Facilitating the presumption of injury resulting from exchanges of pricing information – The Schlecker judgment of the German Federal Court of Justice
In several jurisdictions, claimants’ burden of proof for the existence of injury is a major hurdle to traditional cartel damage claims. To avoid a presumption of injury under the settled case law of the German Federal Court of Justice (Bundesgerichtshof, (“BGH”) for hard-core cartels, cartelists frequently argue that their competition law infringements did not amount to hard-core violations but consisted in “harm-free” information exchanges only. This was for example defendants’ position in cartel damage claims brought against the truck cartel: Despite the clear wording of the European Commission decision, defendants denied that their coordination on pricing and emission standards amounted to actual price fixing, arguing that their elaborate coordination over a period of at least 14 years and involving a multitude of companies constituted a mere information exchange. While a few lower courts had relied on these arguments to dismiss damage claims, the BGH recently put an end to the masquerade, holding that the truck cartel was indeed a hard-core violation.
Yet, cartelists in cases (evidentially) limited to information exchanges went on to argue that while the exchange – technically – may have violated competition law, it could not have led to higher prices in the market and thus did not cause any harm. In its Schlecker judgment of November 29th, 2022, as summarized below, the BGH rejected such arguments raised by companies involved in an exchange of pricing information. First, the BGH made it clear that even when competitors “only” exchange such confidential information, it can generally be presumed that their customers have paid an overcharge. If the information exchange concerns current or future pricing, there is a high probability that the competitors involved will collectively reach a higher price level. While such a factual presumption eases the claimant’s burden to prove injury, it does not change the need for the trial court to conduct an overall assessment of all the specific circumstances – such as the structure of the market in question, competitive conditions, and the objectives pursued by the cartelists. In this regard, the BGH held in Schlecker that an independent expert opinion must be commissioned by the trial court whenever it cannot exclude the likelihood that such an opinion will convince it that marketplace injury incurred – which will regularly be the case when such injury is factually presumed.
Strengthening the position of claimants (not only) in cases limited to exchanges of pricing information, the Schlecker judgement is of major importance for cartel damage claims before German courts. Because of the factual presumption established by the BGH, lower courts will more frequently reach the conclusion that pricing information exchanges led to higher prices. What is more, to accurately assess the existence of injury in the market, trial courts will have to commission an independent expert opinion where sufficient indication for harm exists, even if the expert opinion provided by the claimant is flawed.
I. Schlecker Facts
The claimant in Schlecker is the liquidator of the former German drugstore chain Schlecker. The defendants are competing companies that have supplied Schlecker and other drugstores with various products.
From 2004 to 2006, these manufacturers met with their customers – including Schlecker – on a yearly basis to negotiate sales conditions, in particular discounts for the following year. In parallel, representatives of the manufacturers informed each other on the contents of these confidential negotiations, without – according to the assessment of the trial courts – directly coordinating or fixing their prices. The German Federal Cartel Office (Bundeskartellamt, hereinafter: "BKartA”) investigated these practices after one of the companies had applied for leniency. It imposed fines amounting to EUR 63 million on the cartelists, holding that this exchange of information was able potentially to distort competition. Relying on the BKartA’s decisions, the claimant brought a damages action against the cartelists in 2016. It (still) seeks damages of at least EUR 212 million, arguing that the information exchange had led to increased purchasing prices for Schlecker.
The Frankfurt am Main District Court dismissed the claim as the claimant was found to not have proven a sufficient degree of likelihood that the exchange of information had actually resulted in harm to Schlecker. This decision was upheld by the Frankfurt Court of Appeals. Although the claimant had presented an expert opinion to substantiate the injuries incurred, both courts refrained from appointing an independent expert as requested by the claimant. They held that the expert opinion provided by the claimant was flawed and could thus not provide sufficient indication for the existence of actual injuries to make an independent expert opinion necessary.
II. The Judgement of the BGH
Affirming Schlecker’s exposure to the cartel as a buyer of cartelised products, the BGH thoroughly analysed several interrelated questions revolving around the existence of injury incurred by the claimant as well as its sufficient substantiation and proof.
No binding effect of the BKartA’s decisions with regard to the existence of injuries in this case
First, the BGH confirmed the lower instances’ finding that the BKartA’s decisions did not establish the existence of marketplace injury nor shift the respective burden of proof to the defendants. Instead, the BGH held that these decisions were limited to the finding that the exchange of information had the potential to adversely affect competition. While in terms of the drugstore cartel the BKartA did not have to establish that customers such as Schlecker had actually suffered injury in order to impose the fines, the BGH left the door open for a binding effect of such a finding when it would be essential to the BKartA’s decision. Nonetheless, the claimant at hand remained obliged to prove the existence of injury resulting from the information exchange, while the cartelists could provide evidence to the contrary.
