A presumption of facts that favors claimants: German Federal Court of Justice’s second ruling on the Trucks Cartel extends factual presumption to increased prices for indirect procurement
In its second decision on the so-called Trucks Cartel, released earlier this month, the German Federal Court of Justice, the Bundesgerichtshof (BGH), has further clarified its position on many key elements of damage claims against the cartel members.
The BGH had already acknowledged a factual presumption that the truck cartel had a negative effect on prices for trucks procured from the cartelists. The BGH has now clarified that this presumption also applied to trucks procured from independent dealers (known as indirect procurement). The ruling also includes some useful insights into the BGH’s stance on the scope of the antitrust infringement by the Trucks Cartel, the passing-on defense, and the statute of limitation.
According to the findings of the decision by the European Commission (Case AT.39824 – Trucks), the six main trucks manufacturers active on the European Market had, from at least 1997 until 2011, exchanged information and agreed on the increase of its gross list prices and, in some instances, net prices. They had also agreed on the timing of and on a price surcharge for the implementation of new emission standards. The European Commission found this conduct to infringe European antitrust law.
In its first decision on the Trucks Cartel (BGH, ruling of 23 September 2020, KZR 35/19), the BGH decided that a factual presumption exists that a cartel, thoroughly carried out over the course of many years, regularly leads to excessive prices for its customers.
In the present case (BGH, ruling of 13 April 2021, KZR 19/20), the two lower courts had ruled in favor of the plaintiff, a transport company, deciding that the damage claim was justified on its merit in a so-called interlocutory judgment. The defendants’ appeal was successful; however, this was due to procedural reasons.
The Court’s ruling
Scope of the antitrust infringement
The BGH dismissed the cartelists’ arguments that the conduct had been a mere information exchange. In the BGH’s view, the cartel members also systematically agreed on the increases of their list prices. Those list prices were then the base for the pricing of all cartel members.
The BGH also dismissed the defendants’ argument that the Commission had only found an agreement on the timing and the range of the price surcharge for the introduction of the emission standard EURO 3. The BGH held that the Commission had found the agreement on the timing and the passing-on of price surcharges to have pertained to the standards EURO 3 to 6.
Factual presumption regarding excessive prices
The BGH confirmed that a factual presumption of damages exists in the present case. In general, a factual presumption may be applied in cases where the court, based on its own or expert experience, can conclude from proven facts, i.e., circumstantial evidence (in this case, the antitrust infringement), to unproven facts, (in this case, higher prices for end customers) through inductive reasoning. A factual presumption is essentially a facilitation of evidence, assisting a party in its burden to provide and prove facts, and requires reliance on further means of (circumstantial) evidence.
Factual presumption also applies for indirect purchases
The BGH also decided that the factual presumption applies in cases where the trucks were not procured directly from the manufacturer but from an independent dealer.
According to BGH case law, the causality of a cartel agreement for the price formation on subsequent markets is usually to be determined on the basis of the price level that would have been reached without the overcharge caused by the cartel. Since prices are usually influenced by numerous factors of the market structure and the respective commercial strategy, it is generally necessary to establish that a determined price is attributable precisely to the cartel and not to any other factors.
In the present case, such separation of market levels does not exist. The independent truck dealers are directly integrated into the manufacturers’ distribution structure. The manufacturers in part also sell trucks directly. Therefore, the end customer procures the vehicles directly from the manufacturer either through sales agents, i.e., dealers acting as representatives of the manufacturer, or through independent dealers. In both cases, the list price forms the basis for the ultimate prices charged and for discounts granted to the end customers.
It is highly unlikely that the dealer, under these conditions, would take the price increases on its own margin. The extremely high market coverage of the Trucks Cartel meant that the dealers were, almost without exception, buyers of the cartel members and the other side of the market had practically no alternative. Given such conditions, it is completely implausible to assume that price increases caused by the manufacturers regularly and completely “stuck” at the level of the (independent) dealers.
The BGH confirmed that the passing-on defense has a high threshold and will probably fail in the Trucks cases: defendants must prove that a passing-on of damages to the plaintiff’s customers has taken place. Even if that was possible, the passing-on defense could be excluded for normative reasons: a deduction from the damages suffered by the primary cartel customers may not be required at all if only minor claims are made from customers on the downstream market. However, courts may not simply assume this, as the Court of Appeal did, but must determine the actual usage of the acquired products by the plaintiff, the relevant sales markets on which the plaintiff operates, and the likelihood that customers on the downstream market will enforce any indirect damages claims. In this context, the Court of Appeal will have to take into account whether it is to be expected that the cartelists will be held liable for an amount that substantially exceeds the overall damages caused by the cartel.
Statute of limitation
In its first decision on the Trucks Cartel, the BGH had already decided that the suspension of the statute of limitation started with the initial dawn raids at the premises of the cartelists in January 2011 (and not only with the formal initiation of the investigation). The BGH now clarified that the grace period after the end of the investigation, during which the period of limitation is still tolled does not begin with the notification of the fining decision, but with the expiry of the 2-month period for filing an action for annulment pursuant to Art. 263(4) TFEU. For the Trucks case, this means that the period of limitation was suspended until 20 March 2017.
Addressing the defendants’ comparative market analyses
The decision by the Court of Appeal was ultimately overruled because the Court of Appeal had not sufficiently addressed the comparative market analyses submitted by the defendants. The Court of Appeal stated that all of the defendants’ submissions were based on the incorrect assumption that the conduct had only been an exchange of information. In the BGH’s view, the Court of Appeal nevertheless needed to address the comparative market analyses submitted by the defendants in the context of the overall assessment of all indications speaking for and against the occurrence of damage.
The BGH concluded that the Court of Appeal was not allowed to deny the suitability of the observations of a comparative market over time, submitted by the defendants to speak indicatively against a price effect of the Trucks Cartel without a closer examination of its data basis, methodology and the result of the regression analyses.
From the plaintiffs’ perspective, the ruling is to be welcomed as it confirms the findings in support of the plaintiffs in the first BGH decision on the Trucks Cartel and extends them to a few more important aspects. In particular, the extension of the application of the factual presumption will support the plaintiffs’ case in many of the other pending proceedings. The decision on the statute of limitation effectively extends the suspension period for at least another two months.
In the disputed case, it is to be expected that the Court of Appeal will uphold its previous decision with the stipulations made by the BGH, i.e., thoroughly addressing the expert opinions submitted by the defendants. It will be interesting to see whether the Court of Appeal will follow the BGH’s suggestion to take up the proceedings regarding the amount of the claim pending before the Regional Court in order to determine the damage itself, instead of issuing another interlocutory judgment as to the merits of a claim.