Volkswagen, Porsche and the Hedge Funds: It’s Hannover After All

Here’s the latest leg in the tour of Germany on which the Porsche claimants have embarked: The Braunschweig District Court (Landgericht) dealt with the claimants’ application to move the matter to Hannover today, and granted the motion. You may recall that for some claimants, this will be the third court dealing with the matter, and it looks like a safe bet that it will not be the last.

The actions brought by seven funds against Porsche Automobil Holding S.E. (docket no. 5 O 552/12) was moved to the special chamber dealing with cartel matters (Kartellkammer) at the Hannover District Court. The claims in total are for EUR 1,962,249,057.39. The court held that the claimants did rely on actions that are grounded in cartel and competition law, in particular the abuse of a dominant position (Missbrauch einer marktbeherrschenden Stellung). Further, the case may require a ruling on the issue whether securities law provisions are capable of excluding cartel claims.

Pursuant to Sec. 87, 95 of the Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB), these matters fall within the  jurisdiction of the district courts. Within the state of Lower Saxony (Niedersachsen) the Hannover cartel chamber has exclusive jurisdiction (Sec. 89 GWB, 7 Nds. ZustVO-Justiz). The Braunschweig court’s order is final and can not be appealed.

As Porsche had been opposing this motion, it looks like an interim victory for the hedge fund claimants. Assuming that time is on their side, then they have increased the nuisance value of their actions, which have been pending for almost 18 months now, without any substantive progress of the matter. I am not enough of a cartel guy to have a view on the merits, but apparently, the claimants argue that by building positions in Volkswagen stock, Porsche and some of the banks that helped Porsche formed a cartel and created a dominant market position in Volkswagen stock. Sounds like creative lawyering to me, and at least the Braunschweig court was sufficiently impressed.




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