Federal Court of Justice Decision: Entitlement to Damages in the Context of the Drugstore Cartel
On November 30, 2022, the Federal Court of Justice (BGH), under case number KZR 42/20, rendered a widely noted decision regarding the claim for damages by Anton Schlecker e. K. i. L. in the context of the so-called drugstore cartel. The legal dispute centered on the question of to what extent an insolvent sole proprietor can assert claims for cartel-related damages when active business operations had previously been discontinued due to the opening of insolvency proceedings.
Background of the Proceedings
In the underlying case, the former company Anton Schlecker e. K. i. L., once one of the largest drugstore retail companies in Europe, asserted claims for damages during its insolvency proceedings against several manufacturers of personal care and household products involved in a cartel. The basis for these claims was the participation of various producers in anti-competitive price-fixing agreements, which had already been sanctioned under cartel law by the European Commission.
The core issue of the BGH decision is whether, and to what extent, Anton Schlecker e. K. i. L., as an insolvent debtor, could still have suffered a so-called cartel damage after discontinuing its business activities, and how this damage should be quantified.
Legal Assessment by the BGH
Claim for Damages Despite Insolvency?
The BGH fundamentally affirmed that a company affected by insolvency remains entitled and actively legitimized to claim cartel damages even after discontinuation of its operating business within the context of insolvency proceedings. What is decisive is that the actions by the cartel participants that caused the damage occurred at a time when the company was still active in commercial transactions.
With this, the BGH clarifies the line of German case law: Insolvency does not alter the legal nature or enforceability of a claim for damages that arose prior to insolvency. These claims form part of the insolvency estate and can be pursued by the appointed insolvency administrator in the interest of the creditors. The ability to enforce compensation for cartel-related losses serves to protect the economic value of the insolvency estate and to ensure equal satisfaction of creditor interests.
Requirements for Demonstrating Cartel-Related Damages
The BGH comprehensively addressed the requirements under which cartel-related damage can be established in a civil law context. Since price-fixing and market manipulation typically disadvantage the purchasing side, the highest court in cartel law recognizes a factual presumption for the occurrence of such damage. However, the BGH emphasized that the burden of presentation remains with the claimant: The specific amount of damage must be detailed individually and substantiated by expert opinion if necessary.
In the case of the insolvent debtor, this means: Even if business operations cease after the opening of insolvency proceedings, any cartel damage must be referred to the period of active business activities. Claims are then enforced by the insolvency administration for the benefit of the insolvency estate.
Proportionality and Scope of Compensation
It is particularly noteworthy that the BGH interprets the scope of damages in cartel cases broadly. Accordingly, the entire disadvantage concretely suffered by the injured party is compensable, regardless of whether the effects of the cartel conduct materialized during the period of active business activity or only after the opening of insolvency proceedings.
The value of this differentiated legal view is particularly evident for creditor communities and insolvency administrators, as potential claims can thus be preserved and enforced in the interest of creditors. The BGH further clarifies that damage calculation must be based on the usual principles of damages law, including the deduction of any benefit received. The judgment leaves open how the amount of damage should be determined in individual cases; this remains subject to fact-finding in the courts of first instance.
Practical Relevance
Implications for Insolvency Proceedings and Creditor Interests
The BGH’s ruling has a significant impact on the handling of insolvent companies that were market participants within the meaning of competition law prior to the opening of proceedings. Insolvency administrators are authorized and obligated to effectively pursue existing cartel damage claims in order to increase the estate. Companies disadvantaged by previous cartel conduct may therefore claim compensation even during insolvency, and the burden of production and proof is not shifted against them.
Consequences for the Enforcement and Defense of Cartel Damage Claims
Judicial and extrajudicial disputes regarding cartel damages become even more practically significant due to the decision, especially in insolvency contexts. Companies – as well as insolvency creditors – should thus ensure they properly document the relevant period and justification for damage when examining potential cartel claims. Conversely, cartel participants must be prepared to face claims for compensation even after their former contractual partners enter insolvency.
Outlook and Classification
The BGH decision marks a further step toward the consistent enforcement of cartel damage claims in the spirit of the effectiveness of competition law and the strengthening of creditor interests in insolvency. While calculating individual damages in each case remains challenging, the general understanding of compensability is now clearly established.
With this decision, the highest German civil court not only strengthens the legal position of insolvent companies and their creditors, but also contributes to the harmonization of German cartel law with Union law requirements under the Cartel Damages Directive (2014/104/EU).
Source reference:
The above statements are based on the official decision of the Federal Court of Justice dated November 30, 2022, case no. KZR 42/20, as well as the published statements of facts and reports, including at urteile.news.
Should further legal questions arise in connection with cartel damage claims, insolvency proceedings, or similar issues, it is recommended to have the individual situation reviewed by experienced lawyers. MTR Legal Rechtsanwälte are available for further information and personal contact.
