GER: Drugstore Cartel – Damages for Insolvent Schlecker?

Jan 20, 2023 Benn-Ibler Rechtsanwälte

The German Federal Court of Justice (Bundesgerichtshof, hereinafter BGH) ruled that if competitors secretly exchange information on price-setting vis-à-vis a joint customer, this underscores the experience in principle that prices that are subsequently achieved are on average higher than they would have been without limited competition. Thus, the BGH overturned the judgement of the lower court.

The plaintiff of the case is the insolvency administrator of the Anton Schlecker drugstore chain, one of Germany's largest retailers of branded drugstore products up until 2012. The plaintiff is claiming damages of at least EUR 212.2 million from the defendant drugstore product manufacturers. Between 2000 and 2012, there had been pricing agreements between the drugstore brand product manufacturers for goods purchased from them by Schlecker. The German Federal Cartel Office had already imposed fines on these manufacturers for violation of antitrust laws. The insolvency administrator asserted in court that Schlecker was forced to pay excessive prices for branded drugstore products because of the drugstore cartel and that Schlecker had suffered damages because of this. However, the action had not been successful in the lower courts. Now, the Cartel Panel of the Federal Supreme Court has overturned the appeal decision and referred the case back to the court of appeal.

The German Federal Supreme Court emphasised that agreements between competitors in violation of antitrust laws, which involve sharing of confidential information on pricing behaviour vis-à-vis a joint customer, give rise to the empirical principle that the prices that are subsequently achieved are on average higher than those that would have been achieved without limited competition. Also, the fact that the effects of such agreements depend on specific circumstances, such as prevailing market conditions at the time or the eventual objective pursued by such an exchange of information, does not preclude this principle of experience. These facts had to be examined by the trial judge within his overall determination of whether there were any specific indications either confirming or invalidating this principle of experience.

This principle of experience does apply to the drugstore cartel. According to the German Supreme Court, even though the lower courts had acknowledged this principle of experience, they had erroneously attached too little weight to it. The assumption that no one would think Schlecker had suffered damages is therefore erroneous.

Press Release No.172/2022 on BGH, KZR 42/20 (29.11.2022)