On January 28, 2025, the Grand Chamber of the Court of Justice issued a much-awaited preliminary ruling that clarifies when national laws that prohibit the transfer of antitrust compensation claims to bring a collective action breach EU law.[1] The Court of Justice held that, to respect the principle of effectiveness, national procedural rules cannot limit recourse to such group actions where it is the only procedural way for individuals to bring a claim for compensation. While it is clear that the Court of Justice did not consider Member States are under an obligation to always allow for group action lawsuits, the implications for private enforcement are yet unclear. This will likely be the subject of additional litigation and preliminary rulings.
Background
In 2009, the German Federal Cartel Office adopted a commitment decision closing an investigation into the German Land of North Rhine-Westphalia’s alleged agreement with other owners of woodland to harmonize roundwood prices. While the decision made no formal finding of infringement, 32 sawmills sought to claim compensation for the harm they suffered from the suspected cartel. To this end, the sawmills transferred their rights to the legal service provider ASG 2, so that the latter could seek consolidated compensation on their behalf, in exchange for a success-based fee (so-called “assignment model”).
According to the referring court, German national procedural law allows for group claims under the assignment model for particular matters (such as property rental disputes or air passenger compensation), but not in the field of competition law. Accordingly, it considered that German procedural law obliged it to deny ASG 2 standing.[2] Additionally, the referring court found that, without recourse to the assignment group action and the prospect of consolidated compensation, the sawmills would lack the incentive to pursue legal action. Accordingly, by acting alone, the claimants would not be able to effectively exercise their right for compensation. In its referring question, the court asked whether this German legislation conflicted with the principle of effectiveness and Article 101 TFEU read in conjunction with Directive 2014/104 (the “Damages Directive”).[3]
Group actions by assignment must be allowed only where no other option is “effective”
The Court of Justice found that the German legislation at issue would be incompatible with EU law, so long as the referring court was certain that no other procedure would allow the individuals concerned to effectively bring their claims for compensation. In detail:
- The Court of Justice reaffirmed its settled case law according to which national procedural rules governing actions for antitrust damages must be “effective.” It stated that it is for the national court to determine if national law preventing group actions by assignment has the effect of making it “impossible or excessively difficult”to exercise the right to compensation conferred upon individuals by EU law. Such a conclusion presupposed two cumulative conditions:[4]
- No other collective redress mechanism within national law would enable the group of claimants to effectively assert their right to compensation; and
- The conditions for bringing an individual action make it impossible or excessively difficult to exercise the right to compensation when acting alone.
- The Court of Justice recognized that “the specific features of competition law cases”, notably their legal and factual complexity as well as procedural costs, make collective mechanisms for redress advantageous, in particular for stand-alone actions.[5] Crucially, however, it found that these features do not in themselves mean that bringing an individual claim is excessively difficult (condition (ii) above). The Court of Justice explained that such a finding is warranted “only if, following an examination of the legal and factual elements of the case [the court finds that] specific elements of national law preclude the bringing of those individual actions.”
