CJEU rules on admissibility of cartel-related group actions and effective legal protection

On 28 January 2025, the European Court of Justice (CJEU) ruled on a request for a preliminary ruling by Dortmund Regional Court (Landgericht Dortmund) (case C-253/23 – ASG 2) as to whether a national ban on assignment models is compatible with EU law. Under strict conditions, the principle of effectiveness requires that injured parties be permitted to assert claims jointly via collective redress mechanisms.

The CJEU largely concurs with the Opinion of Advocate General Szpunar (see our analysis). In doing so, the Grand Chamber has developed additional guidelines to specify the principle of effectiveness under EU law. Member States’ legal systems must in any case provide effective access to justice. The CJEU leaves the responsibility of examining and defining the limits of assignment models in cartel damages cases to the national courts.

Background

The CJEU judgment came in response to a request for a preliminary ruling by Dortmund Regional Court: A collection service provider, acting on behalf of sawmills, had filed claims for damages resulting from an infringement of competition law. These claims were assigned to the provider on a fiduciary basis by the sawmills. Based on the case law of the lower courts at the time, the Regional Court doubted whether claims for damages for infringement of competition law could be asserted collectively by means of claim assignment models and wanted to know from the CJEU whether it was in breach of EU law if the German Legal Services Act (Rechtsdienstleistungsgesetz – RDG) prohibited such group actions for collection (“Sammelklage-Inkasso”) in cases of damages for infringement of competition law. The CJEU already considered broad parts of the questions referred to it to be inadmissible and only ruled for the case of a stand-alone action in which claimants cannot rely on a competition authority’s (prior) finding of an infringement of competition law, but must present and prove the existence of such an infringement themselves.

Meaning and specification of the principle of effectiveness

The CJEU firstly confirms that there are no EU provisions prescribing the introduction of group actions in cases of damages for infringements of competition law. Instead, it is up to the national legislators to shape their legal protection systems and thus determine the procedural modalities for the judicial enforcement of EU law. However, the principle of effectiveness and the right to effective judicial protection set boundaries which the CJEU specifies as follows: A national ban on group actions for collection is incompatible with the principle of effectiveness if

• firstly, alternative collective redress mechanisms do not allow injured parties to effectively enforce their claims for damages, and
• secondly, an individual action is accompanied by obstacles that make it impossible or overly difficult to enforce the claim.

Review by national courts

However, to the annoyance of some observers, the CJEU does not itself state whether the above conditions are met in the Dortmund case. Instead, the CJEU discusses the arguments against the premisses of Dortmund Regional Court, according to which German law allegedly prohibits group actions for collection of damages for infringement of competition law, does not provide for alternative collective actions and justifies a lack of interest in an individual action, but leaves the review thereof to the national courts. Since it is not the job of the CJEU to determine the content of national law, it appears to have no other choice in this respect.

No premature intervention in national law and no obligation to introduce group actions

On the other hand, the CJEU provides the national courts with guidelines. In addition to the instruction already familiar from previous judgments and the Opinion of Advocate General Szpunar to assess “all the relevant factors relating to the detailed rules laid down by national law” and “all the legal and factual elements of the case”, the CJEU also emphasises that a breach of EU law cannot be assumed prematurely, but that the threshold is high. While the CJEU recognises that collectively bundling cartel damages claims can facilitate their enforcement, it also clarifies that the complexity and costs of actions for damages for infringement of competition law alone do not in themselves permit the conclusion that the injured parties would not be able to bring an individual action. Rather, this requires specific obstacles in national law that effectively block the path to justice. In addition, an overall assessment will also have to take into account what other procedural and substantive relief is available to the claimant (see Further boost to private enforcement of antitrust law). In short, the principle of effectiveness does not require the general introduction of group actions for infringements of competition law.

Justification of limits to collective redress through legitimate protective purposes

Even if collective redress is the only effective mechanism for enforcing rights in certain cases, the CJEU, in line with Advocate General Szpunar, confirms that a national ban on collection can nevertheless be justified to protect litigants. The CJEU cites the safeguarding of the “quality” of services provided, the “objective and proportionate nature” of the remuneration received by service providers and the prevention of “conflicts of interest” and “abusive procedural conduct” as justification. The CJEU thus makes it clear that effective legal protection in no way requires an unregulated collection market and certainly is not intended to secure a source of income for legal service providers, litigation funders and specialised claimant law firms. The CJEU recognises that national provisions aimed at such protective purposes, such as section 4 of the German Legal Services Act, which is designed to prevent conflicts of interest, are not objectionable under EU law. This idea will also have to be applied to other limits of collective legal protection instruments.

Scope of the decision and practical advice

Although the CJEU expressly limits its statements in this specific case to stand-alone actions in the area of antitrust law, the guidelines it has developed on the interplay between the principle of effectiveness under EU law and national law are likely to have wider significance. Compliance with the principle of effectiveness is not logically limited to group actions for damages for infringement of competition law, but can become relevant in any legal disputes concerning the private enforcement of EU law. For similar reasons, the CJEU has already recognised a further right to bring collective actions for data protection breaches (more on this here [German only])

Based on the established guidelines, courts may be called upon to examine whether the existing individual and collective legal protection in the relevant Member State meets the requirements of the principle of effectiveness. This comes at a time when more legal protection mechanisms are becoming available due to the implementation of the Representative Actions Directive.

Since 13 October 2023, German law has also been supplemented by a general representative action for redress (Abhilfeklage) for consumers and small businesses, providing an effective alternative. Although the representative action does not apply to larger companies, it is questionable whether they would be denied legal protection without collective proceedings, especially given the larger sums usually in dispute.

Economic hardship can be prevented by reducing the amount in dispute in accordance with section 89a(1) of the German Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen – GWB). Additionally, simple litigation cooperation (sections 59 and 60 of the German Code of Civil Procedure [Zivilprozessordnung – ZPO]) enables several injured parties to work together to pursue claims jointly. It appears unlikely that claims could not be pursued in practice in Germany using these mechanisms and that legitimate regulatory restrictions under the German Legal Services Act would have to be ignored.

However, it is already apparent from the initial reactions that the CJEU’s decision is encouraging financiers and service providers to put together group actions against companies. As the CJEU confirms the role of collective redress for effective private enforcement of European law as a whole, this strengthens the pan-European trend towards a greater number of collective proceedings against companies.

In our current Competition Outlook 2025, which presents key developments in antitrust and competition law and summarises essential topics for you in an easy-to-digest format, we also refer to the CJEU’s ruling on the extent to which a national ban on group actions for collection is compatible with EU law.