Bundeskartellamt imposes fine against spice producer Fuchs

The Bundeskartellamt has imposed a fine of 250,000 € against TEUTO Gewürzvertrieb GmbH (TEUTO), Dissen, for violating a prohibition decision of the Bundeskartellamt dating back to July 2002. TEUTO belongs to the Fuchs group.

In 2002 the Bundeskartellamt prohibited the Fuchs group from unfairly impeding the business activities of Hartkorn, one of the few remaining medium-sized spice producers. The impediment amounted to systematically forcing competitors out of the market by paying retailers high contributions to advertising costs, which induced them to agree to stock exclusively Fuchs products.

Fuchs is the second largest spice producer in the world after US-American McCormick and is the clear market leader in Germany and Europe. The company sells dried spices and herbs in household packages under the brand names Fuchs, Ostmann, Ubena and Wagner to food retailers in Germany via the distribution company TEUTO. With a market share of more than 70 per cent Fuchs has a dominant position on the German markets.

According to the Bundeskartellamt’s investigations at least five violations of the prohibition decision were committed by TEUTO sales representatives after the decision had been issued in July 2002. TEUTO’s sales representatives had no longer enforced exclusivity upon the retailers they supplied on a written basis but had either agreed this verbally or de facto enforced it by the manner in which the provisions of the supply agreements were formulated. As an incentive for granting exclusivity to the detriment of Hartkorn, the retailers received unrivalled contributions to advertising costs in the form of payments and/or services in kind (of economic value) such as in particular the free supply of basic fittings, i.e. shop shelves filled with spices. These violations were made possible by the negligent breach of duty of supervision of the managing director at TEUTO who was responsible at that time for marketing. The Bundeskartellamt has now punished this breach of duty of supervision in the fine proceedings which have now been concluded. TEUTO can appeal against the decision.

Bundeskartellamt President Dr Böge stated: “It is not acceptable under competition law for powerful companies to try to squeeze their smaller competitors out of the market by improper means. Continuing to do this even after a prohibition decision by this authority is a grave violation, which is punishable with a correspondingly high fine. The Bundeskartellamt would like to make it quite clear that it will exercise its powers to the full to permanently end competition law violations.”