Estimation of injury by the trial court
Against this background, and according to settled case law of the BGH, assessing whether a claimant has incurred injury requires a thorough analysis of all the relevant circumstances indicating how the market would have developed without the cartel. While the trial judge enjoys a wide margin of discretion as to the necessary level of conviction to ascertain injury under Section 287 para. 1 of the German Code of Civil Procedure (Zivilprozessordnung, hereinafter: “ZPO”), all available facts must be duly taken into account for the necessary overall assessment. Although formally limiting itself to manifest transgressions of the trial judges’ margin of discretion, this is where the BGH disagreed with the reasoning of the lower courts, which had not found injuries resulting from the information exchange to have been sufficiently proven by the claimant.
A. actual presumption of injury caused by a pricing information exchange
Easing the claimant’s burden of proof by factually presuming the existence of injury
The main novelty of the judgment lies in the fact that the BGH – even for a "mere" exchange of pricing information – eased the claimant’s burden of proof with regard to whether injury incurred. Relying on the BKartA’s finding of an exchange of confidential information on the conditions of supply, including current and future prices, the BGH reasoned that such an exchange justified the factual presumption that prices subsequently charged from a common customer were on average higher than those that would have been set in the counterfactual scenario. Such a factual presumption, in contrast to a legal one, does not shift the burden of proof to the defendants. However, it does amount to indicative evidence lowering the threshold required from the claimant to prove the existence of actual injury.
Factual presumption gives strong indicative evidence for the existence of injury
Since the weight accorded to the indicative evidence in the necessary overall assessment depends on the likelihood of the presumed outcome, the BGH deems the factual presumption at stake to entail strong indicative evidence of a cartel-induced price effect. This is because the BGH considers the probability of an exchange of pricing information actually leading to higher prices for customers “particularly high.” It finds, first, empirical economic evidence to suggest that a company usually (and rationally) uses information about current or intended market behaviour of its competitor to adapt its own market behaviour. Second, the BGH deems it very likely that the resulting behaviour differs from the one adopted in the absence of the information exchange, making it thirdly highly probable that the overall price level on the market is higher than in the counterfactual scenario.
Counterbalancing requires clear indicative evidence for the non-existence of injury
In order to counterbalance the resulting strong indication and reach (at least) a non liquet-situation – which would lead to a decision against the claimant – trial courts will have to consider whether the specific economic circumstances of the case justify the assumption that no injuries were incurred. To reach this conclusion, the trial judge will have to accurately weigh in the specific economic circumstances on the affected markets as well as the evidence put forward by both the claimant and the defendants. This includes facts such as the frequency and the duration of the information exchange. Only if indicative evidence pointing to the non-existence of injury clearly prevails – i.e. where it is likely that the competitors did not use the pricing information at all or merely to undercut each other’s prices – may the trial judge reach a conclusion detrimental to the claim.
Hence, in most cases involving an exchange of pricing information, the factual presumption established by the BGH will lead trial judges to conclude that the exchange caused higher prices and thus injuries. This is demonstrated by the fact that although the lower court had already pondered such a presumption, the BGH held that it had not accorded it sufficient weight in the overall assessment of potential injuries, making its assessment erroneous enough to justify the annulment. The BGH thus referred the case back to the lower court for it to conduct an accurate assessment of the injury potentially incurred, taking into account the strong indication for a cartel-induced price effect resulting from the factual presumption.
B. Necessity to commission an independent expert opinion
Independent expert opinion mandatory if private expert opinion and factual presumption point to the existence of injury
The BGH went on to hold that whenever there is an unrebutted factual presumption of injuries – i.e. not only in case of an information exchange on prices, but inter alia in the case of a classic price cartel – the trial court has to commission an independent expert opinion. The trial court cannot abstain from this simply because it finds the expert opinion provided by the claimant to be flawed (e.g., due to methodological or factual errors).
No independent expert opinion is required where alternative factors explain an identified overcharge
The trial court may only refuse to commission such an expert opinion if, on the basis of an (accurate) overall assessment of all factors, it reaches the conclusion that even a flawless independent expert opinion would not convince it of the existence of marketplace harm. However, such an exceptional scenario is only pertinent when other significant (economic) factors are duly identified that plausibly explain why even a confirmation of the private party by the independent expert opinion still cannot lead to the affirmation of such harm. Only in such case will the trial court by no means be able to reach the necessary level of conviction required by German civil procedure (Section 287 para. 1 ZPO) to assume injuries incurred.
