The Act against Restraints of Competition (GWB) regulates all matters of cartel law and prevents the concentration and misuse of excessive market powers. Cartel law therefore ensures that competition is even possible. Central aspects of cartel law are the ban on cartels, the prohibition of misuse of market dominance, the control of mergers and the laws on public procurement. German cartel law is also highly relevant for the common European market, which is why the European Commission acts as the European cartel authority. German cartel law approximates European cartel law, but anti-competitive agreements are judged under European law if they are likely to impair the trade between member countries of the European Union.
Violations of Cartel Law
The ban on cartels is meant to stop concerted actions and agreements aiming to achieve the prevention, restriction or distortion of competition. Cartel law thus protects free competition on the merits by preventing monopolies and prohibiting any agreement such as price-fixing, arrangements on production output, partitioning of sales territories or customer groups as well as calls to boycott certain products.
The critical assessment of one’s own behavior in business with regard to cartel law is generally expected of every company, something that is not always easily done as such an assessment largely depends on the market shares of the companies involved which are rather difficult to determine. A furniture manufacturer of a sofa, for example, might get varying results depending on whether his market shares are determined in the field of sofas, seating furniture or upholstery.
Furthermore, the cartel authorities monitor the market and mergers. The so-called control of mergers is aimed to prevent monopoly market positions through the restriction of competition on the market which often arise when two companies merge into one.
Furthermore, the prohibition of abusive practices within the Act against Restraints of Competition (GWB) aims to prevent market leaders from misusing their market dominance. This prohibition obliges companies with a market share of one third or more to treat competitors with fairness. It also prohibits discrimination; for example, a company may not ask different prices or conditions of its suppliers or buyers without a factual reason.
Violations of cartel law can have severe consequences. A particular danger lies within the fact that violations can not only be reported to the cartel authority, but can also be the object of a cease-and-desist letter from a competitor. Furthermore, contractual agreements may become void, and criminal proceedings can be started. When it comes to proceedings before the cartel authorities, the infringer will be fined, and fines to be paid by the person(s) responsible can amount to up to one million Euros each. Companies can also be fined to pay up to ten percent of their annual turnover.
Our consulting services in the field of cartel law include:
- Legal advice in all questions of sales cartel law
- Legal advice on calls to boycott
- Legal advice on strategies to avoid violations
- Checking for violations committed by competitors, issuing of cease-and-desist letters