In a judgment of 26 February 2013, the German Regional Court of
Cologne rejected an action for damages in the amount of more than
€ 1.1 billion by Danish hearing-aid manufacturer GN Store Nord
A/S against the German Federal Cartel Office (FCO). GN Store sought
compensation from the FCO for the latter's 2006 prohibition of
the merger of GN Store's hearing-aid business with Phonak
In 2006, GN Store decided to sell its worldwide hearing-aid
business to Phonak. In April 2007, the FCO prohibited the proposed
transaction as it considered that the concentration would create or
strengthen a dominant position (based on a presumption of
collective dominance provided for by the German Competition Act).
On appeal, The Higher Regional Court of Düsseldorf upheld the
FCO's decision. However, in April 2010, the German Federal
Court of Justice reversed at last instance that the FCO's
decision had been unlawful (see VBB on Competition Law, Volume
2010, No. 5), finding substantial competition between Phonak and
its two biggest competitors, thus rebutting the presumption of
collective dominance relied upon by the FCO in its prohibition
GN Store subsequently lodged a damages claim against the FCO
before the Regional Court of Cologne, arguing that the FCO
officials had breached their duties and that this conduct should be
presumed to have the required intent or negligence to give rise to
liability for damages.
The Court of Cologne confirmed that the FCO officials breached
their official duties because the prohibition decision had been
unlawful. However, the Court decided that GN Store had not
demonstrated the required intent or negligence on the part of the
FCO officials as there was no indication that they had arrived at
their conclusions without careful examination of the legal and
factual bases. The Court ruled that if an official takes a view
after careful examination, and his view is legally defensible, he
cannot be considered at fault if this view is later disapproved by
the courts. In this regard, the Court recalled that at the time of
the FCO's decision, the interpretation of the German provisions
on collective dominance had not yet been clarified by the German
Federal Court of Justice.
In addition, the Court considered that the FCO officials could
not be considered at fault given that the Higher Regional Court of
Düsseldorf had upheld their decision in 2008. According to the
Cologne Court, FCO officials cannot in principle be expected to
have better knowledge of the law than a specialised panel of
This judgment by the Regional Court of Cologne is the first case
in Germany in which the FCO has been confronted with an action for
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