law, national law cannot prevent cartel victims from assigning their rights to compensation to a provider of legal services (the assignee) which intends to assert them in a damages action, provided that
- the relevant national law does not provide any other collective remedy capable of ensuring that the right to compensation is exercised effectively, and
- an individual action, having regard to all circumstances of the case at hand, makes the exercise of that right impossible or excessively difficult, resulting in the allegedly injured parties being deprived of their right to effective judicial protection.
It is up to the national court seised to determine whether these provisions are fulfilled in the case at hand. The court must take account of all relevant facts and factors regarding the possibility to effectively exercise the right to full compensation based on the rules laid down by national law.
In case of affirmation, the court should seek to interpret the national provisions in a way that complies with EU law. Should an interpretation consistent with EU law be impossible, the court should disapply the national provisions prohibiting the assignment model.
With regard to the specific ‘group action for collection’ within the meaning of the German RDG in the main proceedings, the CJEU adds: If the Dortmund court were to find that the assignment model constitutes the ‘only procedural means’ for the sawmills to effectively assert their right to compensation, such a finding would be without prejudice to the application of the national provisions governing the activity of the assignee in order, in particular, to guarantee the quality of their services and the objective and proportionate nature of the remuneration received by them, and to prevent conflicts of interest and abusive procedural conduct.
Comment
The judgment of the EU’s top court is not surprising. The fact that the assignment model plays an important role in the practice of the private enforcement of competition law has been recognised and accepted by the CJEU already (see judgment of 21 May 2015 in Case C-352/13, CDC Hydrogen Peroxide). It provides for a collective approach to effectively asserting cartel damages claims, a kind of opt-in group action based on substantive law, which is, in itself, independent of the procedural means for collective redress of the Member States.
Recognition of the advantages of the assignment model by the CJEU
As the CJEU points out, as a rule, the possibility that an action for antitrust damages may not only be brought by the person who enjoys the right to compensation but also by a natural or legal third party to whom the right of the alleged injured party to seek compensation has been assigned is directly envisaged by the Directive 2014/104/EU (¶68). The assignment model offers numerous advantages for cartel victims, but also for the defendants and the courts in such cases (for details, see ici).
According to the CJEU, the assignment model ‘is likely to facilitate the exercise of the right to compensation’ (¶85). This is in particular true in view of ‘stand-alone actions’ for damages, where there is no ‘final’ finding of an infringement by a competition authority (as in the case of a mere commitment decision such as that in the Dortmund main proceedings). Although not directly subject to the CJEU’s substantive review, however, the same applies for ‘follow-on actions’ that can rely on such a finding.
The bundling of numerous antitrust damages claims by specialised entities generates considerable economies of scale and know-how. The CJEU therefore rightly emphasises the ‘complex factual and economic analysis’ as an argument for grouping individual claims of that kind together (ibid.). This also undermines the criticism of the German courts referred to by the Dortmund Regional Court, which claimed that (fiduciary) assignments of such claims would violate the RDG precisely because of the complexity inherent in actions for antitrust damages. Incidentally, this criticism had already been explicitly countered by the German legislator in 2021.
The necessity of the assignment model under EU law is to be assumed in individual cases
The requirements under EU law that the CJEU places on the necessity of a ‘group action for collection’ based on (fiduciary) assignments pursuant to the RDG (¶94) are narrow only at first glance. On closer examination, they are likely to be met in most situations:
- According to the CJEU, the complexity and the procedural costs inherent in antitrust damages actions may not in themselves support the conclusion that the exercise of the right to compensation in an individual action would be rendered practically impossible or excessively difficult. However, the reasons why most cartel victims in practice refrain from bringing individual actions go further (e.g., difficulties in establishing damages resulting from anti-competitive behaviour based only on individual data; deterrent costs – e.g. for expert opinions and lawyers – that exceed the harm in dispute; the burden on ongoing business relations with the infringers; the overall management and time effort; difficulties in reaching fair settlements, notably when faced with joint defence groups). These factors are not addressed by national laws and preclude individual actions contrary to EU law (¶86).