Since the Frankfurt am Main District Court and Court of Appeals in Schlecker did not accurately assume such a scenario, the latter will now either have to commission an independent expert opinion or identify alternative factors which indeed exclude the finding of injuries by this court.
III. Conclusion & Outlook
The Schlecker judgment is hardly surprising as it essentially is a consistent evolution of the BGH’s settled case law on similar factual presumptions. It seamlessly continues a more recent line of BGH decisions establishing factual presumptions for hardcore competition restraints, i.e. cartels on quotas and customer protection as well as price fixing.
Flowing from the EU Cartel Damages Directive 2014/104/EU, German law now provides for a legal presumption of marketplace injuries caused by hardcore infringements under Section 33a para. 2 of the German Competition Act (Gesetz gegen Wettbewerbsbeschränkungen, hereinafter: “GWB”), shifting the respective burden of proof to the defendants and transposing Art. 17 para. 2 of the Directive. While this legal presumption supersedes some factual presumptions established by the BGH, it only applies to claims that have arisen since December 27, 2016. However, the cartels provoking such claims have largely not been detected, so that it will still take a few years for the legal presumption to actually make a difference in court proceedings.
For real information exchange cases, the extension of the BGH’s case law is and will continue to be of great significance, given that it is still disputed whether the legal presumption in Section 33a para. 2 GWB actually applies to them. The Schlecker judgment thus facilitates the enforcement of cartel damage claims based on pure pricing information exchange. The BGH rightly assumes that pricing information in the hand of a competitor is generally used to increase the (overall) price level on a specific market – nevertheless leaving the door open for exceptional economic circumstances in which the resulting factual presumption may be rebutted.
If sufficient indication points to the existence of injuries – which in case of an exchange of pricing information is the (new) norm – the trial court must henceforth commission an independent expert opinion even if the expert opinion introduced by the claimant is (methodologically) flawed. The only exception to this rule is the (rare) situation in which even the confirmation of the (flawed) expert opinion by the independent expert would not convince the trial court of the existence of injuries.
With special thanks to Karl-Christoph von Steuben and Dr Leonie Wittershagen for their very valuable input and comments on an earlier draft of this article.
*Dr. Alex Petrasincu is the Germany Managing Partner in Düsseldorf and Berlin and Dr. Merlin Gömann is an Associate in Berlin.
 BGH, Judgment of September 23, 2020, KZR 35/19, para. 43 f. – Lkw-Kartell I.
 BGH, Judgment of November 29, 2022, KZR 42/20 – Schlecker (hereinafter: “Schlecker” or „judgment“).
 Judgment, para. 1-6.
 LG Frankfurt a.M., Judgment of August 10, 2018, 2-03 O 239/16.
 OLG Frankfurt a.M., Judgment of May 12, 2020, 11 U 98/18 (Kart).
 Judgment, para. 28 et seq.
 Judgment, para. 31 et seq.
 Judgment, para. 56 et seq. Such a shift had previously been assumed by courts of lower instances, cf. LG Dortmund, Judgment of June 27, 2018, 8 O 13/17 (Kart), para. 59 et seq., 91; LG Hannover, Judgment of April 16, 2018, 18 O 23/17, para. 87, 120.
 Judgment, para. 36.
 Judgment, para. 33 et seq.
 Judgment, para. 40 et seq.
 Judgment, para. 42 et seq.
 Judgment, para. 46 et seq.
 Judgment, para. 60, referencing BGH, Resolution of July 13, 2020, KRB 99/19, para. Rn. 60 – Bierkartell.
 Judgment, para. 51.
 Judgment, para. 62 et seq.
 Cf. Judgment, para. 68 et seq.
 Judgment, para. 42.
 Cf. Judgment, para. 109.
 Judgment, para. 106 referencing BGH, Judgment of January 28, 2020, KZR 24/17, para. 36, 47.
 Dating back to BGH, Judgment of January 8, 1992, 2 StR 102/91, para. 28 – Preisabsprachen; BGH, Resolution of June 28, 2005, KRB 2/05, para. 21 – Transportbeton-Kartell; BGH, Resolution of February 26, 2013, KRB 20/12, para. 76 – Grauzementkartell I; BGH, Judgment of June 12, 2018, KZR 56/16, para. 35.
 BGH, Judgment of January 28, 2020, KZR 24/17, para. 40 – Schienenkartell II; BGH, Judgment of December 11, 2018, KZR 26/17, para. 55 – Schienenkartell I.
 BGH, Judgment of April 13, 2021, KZR 19/20, para. 26 et seq. – Lkw-Kartell II; BGH, Judgment of September 23, 2020, KZR 35/19, para. 40 – Lkw-Kartell I.