In Germany, the statutory basis for challenging cartel behaviour is the German Act against Restraints of Competition (Gesetz Gegen Wettbewerbsbeschränkungen (GWB); last modified by the 9th amendment to the GWB, in force since 9 June 2017).
Section 1 of the GWB provides the basic prohibition of cartels. If the relevant conduct may affect trade between Member States, Article 101 of the Treaty on the Functioning of the European Union (TFEU) applies as well.
The powers of the Bundeskartellamt are stated in Section 32 et seq GWB (including requiring that an infringement is brought to an end, ordering interim measures or accepting commitments). Additionally, Section 81 (4) of the GWB allows the Bundeskartellamt to impose fines.
Cartel victims may seek injunctive relief or claim damages (Section 33, 33a GWB) before the civil courts.
Cartel conduct that amounts to bid-rigging can be punished as a criminal offence (Sections 263, 298 German Criminal Code). Under German criminal law, only natural persons are subject to these provisions.
The competition authorities are the Bundeskartellamt (with its seat in Bonn), the Federal Ministry for Economic Affairs and Energy, and the supreme authorities of the federal state that are competent according to the laws of the respective federal state (Section 48 (1) of the GWB). Unless a provision of the GWB assigns competence for a particular matter to a particular competition authority, the Bundeskartellamt shall exercise the functions and powers assigned to the competition authority by the GWB if the effect of relevant behaviour extends beyond the territory of a federal state. In all other cases, the supreme authority of the federal state competent according to the laws of the federal state (the “Landeskartellamt”) shall exercise these functions and powers. Most cartel cases are dealt with by the competent departments of the Bundeskartellamt.
In the case of a criminal offence, the investigation will be conducted by the public prosecutor.
The scope of liabilities includes administrative and criminal sanctions.
The competition authority can order the undertakings to terminate an infringement of the cartel prohibition (Section 32 of the GWB), or it can impose fines for the infringement (see Section 81 (4) of the GWB). The maximum fine is EUR1 million for individuals and up to 10% of the aggregated group turnover for undertakings (ie, the total turnover generated by the undertaking concerned and all of its affiliated undertakings in the business year preceding the decision of the authority).
Criminal penalties for individuals can amount to a maximum imprisonment of five years for agreements that amount to bid-rigging.
In private civil litigation, cartel victims may claim compensation for actual damages. German law does not provide a basis for punitive damages.
Anyone may report alleged cartel behaviour to the competition authorities, which have discretion whether or not to initiate administrative investigations.
In addition, all cartel victims (undertakings and natural persons) can make claims in civil proceedings for injunctive relief (Section 33 of the GWB) and damages (Section 33a of the GWB).
Plaintiffs may act on a stand-alone basis (ie, make a claim that is not based on an infringement decision by a competition authority, which requires the competent courts to assess whether a cartel infringement occurred) or as a follow-on damages claim based on an infringement decision by a competition authority that binds the competent courts regarding the finding of a cartel infringement.
In Germany, the Landgericht (lower regional court) has exclusive jurisdiction over all matters relating to cartel behaviour in civil proceedings (Section 87 of the GWB).
For further details, see 5 Private Civil Litigation Involving Alleged Cartels.
Section 1 of the GWB defines cartel conduct as "agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition." This corresponds to the language of Article 101 (1) of the TFEU. Consequently, Section 1 of the GWB shall be interpreted consistently with the corresponding EU law and the ECJ's decisions.
Section 2 (1) of the GWB, which corresponds to Article 101 (3) of the TFEU, provides for an exemption from the cartel prohibition under certain conditions, in particular efficiency gains that outweigh the restriction of competition. However, a cartel conduct – ie, a restriction by object or a so-called hardcore restriction – is very unlikely to fulfil such conditions.
The cartel prohibition covers a broad range of cartel behaviour, and applies to written agreements and to oral agreements, to tacit agreements and to concerted practices – eg, the exchange of commercially sensitive information between competitors that leads to a concerted practice.
The law differentiates between infringements that have the restriction of competition as their object and infringements that have a restriction of competition as a mere effect.
The following conduct usually amounts to a restriction by object:
Broadly speaking, cartels that amount to a restriction by object can be distinguished from co-operations that might only lead to a restriction by effect and possibly benefit from an exception.
Section 3 of the GWB exempts restrictions of competition between small- and medium-sized enterprises under specific circumstances (see information leaflet on the possibilities to co-operate for small and medium-sized enterprises by the Bundeskartellamt dated 1 March 2007).
Special exemptions from the cartel prohibition apply for agriculture (Section 28 of the GWB), press companies (Section 30 of the GWB) and water management contracts (Section 31 of the GWB).
Public enforcement actions concerning ‘cartel conduct’ are generally subject to an extended limitation period of five years, pursuant to Section 81 (8) of the GWB. The general legal limitation period of three years (Section 31 of Gesetz über Ordnungswidrigkeiten (OWiG), the German Administrative Offences Act) only applies to conclusively enumerated cases (eg, merger control proceedings). The limitation period is triggered with the termination of the infringement (Section 31 (3) of the OWiG). When cartel conduct can be regarded as “terminated” is a controversial issue. In any case, the fact that a former cartel participant stays away from cartel meetings is not enough to start the limitation period alone; the undertaking must rather change its market behaviour and distance itself from the cartel in order to eliminate the external appearance of a tacit continuation of the cartel. The limitation period is suspended when competition authorities take procedural acts against the alleged cartel participant.
