German FCO guidelines restraints competition

13 November 2006

Christian Schwedler

The new Guidelines on the setting of fines (Guidelines), published on 15 September 2006, implement the legislative reforms under the German Act against Restraints of Competition for limits on fines, as established by the reform of the German Act against Restraints of Competition (ARC) in 2005 into the administrative practice of the German Federal Cartel Office (FCO).

With the adoption of the Guidelines, the process of harmonisation of the fines for infringements of competition law in Germany to those imposed by the European Commission on the basis of Regulation No. 1/2003 is completed. The initiation of this process dates back to 2005, when the amendment of the ARC raised the limit for fines for infringements of antitrust law in Germany to €1 million. In addition, for certain infringements the FCO can impose fines amounting up to 10% of an undertakings total annual turnover. Under the former ARC, the fines imposed in Germany were significantly lower. The Guidelines set out how the FCO will apply the new provisions in the future. They are closely related to the practice of the European Court of Justice and the European Commission.

The starting point for the calculation of fines is the so-called basic amount. This can be 30% of the turnover achieved with the products or services in relation to the infringement. This provision is identical to the practice of the European Commission as set forth in its Guidelines on the Method of Setting Fines. The exact calculation of the basic amount depends on the degree and duration of the infringement. In a second step, the FCO will consider the specific circumstances of each case and raise or lower the amount accordingly. In addition, the fine may be waived or reduced if the infringing undertaking applies for the leniency programme of the FCO.

Furthermore, the Guidelines contain, inter alia, the following provisions:

  • In addition to horizontal or vertical restraints on competition and unilateral anti-competitive behaviour (abusive practices, unfair hindrance, refusal to supply, etc.), the Guidelines also cover infringements in the area of merger control.

  • In the case of price-fixing and quota cartels, territorial and customer agreements and other severe horizontal restraints on competition, the basic amount is generally set in the upper range of the maximum possible basic amount.

  • For deterrence purposes the basic amount can be raised by up to 100%.

  • In order to determine the maximum limit for fines of 10% of the total annual turnover of an undertaking, the FCO will also take into account the turnover achieved by affiliated undertakings.

The Guidelines aim to provide legal certainty, as they set forth the method for calculating fines in the future. What is more, the Guidelines have the purpose of increasing the pressure on undertakings involved in anti-competitive agreements or practices, which has to be seen in conjunction with the new leniency programme, the establishment of the European Competition Network as well as the facilitation of private enforcement of antitrust law.