The CJEU establishes the limits that a Member State cannot cross by restricting those damaged by an antitrust infringement from giving up their right to be compensated

The CJEU Judgment of 28 January 2025 resolves a question referred for a preliminary ruling by a German court in relation to the compatibility with EU law of the German national legislation governing collective collection actions (Rechtsdienstleistungsgesetz, RDG) which would prevent the injured party for damages arising from a competition infringement from assigning his rights to an entity to exercise them together with the rights of others damaged subjects.

The origin of the case that has given rise to the question referred for a preliminary ruling by the CJEU is to be found in the claim brought by a litigation finance fund (called ASG 2 and referred to in the judgment as the "legal services provider"), which several sawmilling companies affected by an alleged practice contrary to Article 101 TFEU – consisting essentially of a cartel on the timber market– had assigned their rights to compensation in order to bring a collective action for damages (referred to as a "collection" or "recovery" action on behalf of the assignee legal services provider).

In the proceedings before the Regional Court of Dortmund following that action, the Land of North Rhine-Westphalia (defendant in the main proceedings) questioned the locus standi of the claimant legal services provider (assignee), on the ground that the German national legislation governing collective recovery actions (RDG) would prevent the assignment –for collective recovery purposes– of claims arising from an alleged infringement of competition law. And that, therefore, the aforementioned assignments of the compensation rights by the affected sawmilling companies to the legal services provider ASG 2 so that the latter could collectively exercise, in its capacity as assignee, an action for damages, would be null and void.

In this context, the Regional Court of Dortmund decided to stay the proceedings and to refer the following questions to the Court of Justice of the European Union for a preliminary ruling:

• On the one hand, if national legislation (in this case, the RDG), which prevents or restricts persons potentially affected by an infringement of competition law from being able to assign their rights to compensation (in particular, in cases of collective damage) for the exercise (together with those of other potential injured parties) by a legal service provider, would be contrary to European Union law (and specifically, to Articles 101 TFEU, 47 CFEU, and 2-3 of Directive 2014/104 -the Damages Directive-).
• And, if the answer is in the affirmative, whether the national court should disapply the provisions of domestic law (in this case, German law) if it were considered that an interpretation in conformity with EU law is not possible, so that in any event, the transfers of rights are valid, and an effective exercise of those rights is possible.

CJEU Decision

In view of the above, and after making a detailed review of its previous jurisprudence, the CJEU resolves the question referred for a preliminary ruling by the Regional Court of Dortmund based, in essence, on the following reasoning:

