Court of Appeal provides guidance for further course of proceedings in prestressing steel litigation

NL Law
EU Law

On 27 July 2021, the Court of Appeal of Den Bosch issued an interim judgment in the Dutch prestressing steel litigation, ruling on three issues: (i) the obligation of claimant to furnish facts; (ii) the assignment of claims; and (iii) the liability of the parent companies. In short, the Court of Appeal allowed the claimant Deutsche Bahn another opportunity to supplement the facts needed to substantiate its claims in the next phase of the proceedings.

The Den Bosch Court of Appeal has rendered judgment in the ongoing Dutch prestressing steel litigation, in which indirect purchaser Deutsche Bahn initiated civil proceedings against manufacturers of prestressing steel which were alleged to have participated in a price-fixing cartel between 1984 and 2002.

In its judgment of 27 July 2021, the Court of Appeal (“the Court”) ruled on three issues: (i) the obligation on Deutsche Bahn to furnish the relevant facts supporting its claim; (ii) the validity of the assignments of the claims to Deutsche Bahn; and (iii) the liability of the defendants’ parent companies.

Concerning the obligation to furnish facts, the Court considered that Deutsche Bahn had not yet furnished sufficient facts to substantiate its claims. Deutsche Bahn essentially only referred to the Decision and an economic model prepared by Oxera. According to the Court, this was insufficient. Taking into account the nature and gravity of the cartel agreements, and the time and effort needed to gather all the facts, the Court allowed Deutsche Bahn an extra opportunity to supplement the substantiation of its claims in the next phase of the proceedings. This approach corresponds with the EU principle of effectiveness, according to the Court.

On the assignments, the Court gave several interesting decisions. One of the defences the Court assessed concerned the defence that the assignments of the claims of the direct purchasers were invalid in view of the German Rechtsdienstleistungsgesetz. Article 4 of the Rechtsdienstleistungsgesetz prohibits conflicts of interests when providing legal services. According to the defendants, such a conflict of interests exists. They point to the fact that Deutsche Bahn brought claims on behalf of (i) direct purchasers (who assigned their claims to DB), as well as (ii) an indirect purchaser (Deutsche Bahn itself). The defendants allege that this leads to an inherent conflict of interest when it comes to the issue of passing-on (i.e. the question whether direct purchasers of a cartelised product (such as the assignors) have 'passed on' any overcharge caused by the cartel to their purchasers (i.e. the indirect purchasers, in this case Deutsche Bahn itself)). The Court rejected this defence, considering that Deutsche Bahn has a well-considered litigation strategy, thereby pre-empting possible conflicts of interest. Deutsche Bahn has made clear arrangements with the assignors about the distribution of the net result of the proceedings, and therefore no conflict of interest within the meaning of Article 4 Rechtsdienstleistungsgesetz can arise.

Another defence that the Court ruled on was the defence that the assignments of the claims of the direct purchasers were invalid because they are ‘partial assignments’ (deelcessies). This means that, according to the requirement of determinability under German law, it must be clear from the deed of assignment which part of the claim has been assigned. That is not the case, according to the defendants. In assessing this defence, the Court referred to a judgment by the German Bundesgerichtshof, from which follows that every transaction and every supply pursuant to illegal cartel agreements is an individual act which is unlawful and may cause damage. This applies to transactions between manufacturers and direct purchasers, and to transactions between direct purchasers and indirect purchasers, according to the Court. The Court considered it not immediately clear that the assignments were invalid. Whether Deutsche Bahn has provided the required clarity in relation to the deed of assignment can be assessed in a later stage of the proceedings. 

In assessing the liability of the parent companies, the Court refers to both ECJ and Dutch case law, and considered that the Commission has irrevocably established one ‘undertaking’ consisting of the respective parent companies and their respective subsidiaries. Therefore, there is no room for invoking deviating German national law. The Court concludes that in principle the relevant parent companies of the defendants are jointly and severally liable in relation to article 101 TFEU.

The Court indicated that other issues will be addressed in the next stages of the proceedings.

This article was published in the Competition Newsletter of October 2021. Other articles in this newsletter:

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