So it has begun. However, when will the new provisions of the 9th amendment of the GWB actually apply? Aside from a number of exceptions, the 9th amendment will come into force on the day following its promulgation. But, a number of not insignificant provisions will have retroactive effect. This sounds as if it could be exciting.

The legislature has determined a time of entry into force for the 9th amendment of the GWB pursuant to Article 82(2)(1) of the German Fundamental Law. According to that provision, certain provisions regarding cartel damages claims entered into force already as of 27 December 2016 (Article 8 S. 1 of the amendment). The other provisions entered into force on the day following the promulgation, i.e. on 9 June 2017. Beyond that, there are a number of questions as to when certain provisions will apply and whether transitional rules will apply in some cases.  The present contribution offers a short overview in this regard.

Cartel damages claims – substantive and procedural rules

General considerations

The new provisions regarding cartel damages claims (see on this “I want my money back!” – Cartel damages claims after the 9th reform of the German Competition Act) essentially apply as of 27 December 2016 (due to the implementation deadline of the EU cartel damages directive 2014/104/EU). This is about cartel damages claims, the binding effect of decisions by competition authorities, the passing-on defence, the joint and several liability, the leniency rules, the effect of settlements as well as the statute of limitations that will be discussed below. Only the new substantive right to information and surrender claim of § 33g GWB (see on this Tell me more, tell me more … The right to obtain information according to the 9th amendment of the German Act against Restraints of Competition (part 1)) does not have retroactive effect; it entered into force only on the day following promulgation, i.e. on 9 June 2017.

Extension of the statute of limitations for cartel damages claims

The limitation period for cartel damages claims where the claimant has knowledge will be extended to five years (now § 33h Abs. 1 und 2 GWB), i.e. by two years compared to the regular limitation period applicable thus far (§ 195 BGB, the German Civil Code – see No limits..? The limitation rules for cartel (damages) claims after the 9th reform of the German Competition Act (ARC)). However, this only applies to cartel damages claims that arose after 26 December 2016 and for cartel damages claims that arose before that, but that were not yet time-barred on 9 June 2017 (§ 186 Abs. 3 GWB). This arguably is what under German law is called an artificial retroactive effect (i.e. an extension of the statute of limitations for already existing claims). Whether claims that already existed on 27 December 2016 were already time-barred on 9 June 2017 has to be determined based on the provisions regarding the statutory start, suspension, expiry suspension and new start of the limitation period that were in force until that date.

The statutory limitation period where the claimant does not have knowledge only ends after ten years, like previously (§ 33h(3) GWB respectively § 199(3) No. 1 BGB). Otherwise, the 30-year limitation period of § 33h(4) GWB applies.

Delayed start of statutory limitation period for joint and several liability

The statutory limitation period for compensation claims under joint and several liability pursuant to § 33d(2) GWB will be extended by § 33h(7) GWB until the point in time when the damages claim pursuant to § 33a(1) GWB underlying the compensation claim has been satisfied. Thus far, the general rule applied, that the limitation period for compensation claims under joint and several liability started once the individual qualifying for compensation learned about the facts on which the damages claim against the paying joint and several debtor is based. The new provisions considerably reduce the risk for the joint and several debtor (entitled to compensation) that the compensation claim is time-barred before the damages claim has been brought. As discussed above, this extension only applies to compensation claims that either arose after 26 December 2016 or that arose before 27 December but were not yet time-barred on 9 June 2017 (§ 186(3) GWB).

Rule of evidence regarding the passing-on defence, right to information and surrender claim and new procedural rules only applicable for lawsuits filed after 26 December 2016

The rule of evidence regarding the passing-on defence of § 33c(5) GWB (siehe Plaintiff’s paradise? – The passing-on defense after the 9th amendment of the German Act against Restraints of Competition (GWB)), the right to information and surrender claim pursuant to § 33g GWB and the procedural rules of §§ 89b to 89e GWB do only apply to procedures in which the lawsuit was filed after 26 December 2016.

New cost regulation for third party interventions

The amendment does not foresee a transitory provision for the new rule in § 89a(3) GWB that limits costs for third party interventions. According to general principles of application in time, new procedural rules also apply to on-going proceedings, but not to procedural acts or procedural situations that had already been completed pursuant to the previous rules in force. Thus, § 89a(3) GWB in principle applies as of its entry into force, however, not in the case of a third party intervener who had already joined at that point in time, because his/her cost reimbursement claim had already arisen subject to a condition precedent.

Transitional provision for structural changes within the group

As mentioned earlier, the 9th amendment of the GWB introduces a group liability for cartel offences, which is aimed on replicating EU law (see The return of the kin liability (Sippenhaft) – Liability of parent companies after the 9th amendment of the German Act against Restraints of Competition (GWB)).

In addition, the 9th amendment of the GWB introduces a “default liability for a transitional period” in § 81a GWB. This provision is aimed on covering structural changes within the group before the new regulations on group liability for cartel offences become fully effective (in § 81 (3a) to (3c) GWB). This is most likely a legacy of the famous so-called “sausage gap”, which could lead to avoiding a cartel fine by way of clever company restructuring (the fined companies ceased to exist – see Closing the so called “Sausage gap” – Cartel fine procedures after the 9th amendment of the German Act against Restraints of Competition (GWB)). In particular, the new provision applies to structural changes within the group made once cartel proceedings had already been opened but not finished. The new provision then provides for the liability of the group companies as well as for the universal legal or economic successors. This also applies to cartel proceedings which were already opened before the 9th amendment to the GWB came into force. Scholars already assert a breach of the principle of non-retroactivity because this provision allows the fining for already completed cartel offences within the group virtually retroactively. The German legislature and other voices take the view that the provision only stipulates a default liability which is attached to structural changes made at a time when cartel proceedings were already opened. In addition, there would be no sanction but only the provision of a security, which does not imply a regulatory offence. Surely an interesting discussion, which can most likely only be settled by the German Federal Constitutional Court in Karlsruhe.

Application of new threshold for merger control

§ 35(1a) GWB will introduce a new threshold for transaction valued at more than EUR 400 million where the target company will be active in Germany to a significant extent. This new threshold will lead to the applicability of German merger control in cases where the second national threshold of EUR 5 million turnover in Germany (§ 35(1) No. 2 GWB) is not met (see Mind the gap – New Size-of-Transaction Test in German merger control). This provision will apply from 9 June 2017 on all mergers which were not completed by then and which fall under German merger control only because of the new threshold.

Other provisions

As said before, the other provisions entered into force on the day following the promulgation which is 9 June 2017.

Outlook

The next and final post from our blog series on the German Competition Act reform “Friends forever? Joint and several liability for cartel damages” will be published tomorrow.