The Court of Justice found that, if the two cumulative conditions are met, national legislation can still legitimately regulate providers of group action for collection services. In particular, national legislation may set out rules to guarantee the quality of the services and the objective and proportionate nature of the remuneration of their providers, as well as to prevent conflicts of interest and abusive procedural conduct.[6]
Passing the saw to national courts
The Court of Justice’s judgment leaves much unresolved. Its clarity was not aided by the disputes concerning the facts, and the uncertainty surrounding the interpretation of the German national legislation in question, which saw the referring court and some of the parties to the proceeding on opposite fronts. While the referring court considered that German law precluded the group claim by assignment, interveners contested this finding.[7] Moreover, interveners disputed the referring court’s finding that other collective mechanisms, like factoring[8] or the joinder of claims,[9] would be ineffective.[10] Finally, the interveners also opposed the national court’s finding that individual sawmills would not have an incentive to bring claims when acting alone, arguing that “the number of individual claims of the sawmills concerned … puts into perspective the reluctance those sawmills might demonstrate [to waive their right to bring compensation individually].”[11]
As a result, it is far from obvious how the Court of Justice considers the two conditions should be applied in practice. At the very least, it appeared skeptical of the referring court’s interpretation of, and approach to, the facts. Some passages suggest that the Court of Justice may target claims concerning “scattered harm,” that is, situations where individual claimants have suffered too little damage to have an incentive to bring a claim alone. By contrast, where claimants have faced losses that are sufficiently large to bring independent claims, group actions would not be required, even though grouping the actions would still bring advantages to the claimants. Indeed, this was the reasoning of Advocate General Szpunar, who – while noting that these notions are a function of national (German) law and not defined by EU law – opined that group actions by assignment could not be prohibited for the pooling of individual claims of a “small amount.”[12]
Overall, the Court of Justice offers qualified support for collective actions, while making it clear that the principle of effectiveness does not impose a strict obligation on Member States to implement collective redress wholesale within national legal systems. Rather, the Court of Justice found that the necessity of group actions by assignment under EU law should be determined on a case-by-case basis, thereby placing much of the responsibility on national courts. While this is aligned with the Court of Justice’s longstanding case law on the principle of Member States’ procedural autonomy,[13] it could well lead to inconsistent decisions at national level.
While the assignment model already plays an important role in private antitrust enforcement in various Member States, such as Austria, Finland and the Netherlands, collective competition redress is either unavailable, restricted, or effectively inaccessible in many other Member States, such as France and Spain. The ASG 2 judgment may offer a narrow path for bringing group claims in such Member States. While the Court of Justice outlines quite stringent conditions for determining that a national law preventing recourse to collective claims breaches EU law, the risks of group actions against cartel participants can no longer be wholly excluded in Member States with restrictive collective redress regimes. This is particularly the case where the cartel caused diffuse and scattered harm, with the result that bringing an individual claim for compensation would be unrealistic.
[1] ASG 2, Ausgleichsgesellschaft für die Sägeindustrie Nordrhein-Westfalen GmbH v. Land Nordrhein-Westfalen(Case C-253/23) EU:C:2025:40 (“ASG 2 Judgment”).
[2] ASG 2 Judgment, para. 29: “the referring court states that … the group action for collection based on those assignments must be dismissed without an examination on the merits in the absence of legal standing to bring proceedings.”
[3] Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on Certain Rules Governing Actions for Damages Under National Law for Infringements of the Competition Law Provisions of the Member States and of the European Union, OJ 2014 L 349/1.
[4] ASG 2 Judgment, para. 84.
[5] ASG 2 Judgment para. 85. In “stand alone” cases, as opposed to “follow-on” cases, there has been no final determination of a competition infringement by a competition authority. Accordingly, the claimant bears a heavier burden since they must also prove the existence of an infringement.
[6] ASG 2 Judgment, para. 87.
[7] Ibid., paras. 77 and 79.
[8] That is, a full transfer of a third-party claim in exchange for an immediate payment of financial compensation from the assignee to the assignor.
[9] That is, a joint action initiated by several applicants, allowing them, among other things, to conduct joint assessments and obtain expert opinions to determine the extent of their individual losses.
[10] ASG 2 Judgment, paras. 77 and 79.
[11] Ibid., paras. 80 and 81. See also ASG 2 (Case C-253/2), opinion of Advocate General Szpunar, EU:C:2024:767 (“Opinion of Advocate General Szpunar”), para. 120: “the [question] is based on the premise that [prohibiting the group action] renders it practically impossible … to bring an action for damages for a small amount. Although it is debatable whether the main action concerns a small amount, the referring court seems to consider that to be the case.”
[12] Opinion of Advocate General Szpunar, paras. 66 and 136. The Court of Justice may have shared this view, or had a narrower view, depending on the reading of the ambiguous para. 86.
[13] See, among others, Rewe-Zentral AG (Case 33-76) EU:C:1976:188; F. Hoffmann-La Roche (C-261/21) EU:C:2022:534; and Courage and Crehan (C‑453/99) EU:C:2001:465.