- Instead of using a group action for collection, antitrust damages claims may be grouped by assigning them in the form of genuine factoring, that is to say, not a ‘simply fiduciary transfer’, but a ‘full transfer’ of the respective claim (¶80). However, if this takes place in return for immediate payment of financial consideration by the assignee to the assignor, it will regularly fail, as the relevant price depends on an unclear outcome of the case (namely the estimated damage) as well as a risk component and is therefore highly speculative.
- A joinder of actions by several injured parties themselves (again: ¶80) is in most cases not feasible, as well. It is quite possible that such a joint action will break down into expensive individual lawsuits in the course of the proceedings (e.g., due to individual settlements or a separation of proceedings by the court), and it is also difficult to manage, if one and the same court is at all competent for the actions of the different claimants. In addition, the claimants involved must be careful not to commit a cartel offence themselves by jointly using their commercial data for a damage assessment. Accordingly, such cases are very rare in practice.
- The EU Directive 2020/1828 on representative actions also offers no alternative. Firstly, it does not even list competition law as an area of law to which it applies. Secondly, it only concerns rights of consumers (in Germany also, but only, small companies). Thirdly, the opt-in representative actions can only be filed by non-commercial bodies, such as a consumer association which, however, typically lack the necessary personal, organisational and financial means for dealing with a complex and expensive antitrust damages action.
In practice, therefore, many victims of anticompetitive practices demand the assignment model and are willing to pay a success fee to its providers. This justifies the assumption that, at least from those victims’ perspective, there are no equivalent alternatives and that an individual action in competition law is regularly not reasonable. As AG Jääskinen already observed in his Opinion in CDC Hydrogen Peroxide (¶29), the emergence of players whose aim is to combine ‘assets based on claims for damages arising from infringements of EU competition’ law demonstrates that it is often ‘not reasonable’ for injured parties to sue the infringers themselves individually.
This applies both to cartel-affected consumers as well as companies. Especially the latter examine in detail the best way to assert their claims for damages in a given case to comply with their corporate duties to enforce potentially valuable assets. Even large firms often assign their claims to a specialised entity for the purpose of bundled enforcement and consider this as their best choice.
Relevance of the CJEU ruling
In the end, the requirements which the CJEU places on the necessity of group action for collection will hardly matter in practice. The CJEU was only concerned with the minimum standard under paramount EU law. However, as the European Commission stated in the court hearing, Directive 2014/104/EU itself is based on the assumption that the transfer of a claim originating from an unlawful act is already ‘accepted in the EU legal order’ as it reflects a ‘general principle common to the laws of the Member States’ (see the Opinion in ASG 2 ¶103).
The assignment model in competition law cases is thus supposed to be compatible with any national law in the EU. Even from a German law perspective, the (fiduciary) group action for collection pursuant to the German RDG allows for the enforcement of claims for damages resulting from infringements of competition law. This has been confirmed by more recent higher court rulings following the Dortmund Regional Court’s order for reference, so that its doubts about the recognition of antitrust damages claims under the RDG have become obsolete. In 2024, the Higher Regional Court of Munich accepted the group action for collection in the Cartel des camions case (judgment of 28 March 2024, file no. 29 U 1319/20 Kart). The Higher Regional Court of Stuttgart has also done so (judgment of 15 August 2024, file no. 2 U 30/22), namely in the Roundwood case (albeit this time in a damages action against the Land of Baden-Wuerttemberg). Germany’s Supreme Court (Bundesgerichtshof) is likely to confirm this case law. It has already ruled on several occasions that the group action for collection is fundamentally permissible, not least from the point of view of providing victims of unlawful acts with ‘access to justice’ (see ici).
After the judgment in ASG2, it is clear that no Member State can entirely prohibit or make inaccessible the assignment model in competition cases. The judgment of the CJEU should therefore enable the national courts to leave much of the debate on the standing of plaintiffs behind and rather focus on the real issue: efficient and fair compensation of the victims of competition law infringements in the EU.
By Carsten Krüger, Till Schreiber, Martin Seegers
