Right to assign antitrust damages claims follows directly from EU law, AG opines

On 19 September 2024, Advocate General Szpunar (“AG Szpunar”) issued an opinion on the right of litigation vehicles to bundle antitrust claims. In his opinion, the AG confirms that the right for injured parties of a competition law infringement to assign their claims to a litigation vehicle for the purpose of starting damages proceedings follows directly from the cartel prohibition of Article 101 TFEU. Moreover, national rules that make the assignment of antitrust damages claims impossible or excessively difficult should be disapplied.

Background of the case

The case involves ASG 2, a German litigation vehicle, that claims damages from the Land of North Rhine-Westphalia for cartel violations. ASG 2 brings the case on behalf of several sawmills, that have assigned their claims to ASG 2.

Assigning a claim to a claim vehicle (the ‘assigmment model’) is a common practice in antitrust damages cases. The assignment model is used because it is often less costly and more efficient to bundle claims in one case than to start multiple individual proceedings. Furthermore, claim vehicles may have better possibilities to seek third party litigation funding for the case. In the situation of “scattered harm”, with multiple victims of a cartel but with a relatively low damages amount per victim (for example in a situation of a cartel harming mostly small and medium-sized enterprises), the assignment model may be the only way to pursue a damages claim if there is no opt-out collective action model available (like in Germany).

Under German law, claim vehicles require a specific license to ‘represent’ (injured) parties, which also applies to the situation of assignment of claims. ASG 2’s license was challenged in court.

Questions posed to ECJ

In the preliminary reference, the German District Court of Dortmund considers that under German law, the assignments at issue in the main proceedings were null and void and that, consequently, the claim must be dismissed without an assessment on the merits. The court comes to this conclusion because it considers that ASG 2 does not have the expertise to start proceedings for a stand-alone antitrust claim. This would in essence mean that it is prohibited to assign claims to ASG 2. The German court claims that the assignment model is the only effective model in Germany for ensuring the effective enforcement of the right to compensation for ‘collective harm’ or ‘scattered harm’ in cartel cases. The sawmills would therefore not have alternative options to enforce their rights under the cartel prohibition of article 101 of the Treaty on the Functioning of the European Union (“TFEU”).

Against that background, the court questions in essence whether the German assignment rules comply with article 101 TFEU, the Antitrust Damages Directive and Article 47 of the Charter of Fundamental Rights of the European Union (the “Charter”), since it would be very difficult or even impossible to recover antitrust damages in Germany due to this rule. If EU law precludes the German assignment rules, the court would have to disapply them and regard the assignments as valid.

The opinion of AG Szpunar

AG Szpunar identifies this case as an “unprecedented opportunity” to rule on the compliance with EU law of the rules on assignment (and, therefore, the assignment model used by litigation vehicles in antitrust damages claims).[1]     

AG Szpunar concludes that the assignment rules as outlined by the German court violate the EU cartel prohibition of Article 101 TFEU. The AG comes to this conclusion on the basis of the following:

• AG Szpunar recalls de distinction between (i) the constitutive conditions for liability under EU competition law, governed by EU law;and (ii) the ‘detailed rules’ for exercising the right to compensation, which fall under national law;[1]
• The question who may claim the right to full compensation is a constitutive condition and therefore falls under EU law.[2] According to the AG, also the transferability is governed directly by EU law as it would“ stem from the very nature of that right (..)”[3]
• The conditions for assignment, however, are determined by national law,[4] but they should not make it, in practice, impossible or excessively difficult to obtain reparation (principle of effectiveness)[5] and they should not conflict with the right to an effective remedy and to a fair trial of Article 47 of the Charter (principle of effective judicial protection);[6]
• The AG concludes (in essence) that if national rules make it excessively difficult to exercise the right of full compensation for harm caused by a cartel and therefore lead to a significant risk that injured parties will not exercise their rights, this law does not comply with the principles of effectiveness and effective judicial protection;[7]
• The AG notes that in Germany, the claim assignment model is presented by the referring court as the only feasible option, yet the assignments would be null and void under national law. The national rules therefore create barriers for small and medium enterprises, making it unlikely that they will pursue their claims due to the complexities and costs involved. Thus, AG Szpunar finds the German rules on assignment inconsistent with the principles of effectiveness and effective judicial protection.[8] The rules can also not be justified by their rationale.[9]
• Finally, the AG states that if the German court cannot interpret the national rules in conformity with the principles of effectiveness and effective judicial protection, it is required to disapply those national provisions and to hold that the claim assignments are valid.[10]

Implications for future cases

AG Szpunar’s conclusion recognizes the important role of the assignment model and claim vehicles in facilitating antitrust damages claims. If the AG’s opinion is followed, national rules that make assignments of antitrust damages claims too burdensome should be disapplied, at least if there are no effective alternative options for recourse. This is helpful for claim vehicles in legal discussions about the validity of assignments.   

More generally, the opinion is interesting because AG Szpunar confirms and expands the direct effect of the cartel prohibition of Article 101 TFEU. The AG opines that the conditions for the right to compensation follow directly from Article 101 TFEU, and that also the transferability of that right follows directly from this article. National law is according to the AG only relevant for the ‘detailed rules’ for the execution of that right, subject to the EU principles of effectiveness, equality and an effective judicial protection.  

The ECJ’s judgment is expected in the first half of 2025.

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[1]                AG Opinion, par. 85

[2]                AG Opinion, par. 94.

[3]                AG Opinion, par. 98.

[4]                AG Opinion, par. 98 and 107.

[5]                AG Opinion, par. 108.

[6]                AG Opinion, par. 110-111.

[7]                AG Opinion, par. 119.

[8]                AG Opinion, par. 122 – 127.

[9]                AG Opinion, par. 135 and 136.

[10]               AG Opinion, par. 143 and 144.