Standalone damage claims on the upswing

Private cartel damage litigation is often, especially in Germany and other EU Member States, automatically associated with so-called follow-on damage claims. First the fine by an antitrust regulator, followed by private damage claims. This week, the Higher Regional Court of Stuttgart reminded us that claimants can also successfully seek private cartel damage claims on a standalone basis.

As we all know , these days, most claimants seeking compensation for damages caused by a cartel rely on a fining decision by an antitrust regulator (also see our previous post). In contrast to these follow-on actions, some claimants bring their cases to court on a standalone basis. The main disadvantage is obvious: They cannot use the decision of a regulator as a (legally binding) basis, but have to provide the full evidence for a cartel violation themselves.

First follow-on, then standalone

The Higher Regional Court of Stuttgart recently had to deal with the so called “timber cartel”. The case is unusual as the claim was initially pursued as a follow-on action (i.e., the claim used to be based on a fining decision by Germany’s Federal Cartel Office (FCO)) and later, involuntarily, as a standalone action. This was because the FCO’s fining decision was overturned on appeal because of formal reasons.

The court now found that the “timber-cartel” as alleged by the claimants actually existed. This is generally perceived as a breakthrough and huge achievement for the claimants. Some even assume that this decision could be the catalyst for further “standalone” lawsuits in this area – while not unusual in other jurisdictions, standalone damage claims are still somewhat of a rarity in Germany.

Similarly noteworthy is the court’s finding that the assignments of the claims to a litigation vehicle do not constitute a breach of German law and are to be considered valid. The question whether and how claims can be “bundled” via litigation vehicles is highly disputed in Germany, even before the courts. Particularly since Germany, unlike the UK or the US (see below), does not have a class action system for antitrust damage claims in place, this judgment will strengthen the claimant and litigation funding industry and give it new impetus to expand the “bundling practice” further.

UK and US regime as trendsetters

Whilst the case seems somewhat special from a German perspective, standalone claims have been much more established for quite some time in other countries, especially in the UK and the US. Just recently, in the UK, e.g., Kerilee Investment pursued a standalone competition claim against a UK trade association for tin producers over alleged abuse of dominance, the British Independent Retailers Association filed a claim against Amazon over the alleged misuse of data and manipulating its Buy Box, and Which?, a Consumers’ Association, pursued a collective proceeding for standalone damages against Qualcomm.

In particular the UK’s antitrust “opt-out” collective action regime and the US class action regime, where litigation can be brought on behalf of a bundled “class” of claimants, have brought up many antitrust damage actions pursued on a standalone basis. Interestingly, many of these lawsuits seem to relate to allegations of market abuse rather than cartel infringements. In contrast, the focus of follow-on actions is clearly on proceedings based on cartel decisions.

Outlook

While the advantages of follow-on actions for claimants are obvious, standalone actions are experiencing an upward trend – in Germany underpinned by this week’s court decision.

“Use cases” for standalone antitrust damage claims appear to relate in particular to cases in which the regulators have due to a lack of resources not been willing or able to investigate. Also, at least so far one could get the impression that abuse cases tend to be pursued on a standalone basis more often than cartel cases are (and we are yet to see what kind of private litigation the Digital Markets Act will bring).

In order to reduce litigation costs and risks for the individual claimant, which are particularly high in standalone actions as the infringement as such must be proven, forms of class actions seem to be a favored instrument. Also against this background, this week’s ruling by the Higher Regional Court of Stuttgart is likely to give a boost to standalone lawsuits.

Photo by Maksym Kaharlytskyi  on Unsplash