EU Competition Law: Collective Actions Are Allowed

Feb 7, 2025 Benn-Ibler Rechtsanwälte

The European Court of Justice (ECJ) has ruled that national law must provide for a collective action to bring together the individual claims of victims of a cartel. National provisions that exclude collective actions for damages are contrary to EU law.

In the case to be decided, 32 sawmills in Germany, Belgium, and Luxembourg claimed to have suffered damages as a result of a cartel. The German federal state (Land) of North Rhine-Westphalia is alleged to have charged excessive prices for the sale of logs originating in that state to sawmills from at least 28 June 2005 until 30 June 2019. All of the sawmills concerned ceded their claims for damages. A legal service provider then asserted the ceded claims against the Land by way of a class action. It acted in its own name and at its own expense, but on behalf of the sawmills, in return for a contingency fee.

The Land then challenged the legal standing of the legal aid organisation. Its argument was that German law did not permit such class actions. The German court of appeal disagreed and held that class actions were the only form of collective action for the effective recovery of damages in cartel cases.

In those circumstances, the Court of First Instance referred the following question to the ECJ for a preliminary ruling: Does European Union law preclude the interpretation of a national provision which prevents victims of a cartel from bringing such an action?

European Union law allows anyone to claim compensation for damage suffered as a result of an infringement of competition law. The rules for enforcing this right are left to the Member States in accordance with the principle of effectiveness.

A prohibition on the use of collective action for the recovery of debts operated by a legal service provider may undermine the effectiveness of EU law. This is the case where national law does not provide for any other collective redress mechanism for the grouping of individual claims and where it is impossible or excessively difficult to bring an individual action.

ECJ C-253/23 (28 January 2025)