The Stuttgart Higher Regional Court has ruled that the State of Baden-Württemberg breached German antitrust regulations through timber contracting practices spanning almost thirty years. This decision could result in damages amounting to 500 million euros.
The lawsuit, filed by Ausgleichsgesellschaft für die Sägeindustrie GmbH (Compensation company for the sawmill industry) on behalf of 36 local sawmills, alleges that Baden-Württemberg engaged in cartel-like behaviour that artificially inflated timber prices. The sawmills claim they are owed 270 million euros in damages, excluding interest, due to these practices.
The court concluded that the state unlawfully facilitated the joint marketing and bundled sales of roundwood through agreements with municipalities that owned forests exceeding 100 hectares. Smaller forest owners were not implicated in the ruling, as their dependency on state support for marketing timber was deemed necessary and outside the scope of the cartel breach.
According to the court, these agreements distorted competition, forcing sawmills to pay prices that did not reflect a competitive market environment. “The defendant state culpably violated the ban on cartels … through the agreements on the joint marketing and bundled sale of roundwood,” stated the court, emphasizing that larger municipalities could have managed timber sales independently without state intervention.
Rüdiger Lahme, partner at Quinn Emanuel Urquhart & Sullivan LLP, highlighted the significance of the ruling: “This decision underscores that no state entity is exempt from compliance with antitrust laws when engaging in economic activities,” said Lahme. “It is a clear message that even governmental bodies must respect the principles of fair competition.”
Documents revealed that the state marketed timber in uniform packages, combining wood from its forests, private landowners, and municipalities. The practice allegedly obscured the origin of the timber and prevented competitive price setting. The court determined that agreements involving larger landowners impaired competition, violating antitrust principles.
The recent ruling overruled earlier judgments, including a January 2021 decision by the Regional Court of Stuttgart. A class action lawsuit seeking 450 million euros in cartel damages was dismissed then. The court had deemed the collective assignment of claims inadmissible under the Legal Services Act, rendering the plaintiff unable to pursue the lawsuit on behalf of the sawmills. The current decision rectifies that outcome, affirming the validity of the claims brought forward by Ausgleichsgesellschaft für die Sägeindustrie GmbH.
The decision of the Higher Regional Court confirms the state’s responsibility, while a lower court is delegated to precisely assess the damages to be paid.
Given the significant legal and financial implications, the case is expected to move to the German Federal Court of Justice. The Stuttgart Higher Regional Court has permitted an appeal, highlighting the dispute’s broader importance in defining the scope of antitrust accountability for state entities.