• First, the Court understands –following the Advocate General's conclusions– that EU law and, in particular, the Damages Directive (art. 2, point 4), does not impose any obligation on Member States to establish a collective complaint mechanism for the recovery of damages arising from infringements of competition law,  nor does it govern the conditions to which the validity of an assignment by the damaged party, with a view to such a collective action, of his right to compensation for damage potentially caused by an infringement of competition law is subject (paragraph 69).
• It follows that: (a) both the establishment of a mechanism for collective complaints for this type of damage arising from competition infringements; (b) as the conditions to which the validity of the assignment of the right to compensation for such damage to a natural or legal person is subject in order for that person to bring such a collective action before a national body, are part of the modalities for the exercise of the right to compensation, which are not governed by the Damages Directive, and they must be regulated by the Member States in accordance with their internal rules (paragraph 70).
• In this regulation of the modalities for the exercise of that right, however, in accordance with the Court's settled case-law, States must respect the principles of equivalence and effectiveness (CJEU Courage and Crehan, C453/99; and Cogeco Communications, C637/17), and in particular, the right to full compensation for damages caused by infringements of competition law (CJEU Repsol Comercial de Productos Petrolíferos, C25/21); as well as the right to effective judicial protection guaranteed by Article 47 of the CEFEU (paragraph 71).
• In the case in the main proceedings, the referring court had doubts as to whether the principle of effectiveness, as well as the right to effective judicial protection, was consistent with German case-law interpreting the RDG as meaning that collective recovery action may not be brought in cases where the damage sought to be claimed collectively arises from an infringement of competition law. In that regard, the referring court  states that: (a) the action arising from the RDG would be the only way for the damaged sawmilling companies to collectively exercise their actions for compensation; and (b) that, although the individual exercise of such an action is possible, such a possibility would nevertheless not allow the exercise of that right in an effective manner (paragraphs 76 and 77).
• On the basis of these premises, the CJEU states that it is for the national court to verify (after assessing all the legal and factual elements of the case) whether the interpretation of national law which excludes collective action for recovery in competition law disputes has the effect of making it impossible or excessively difficult to exercise the right to compensation which EU law confers on damaged parties by an infringement of competition law and deprive them of effective judicial protection. That is in the light of all the relevant factors relating to the remedies provided for by national law for the exercise of that right (paragraphs 82 and 83).
• And whether, in that assessment, the national court –after interpreting the national legislation in accordance with the requirements of EU law– finds: (a) that none of the collective mechanisms alternative to collective action for recovery provided for by national law (in this case, the RDG) allows the right of persons seeking compensation for damage allegedly caused by an antitrust infringement to be effectively exercised; and (b) that the conditions for the bringing of an individual action laid down by national law make it impossible or excessively difficult to exercise that right to compensation and thus undermine the right to an effective remedy of the injured parties; then it must declare (in accordance with the principle of the primacy of EU law) that national law,  in so far as it excludes such collective recovery actions by the transferee, would not comply with the requirements of EU law (paragraph 84).
• However, for the purposes of carrying out the above assessment, the CJEU reminds the court a quo that:
• While it is true that mechanisms for grouping individual claims may facilitate the exercise of rights to compensation by those injured by an infringement of competition law, "the complexity and procedural costs inherent in such actions for damages do not in themselves support the conclusion that the exercise of the right to compensation in the context of an individual action is practically impossible or excessively difficult" (paragraphs 85 and 86).
• The fact that the national court concludes that the mechanism of collective action for recovery is the only procedural remedy available to the damaged sawmills to effectively exercise their rights to compensation does not preclude the application of the national provisions governing such actions and, specifically, those relating to the remuneration of service providers and the prevention of conflicts of interest and actions abusive procedural (paragraph 87).
• In order to ascertain whether the RDG does in fact preclude the exercise by the provider of legal services to which the sawmilling undertakings assigned their rights to compensation, the referring court must take into account the whole of national law, applying the methods of interpreting rules recognised by that law (paragraph 91). To that end, the High Court points to the fact that some of the parties to the main proceedings have pointed out that, in reality, certain German courts have been interpreting the RDG as meaning that the exercise of such a collective action in the event of damage resulting from infringements of competition law is only subject to compliance with certain formal requirements of quality of service by the service provider (i.e., the level of remuneration of the service provider or the existence of the conflict of interest; paragraph 92).
• And that, only in the event that it is not possible to interpret the national provisions in accordance with EU law, must the court a quo proceed to disapply them (CJEU Whiteland Import Export, C308/19; paragraph 93).

On the basis of the foregoing, the CJEU ruled that national legislation which prevents persons allegedly damaged by an infringement of competition law from assigning their rights to compensation to a legal service provider so that the latter can exercise them jointly in the context of an independent action for damages, is contrary to Article 101 TFEU, Articles 2 (point 4) and 3 (paragraphs 1 and 4) of the Damages Directive and Article 47 of the CFDU, and would therefore not comply with the requirements of Union law, provided that two conditions are met, cumulatively:

• That the domestic law of the State in question does not provide for any other possibility of grouping the individual claims of those damaged parties;
• And that the exercise of an individual action for damages is effectively impossible or excessively difficult for the damaged party in view of the specific circumstances of the case in question (paragraph 94).