European Court of Justice clears the path for collective redress in antitrust damages
In a highly anticipated ruling, the Grand Chamber of the European Court of Justice (ECJ) on January 28 ruled that the EU principle of effectiveness may oblige national laws to provide for means of collective redress in the field of antitrust damages (case number C-253/23 – ASG 2)—a ruling that bodes well for claimants and for legal finance, as coverage in legal press confirms.
For more than a decade, the German federal state of North Rhine-Westphalia controlled prices of round timber for almost 50% of all suppliers in its territory. A group of 32 sawmills from Germany, Belgium, and Luxembourg with damages of €220 million assigned their claims to Plaintiff ASG 2, a legal services provider funded by Burford.
First instance courts in previous cases considered the bundling of claims by way of assignments in violation of the German Legal Services Act (Rechtsdienstleistungsgesetz). In this case, the District Court Dortmund took a different route: It sought guidance from the ECJ by requesting a preliminary ruling. The court argued that a prohibition of the assignment model in antitrust damages cases would violate EU law absent other effective means of collective redress under German law.
The ECJ has confirmed the District Court’s doubts. The Grand Chamber emphasized that under EU law, any individual or entity harmed by competition violations has the right to claim damages, and member states must ensure the effective enforcement of such claims. National laws must not render the enforcement of antitrust damages claims impossible or excessively difficult by prohibiting the collective enforcement of such claims. In particular, national laws must not prohibit the assignment model if there is no other possibility to effectively bundle claims.
This landmark decision from Europe's top court paves the way for the continued use of collective redress and legal finance. While national courts will implement the guidance provided by the ECJ, the ruling of the Grand Chamber sends an unambiguous signal of the ECJ’s guidance on and interest in this issue.
This signal comes at a time when second instance courts have already started to overturn the restrictive first instance decisions. In particular, in another round timber cartel case, the Stuttgart Court of Appeals recently greenlighted the assignment model. The German Federal Court of Justice is also expected to rule on the issue in the near future, having taking a liberal stance on the assignment model before in other areas of law. This approach is now further backed by the ECJ.
