Today the federal state of Baden-Württemberg withdrew the commitments it offered in the Bundeskartellamt proceedings initiated against it for its joint marketing of round timber. The commitments were aimed at bringing the state's timber marketing practices into line with competition law.

Andreas Mundt, President of the Bundeskartellamt: "We regret the decision of the federal state of Baden-Württemberg. The commitments which it offered were adequate to remove the problems under competition law of its joint timber marketing practices via Forst BW. Our letter last December in which the state was given an opportunity to comment contained no new demands or surprising legal assessments in this respect. We will now press on with our proceedings."

The main reason given by Baden-Württemberg for withdrawing its commitments is that the Bundeskartellamt's draft decision sent in December 2014 contained legal statements on the differentiation between sovereign and economic activities in forest management which Baden-Württemberg could not accept. Another reason given was that the Bundeskartellamt had practically declared that the agreed opt-out clause in the event of an amendment to the Federal Forest Act was ineffective.

However, the different interpretations of the law on these two aspects do not affect the primary objective of the competition-relevant commitments offered by Baden-Wurttemberg.
With the creation of a state forestry enterprise and the transfer of forest management activities and the sale of timber from the lower forestry authority to the districts, these commitments would have led to the necessary separation of timber marketing for state forests from timber marketing for communal and private forests. This would have enabled the districts to continue marking timber for the communal forest owners if these did not wish to perform these activities themselves.

However, in its commitments Baden-Württemberg was resolute that both forestry planning activities and forest management, including forest ranger services and tree marking in communal forests were sovereign activities. The Bundeskartellamt therefore had to comment on these competition law issues in its draft decision.
Contrary to the state of Baden-Würrtemberg, the Bundeskartellamt is of the opinion that these forest management activities are in essence economic activities. This fact bears no consequence for aspects such as public interest, nature conservation or sustainability, which are already considered in the statutory requirements of the state's Land Forest Act, compliance with which is subject to the same government surveillance and control as applies to private forest management. Ultimately, however, the statements on these aspects in the Bundeskartellamt's decision would not have materially affected the binding nature of the commitments offered because there is no direct link between forest planning activities and the individual activities of forest management and the marketing of timber.

As regards the opt-out clause in the event of an amendment to the Federal Forest Act, it should be noted that this was merely a proviso set by Baden-Württemberg to allow it to react to any possible change in the legal situation brought about by a change to the federal law. At the same time reference was made in the commitments to the restrictions imposed on the proviso by EU competition law. In so far the authority's statements in its draft decision only made the limitations of the proviso transparent for all parties concerned.

Background:
In 2012 the Bundeskartellamt initiated a proceeding against the federal state of Baden-Württemberg and its joint marketing of round timber. This was triggered by complaints from saw mills and the timber industry.
Via its state company Forst BW Baden-Württemberg markets timber not only from its own state forests but also from communal and private forests (approx. 60% of the entire volume of round timber in Baden-Württemberg). Forst BW negotiates the prices for all forest owners, determines the customers and sets the conditions for sales. According to the Bundeskartellamt's current evaluation this type of cooperation between competitors is prohibited under competition law.
Examples from other federal states show that there are also models for marketing timber which conform with competition law.
The Bundeskartellamt had already expressed its concerns to Baden-Württemberg in December 2013. Subsequently Baden-Württemberg had drafted commitments in close cooperation with the Bundeskartellamt to dispel these concerns. Today Baden-Württemberg withdrew the commitments.