Federal Cartel Office prohibits chemicals traders joint venture previously cleared in merger control

06 February 2013

Dr. Jörg Witting, Fabian von Busse

On 21 November 2012, the Federal Cartel Office (FCO) prohibited the further operation of a joint venture between two chemicals traders, saying it had anti-competitive effects. The FCO decision was not based on merger control provisions, but on the EU and German cartel prohibition.

The parents and the respective joint venture trade chemical products in Germany. The joint venture existed for 16 years and its establishment was cleared by the FCO. The FCO found that all three companies were active in the same regional markets and had joint market shares of up to 70%. The FCO opened the investigation in 2008, after it had uncovered a cartel operated by 12 chemical traders, including the present parent companies and the joint venture.

The FCO has now held that the joint activity within the joint venture led to a significant information exchange between the parents. Moreover, the parties’ coordination was advantageous and commercially useful. The FCO therefore determined that there was a restriction of competition and ordered the parties to stop the implementation of the joint venture partnership agreement.

Referring to case law of the German Federal Supreme Court, the FCO held that irrespective of the characterisation of the joint venture as fully functioning, the general cartel prohibition under EU and German competition law was applicable to a joint venture if its parent companies remain competitors on the same product and geographic markets as the joint venture.

The decision shows that parent companies should carefully assess whether their cooperation within a joint venture possibly leads to anticompetitive effects as the FCO is prepared to order the discontinuation of anti-competitive joint ventures even after many years of existence.

The FCO decision is not final as the parties have appealed the decision to the Dusseldorf Higher Regional Court.

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