Cartelist to face larger damages claims following German Federal Supreme Court ruling

In 2003, the German Federal Cartel Office ("FCO") imposed a fine on several cement makers for a price-fixing and market-allocation cartel that operated between the 1990s and 2002. In 2013, after several appeals, the penalty was upheld by the Supreme Court. In 2015, a tool manufacturer sued a cement manufacturer for damages flowing from the excessive prices it had to pay for cement as a result of the cartel. 

The limitation period in Germany for bringing a claim for damages in relation to breaches of competition law is three years from the time the claimant became aware of the illegal conduct. On 1 July 2005, new legislation ("2005 Law") came into force providing that this limitation period:

• is suspended on the commencement of an investigation by either the Commission or an EU member state competition authority; and
• restarts six months after the relevant authority issues a legally binding infringement decision. 

Until the Supreme Court's judgment, the question of whether the suspension of the limitation period as set forth in the 2005 Law also applied to cartel conduct which occurred before the 2005 Law was enacted was unclear and subject to several deviating court decisions.

The Supreme Court has now ruled that the suspension provision also applies to cartel damages claims which are based on cartel infringements which occurred before 1 July 2005 and which were not previously time-barred. The Supreme Court underpins its judgment with the general legal principle that as from the date on which changes of provisions concerning limitation periods of claims come into force, they also apply to claims which accrued already before and which have not yet become time-barred. The Supreme Court has stated that it will release a decision explaining its reasoning soon.

The Supreme Court's ruling will give potential cartel litigants many years of additional time to prepare for making any such claims, as the competition authorities' investigations regularly take several years. Accordingly, the Supreme Court explicitly noted that its judgment will affect not only the cement cartel but also other cartels such as trucks, train-tracks and sugar, as the German courts will need to consider suspending the limitation period also in the respective on-going proceedings. For example, in relation to the Commission's trucks cartel decision, a suspension of the limitation period may be expected to extend the time period for which a claim could be made by over 50%. However, because the ruling has retroactive effect, it will also impact even older cartel decisions, such as the Commission's bathroom fitting cartel or the cathode ray tube investigation. 

On the one hand, the claimant-friendly ruling provides legal certainty and further compensates victims of long-lasting cartels. On the other hand, the ruling may reduce the incentive for cartelist to apply for leniency, as their risk of facing larger damages claims increases.

With thanks to Martha Janik of Ashurst for her contribution.