The German Federal Cartel Office (FCO), the Bundeskartellamt, has announced on 19 October 2016 that it has discontinued its fine proceedings against two companies of the "Zur Mühlen" group. Initially, the FCO had imposed fines in the amount of € 128 million against those companies. However, as a result of an internal reorganization of the group the fines have now become obsolete. After an appeal against the imposed fines major assets from the fined companies were transferred to other companies of the "Zur Mühlen" group. Subsequently, the companies that have been fined were liquidated.

Background: "Sausage cartel"

On 15 July 2014 the FCO had imposed fines in the amount of € 338 million for illegal price agreements against 21 meat products manufacturer and 33 persons acting under responsibility. In particular, the FCO had found that there was a fundamental understanding between the participants of the cartel to regularly inform each other about demands for price increases.

Background: Loophole

The fined companies used a loophole in German law. In this regard, the president of the FCO, Mr. Mundt, mentioned: "We would have liked to avoid this outcome. However, the reorganization within the "Zur Mühlen" group lead to the situation that the entitlement concerning the payment of the fine cannot be enforced. The currently existing loophole (so called "sausage loophole") made this outcome possible."

Practical tip of Dr. Dethof:

The still existing loophole in German law will probably soon disappear. The German federal cabinet already adopted the draft for the modified Act against Restrictions of Competition (GWB). As things stand at the moment the modification will come into force in March 2017.

Links

  • FCO press release of 19 October 2016 regarding the "sausage gap" (only available in German)
  • FCO press release of 15 July 2014 regarding the sausage cartel (in English)
  • Government draft "Draft for the modified Act against Restrictions of Competition (GWB)" (only available in German)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.