Cartels Comparative Guide

Author:Mr Mathias Stöcker
Profession:Shearman & Sterling LLP

1 Legal and enforcement framework

1.1 Which legislative and regulatory provisions apply to cartels in your jurisdiction?

The legal basis for cartel enforcement in Germany is the Act against Restraints of Competition (ARC). Section 1 of ARC corresponds to Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) and broadly prohibits agreements or concerted practices between undertakings that have as their object or effect the prevention, restriction or distortion of competition.

1.2 Do any special regimes apply to cartels in specific sectors?

Section 1 of the ARC does not apply to certain restrictions of competition in the agricultural sector or in the water supply sector, or to resale price maintenance in the magazine and newspaper sector.

Moreover, there is an exemption from Section 1 of the ARC for publishing cooperations between newspaper or magazine publishers, to the extent that such agreements enable the parties to strengthen their economic base for intermedia competition. Since the exemption relates only to Section 1 of the ARC, and not to Article 101(1) TFEU, it does not apply to cooperations which may affect trade between EU member states. As such, the exemption relates primarily to small and medium-sized publishing houses.

The relevant exemption relates to agreements on publishing cooperations between newspaper and magazine publishing houses; it does not apply to editorial cooperations. Moreover, as the Federal Cartel Office (FCO) pointed out in a report on a fine decision against a publishing house in 2018 (DuMont/Bonner Generalanzeiger), it takes the view that any hard-core restrictions such as pure price or territorial cartels remain prohibited. The FCO has stressed that the purpose of the exemption is not to eliminate competition, but rather to enhance plurality of the press by strengthening competition between newspaper and magazine publishing houses and other media, in particular pure online media.

1.3 Which authorities are responsible for enforcing the cartel legislation?

The cartel prohibition is enforced primarily by the FCO in Bonn. The authority has nine independent divisions which are responsible for different industry sectors and product markets. Additionally, the FCO has three divisions which focus exclusively on the enforcement of the cartel prohibition, as well as a special unit for combating cartels, which provides technical assistance to the special cartel divisions.

Infringements with regional effects are dealt with by the state cartel offices. However, most cartel cases are dealt with by the FCO, which is in charge of both investigating potential violations and enforcing the cartel prohibition.

In cases of bid rigging, the state prosecutor can open proceedings against individuals on the basis of the German Criminal Code.

1.4 How active are the enforcement authorities in investigating and taking action against cartels in your jurisdiction? What are the statistics regarding past and ongoing cartel investigations? What key decisions have the enforcement authorities adopted most recently?

The FCO is very active in investigating and taking action against cartels. In 2018, the FCO imposed fines in cartel proceedings totalling approximately €380 million on 22 companies or trade associations and 20 individuals. The sectors concerned included special steel manufacturers, potato producers, newspaper publishers and producers of rolled asphalt. The FCO carried out seven dawn raids at a total of 51 companies.

2 Definitions and scope of application

2.1 How is a 'cartel' defined in the cartel legislation?

Cartels comprise agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition.

2.2 What specific offences are defined in the cartel legislation?

Practices that are prohibited under Section 1 of the Act against Restraints of Competition (ARC) include:

horizontal agreements, such as fixing prices or terms and conditions, allocating markets (territory, customers or quotas), bid rigging or exchanging sensitive market data (eg, prices); and vertical agreements, such as resale price maintenance.

2.3 Is liability under the cartel legislation civil, criminal or both?

German law generally does not provide for criminal sanctions for violations of the ARC, except for Section 298 of the German Criminal Code, which provides for a prison sentence of up to five years for bid rigging in tender proceedings. According to a Federal Court of Justice decision, depending on the circumstances of the individual case, bid rigging could also be regarded as a particular form of fraud (warranting a prison sentence of up to five years).

2.4 Can both individuals and companies be prosecuted under the cartel legislation?

Yes. Directors, officers and certain senior employees can be prosecuted for personal involvement in a cartel infringement. Further, directors and officers can be prosecuted for breaching their duty of supervision with respect to subordinate employees who are personally involved in a cartel infringement.

2.5 Can foreign companies be prosecuted under the cartel legislation?

Yes. Cartel conduct outside of Germany is covered by the cartel prohibition insofar as it has an appreciable effect in Germany. The Federal Cartel Office (FCO) tends to interpret this rule broadly and asserts jurisdiction even in cases with little or only indirect effect on Germany.

2.6 Does the cartel legislation have extraterritorial reach?

Yes. If a restriction of competition has appreciable effects in Germany, the cartel legislation applies, even if a restrictive agreement was concluded outside Germany and the place of business of the undertakings concerned is outside Germany.

2.7 What is the statute of limitations to prosecute cartel offences in your jurisdiction?

In general, serious infringements become time barred five years after termination of the infringement, whereas less serious infringements become time barred three years after termination of the infringement.

However, investigations by the FCO, the European Commission or competition authorities of other EU member states will suspend the limitation period.

That said, infringements become definitively time barred at the end of the double statutory limitation period if by then there is no final fine decision or first-instance court decision, if a fine decision is appealed.

3 Investigations - general

3.1 On what grounds may the enforcement authorities commence an investigation?

The Federal Cartel Office (FCO) may obtain indications of anti-competitive conduct through third-party complaints, a leniency application by one of the companies involved or anonymous whistleblowing. Apart from that, the FCO may also commence an investigation based on information in the public domain, such as press reports suggesting potential anti-competitive conduct.

3.2 What investigatory powers do the enforcement authorities have in conducting their investigation?

The FCO may generally collect any evidence. It may carry out unannounced searches of business premises and residential premises. In this context, it may seize physical and electronic documents. It also has the right to 'image' computer hard drives using forensic IT tools. As a general rule, such investigative measures require a search warrant by a judge. Further, the FCO may interview individuals; however, interviewees may refuse to answer questions to the extent that they might incriminate themselves.

3.3 To what extent may the enforcement authorities cooperate with their counterparts in other jurisdictions...

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