Ban on cartels
Price-fixing agreements and other anti-competitive agreements between companies are generally prohibited. The Bundeskartellamt prosecutes illegal cartels and can impose substantial fines on the individuals and companies involved.
- What is a cartel?
- Exempted agreements
- Effective cartel prosecution
- Setting of fines
- Compliance: How can companies avoid violating cartel law?
What is a cartel?
If several competitors co-ordinate their market conduct with the object of restricting or eliminating competition, this is called a cartel. Anti-competitive agreements between companies can take different forms. Particularly serious are agreements between competitors on prices or product quantities and on the allocation of sales areas or customer groups (so-called hardcore cartels). However, the ban on cartels is also generally applicable to other agreements between competitors such as e.g. co-operations or market information systems.
The prohibition of cartels also applies to agreements between companies that are active at different market levels. For example, agreements between manufacturers and retailers on retail prices are prohibited. In this context only non-binding price recommendations are admissible (so-called recommended retail prices, RRP).
Cartel agreements generally result in excessive prices coupled with lower product quality. At the same time the elimination of competition reduces the innovative potential of the companies. Cartels thus hurt the economy as a whole and the consumer in particular.
Under certain conditions anti-competitive agreements may be exempted from the ban on cartels. This exemption can apply e.g. if an agreement serves to improve the production of goods or promotes technical progress while allowing consumers a fair share of the resulting benefit. Furthermore, certain forms of cooperation between small and medium-sized companies are admissible.
Effective cartel prosecution
The Bundeskartellamt has always given high priority to the prosecution and punishment of illegal agreements, especially price and quota agreements and customer or territorial allocation agreements (so-called hardcore cartels). In recent years the intensity and effectiveness of cartel prosecution has been further improved:
- 2000 Introduction of the Leniency Programme
- 2002 Creation of the Special Unit for Combating Cartels (SKK)
- 2005 Creation of a Decision Division specialising in cartel prosecution
- 2006: Fundamental review of the Leniency Programme
- 2006 Introduction of Guidelines for the setting of fines
- 2008 and 2011: Creation of two further Decision Divisions specialising in cartel prosecution
- 2012 Introduction of an anonymous whistle blowing system
- 2013: Review of the Guidelines for the setting of fines
Cartel proceedings concluded between 1994 and 2012*
*A fine proceeding against several parties is considered as terminated once a first fine has been imposed.
Setting of fines
If the initial suspicion of a cartel violation is confirmed during the course of the investigations, an administrative order imposing a fine can be issued. The fine imposed on the persons involved can amount to up to one million euros. Companies can be fined up to ten percent of their annual turnover.
The actual amount of the fine depends on the seriousness and duration of the infringement. The proportion of the product turnover achieved from the infringement is also taken into account (for further details see the Bundeskartellamt's Guidelines for the setting of fines.
Cartel proceedings can be terminated by settlement. If a settlement can be reached, the fine will be reduced (further information on settlements).
Although substantial fines are imposed to punish the infringement and achieve deterrence, the companies' economic capacity will be considered. No company will have to face bankruptcy due to cartel fines.
The fines received accrue to the federal budget so that ultimately all consumers benefit from them.
Total fines imposed by the Bundeskartellamt - 2001 to 2014
Selected maximum fines**
|Year||Cartel proceeding||Total fines imposed (Euro)||Highest single fine against a company (Euro)|
|2005||Industrial insurance companies||151,400,000||33,850,000|
|2007||Liquefied Petrolium Gas||248,950,000||67,200,000|
|2008||Clay roof tiles||188,081,000||66,280,000|
|2013||Rail manufacturers - DB||134,500,000||103,000,000|
|2013||Rail manufactures - private market||97,640,000||88,000,000|
**Since litigation is still pending in individual cases, not all the fines are final. In the cement proceedings, the fines were reduced by the Düsseldorf Higher Regional Court to approx. € 400 million.
Cartels that have an effect in the territory of the Federal Republic of Germany can be prosecuted by the Bundeskartellamt. However, some agreements between companies also have cross-border dimensions. In such cases the competition authorities within the European Competition Network (for details on the ECN) must decide whether it would be appropriate for several national competition authorities to co-operate on the matter or whether the case should be referred to the European Commission in Brussels.
More details on the European Commission.
If the agreements only affect the territory of a federal state (Land) or even smaller regions such as individual municipalities, the competition authority of the respective Land is the competent authority to deal with the case.
Compliance: How can companies avoid violating cartel law?
The Bundeskartellamt welcomes and supports measures undertaken by companies to avoid violating cartel law (e.g. staff training, risk analysis, creation of warning and control systems, internal consequences for cartel participants etc.).
Effective compliance measures help companies to avoid competition law infringements. If an infringement has nevertheless occurred, such measures help to effectively uncover and stop this. Compliance measures can thus help to avoid or reduce fines. They can e.g. give companies an advantage in the race for a top position in the leniency queue.
Companies have various options for using such preventive measures which have to be adapted to the respective business sector and size of company. For this reason the Bundeskartellamt cannot make any generally applicable recommendations. The following documents provide guidance on effective competition law compliance:
- OECD Roundtable on promoting compliance with competition law, Note by Germany
- cf. also the European Commission's brochure "Compliance Matters"