Cartel damages: Germany, the assignment model and debt collection services – an update | Hogan Lovells



[co-author: Hannah Fries]

Germany does not offer plaintiffs a true US- or UK-style class action regime. Claimants will therefore look for other ways to join forces and consolidate their claims using the so-called attribution model as the preferred solution. Often, these assignments are outsourced to dedicated commercial legal service providers. Their respective SPVs will then act as plaintiffs and sue for damages in their own name. This business model is particularly popular in the area of ​​cartel damage.

In recent times, various German courts have reviewed the legality of this business model. We note two particularly relevant judgments below – for further review, we also include links to case reviews that our team has published in the Competition Bulletin.

In July 2021, the cartel damages community paid particular attention to a groundbreaking decision by the Federal Court of Justice (FCJ, Case Reference: II ZR 84/20): after certain lower courts had previously ruled that cartel damages assignments were invalid where the SPV was a provider of legal services, the FCJ decided – in a non-cartel damages context – that, generally, enforcement consolidation of claims by an SPV is not contrary to German law. This FCJ judgment, while rendered in an insolvency law context, was widely seen to impact many other mass claims scenarios – particularly cartel damages claims.

January 2022 then brought two judgments from the regional court in Stuttgart, which highlighted that the legal situation is however still uncertain with regard to the cartel’s claims for damages (reference numbers: 30 O 176/19 and 53 O 260/21). The Stuttgart Regional Court ruled that the cartel’s damages assignments to a legal service provider were again invalid. On the one hand, the court discusses – and in fairly general terms – the scope and complexity of the issues of fact and law in cartel damages cases. According to the court, they exceed the typical and acceptable level of difficulty for commercial debt collection services. On the other hand, the court held that the cartel damage scenarios specifically lent themselves to creating conflicts of interest irreconcilable with an assignment to a debt collection legal service provider – particularly with respect to the defense of transmission often invoked.

Despite the FCJ’s seemingly firm judgment regarding the consolidation and enforcement of assigned claims in an insolvency setting, the recent Stuttgart rulings, again, create uncertainty for the consolidation of cartel damages claims. It remains to be seen how the higher courts — and ultimately the FCJ — will deal with this important issue in the future.

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