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Federal Court of Justice confirms key points of Bundeskartellamt's landmark decision concerning unfair trading practices

Date of issue: 29.01.2018

In its decision of 23 January 2018 the Federal Court of Justice confirmed the Bundeskartellamt's decision in its abuse proceedings against the retailer EDEKA ("wedding rebates") and clarified general issues concerning the prohibition to demand unjustified benefits from suppliers. The proceedings concern EDEKA's demands for an "alignment of conditions", an "adjustment of payment terms" and a "partnership reimbursement". The Federal Court of Justice, like the Bundeskartellamt, declared the practice of powerful retailers to shift an excessive amount of their entrepreneurial risk to manufacturers illegal.

Andreas Mundt, President of the Bundeskartellamt: "The Federal Court of Justice's decision has shown that the prohibition of the abuse of bargaining power under competition law is effective. The legislator has tightened this prohibition several times. Now the Federal Court of Justice has removed further obstacles. This sends out an important signal to the sector. Hard bargaining is admissible but the abuse of market power is prohibited."

After its takeover of the "Plus" stores in 2008, EDEKA had unilaterally demanded certain conditions from its suppliers. The Bundeskartellamt had selected Edeka's demands on sparkling wine manufacturers as an example and prohibited them in its 2014 decision of principle (see press release of 3 July 2014). In 2015, on EDEKA's appeal, the Düsseldorf Higher Regional Court (OLG) completely reversed the authority's decision because it saw no indications that EDEKA had abused its market power or had made inadmissible demands on its suppliers (see press release of OLG Düsseldorf of 18 November 2015). The Bundeskartellamt appealed this decision in three key points. The Federal Court of Justice has now taken the authority's side on these points.
In its demands for an alignment of conditions EDEKA had compared its own purchase conditions with those of "Plus" and demanded an adjustment to individual, more beneficial conditions which had been granted to Plus. However, it based its comparison not merely on the conditions in place at the time of the takeover of Plus, but also on beneficial conditions which had only temporarily existed well before the merger was implemented. The Federal Court of Justice held that this conduct represented an abuse of bargaining power.

The court also found that EDEKA's demand for its own payment terms to be adjusted per se to those of "Plus" violated competition law.
It also regarded the company's demands on the sparkling wine manufacturers to share the costs for the refurbishment of outlets by way of a "partnership reimbursement" as an abuse of bargaining power. The Bundeskartellamt had objected to EDEKA's intention to have its suppliers share in the acquisition costs which should be borne solely by the company.

Press release (pdf)

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