Private competition claims may also be statute-barred. The provisions on limitation periods have been changed numerous times in order to strengthen private competition law enforcement. The latest reform extended the standard limitation period for cartel damages claims from three to five years as of 9 June 2017 (Section 33h (1) of the GWB). This regular five-year period starts with the end of the year in which the claim arose and the claimant became, or at least should have become, aware of the relevant circumstances of the claim and the identity of the (allegedly) responsible undertakings. Regardless of the claimant’s knowledge, an absolute limitation period of ten years applies to all damages claims. It has been clarified that, in any event, the limitation period does not start to run before the competition law infringement is terminated (Section 33h (2) and (3) of the GWB).
The limitation period is suspended during ongoing investigations of the Bundeskartellamt, the European Commission or any other competition authorities, or during court proceedings in the event of information claims (Section 33h (6) of the GWB). The suspensions ends no earlier than one year after the respective authority or court has rendered its final and binding decision.
Section 185 (2) of the GWB provides for the “principle of impact” (Auswirkungsgrundsatz), according to which German jurisdiction is limited to restrictions of competition that have an effect within the scope of the GWB. Consequently, the German authorities can only prosecute cartels with an effect in the territory of the Federal Republic of Germany, and may not investigate cartels that operate only in foreign countries and have no effect in Germany.
For jurisdiction in damage claims, at least one of the defendants must be based in Germany (“anchor defendant”) or the infringement must have occurred in Germany. In this case, all defendants can be sued before German courts.
When cartels affect Germany but also have cross-border dimensions, a decision must be taken within the European Competition Network (ECN) as to whether co-operation between several national competition authorities is appropriate or whether the European Commission shall take over (see 1.7 Principles of Comity, below).
If, on the other hand, the cartels concern only the territory of a federal state or even smaller regions, such as individual municipalities, the respective authority of the federal state is responsible (see 1.2 Public Enforcement Agencies and Scope of Liabilities, Penalties and Awards, above).
Article 12(1) of Regulation (EC) No 1/2003 authorises the competition authority to inform, for applying Articles 101 and 102 of the TFEU, the European Commission and the competition authorities of the other Member States of the European Union, (1) of any matter of fact or of law, including confidential information and in particular operating and business secrets, and to transmit to them appropriate documents and data, and (2) to request these competition authorities to transmit such information and to receive and use it as evidence (Section 50a of the GWB). The Bundeskartellamt has the same powers in other cases in which it co-operates with the European Commission or with the competition authorities of other states for the purpose of applying provisions of competition law (Section 50b of the GWB).
The Bundeskartellamt takes an active part in the ECN. This particularly concerns the exchange of information and mutual assistance in cartel investigations.
Furthermore, the Bundeskartellamt regularly co-operates with competition authorities from all over the world, either based on bilateral agreements or within international networks. The nature of co-operation varies from country to country and includes, inter alia, co-ordination of enforcement activities, exchange of information in cases of mutual interest, exchange on competition policy issues and, in some cases, capacity building support.
In practice, the Bundeskartellamt has considerable discretion as to how it co-operates with other competition authorities. It considers the legitimate interests of the parties concerned – eg, an exchange of information received by the Bundeskartellamt from leniency applicants will usually only take place with their consent.
First of all, an infringement of competition law must attract the attention of the competition authorities. The initial information might result from their own research and market intelligence, but in most cases illegal activities are brought to the attention of the authorities under the Leniency Notice by undertakings that are somehow involved in the infringement. The leniency regime leads to a high number of whistle-blowers, whose insider information is very valuable for the Bundeskartellamt in order to build a case. Another important source of information is complaints from third parties, often other market participants, who know the market mechanisms and can also offer relevant insights. Sometimes, the authorities only get an anonymous notice (the Bundeskartellamt provides a whistle-blower tool on its website), or they are alerted by media reports.
If a competition authority is interested in a case, it seeks further information. The authorities can investigate in secret or openly – eg, by sending out an informal request for information. The authorities will use their formal powers of investigation (eg, searches and seizures) in situations where they want to surprise cartel members in order to obtain as much evidence as possible, and will interview witnesses and experts.
At a certain point, the competition authority will decide whether or not to open a formal investigation. The competition authorities have a broad discretionary power. The law does not set a specific standard. Accordingly, the authorities assigning the proceedings a file reference is sufficient for the opening of formal proceedings.
Once the competition authority has fully investigated the case, it issues a statement of objections, which enables the undertakings under investigation to take a position on the accusations. They have a right to access the files and can prepare written and oral comments on the investigation. A hearing can be summoned, if requested by one of the parties.
There is no specific timeframe for the whole investigation. However, if the authorities cause an undue delay, this may result in a decrease in administrative fines.
Dawn raids are common in German cartel investigations. Searches without prior notice are highly effective because of the surprise effect, which prevents the setting-aside of relevant evidence. This is especially relevant if there is no general witness or leniency applicant. Competition authorities need a search warrant issued by a local court in order to be entitled to search business premises, cars or private homes. The competition authorities are allowed to conduct a search by their own authority only in exceptional cases, namely if waiting for a court order would cause a significant delay that might jeopardise the investigation.
During dawn raids, the competition authorities are authorised to seize all relevant evidence that is not handed over voluntarily. In particular, they may seize or copy any relevant documents, hard drives and e-mail accounts. If the authorities insist on seizing original documents, a copy of every document should be made in order to keep track of the information disclosed.
On a more general note, good co-operation with the authorities is advisable. If the dawn raid runs smoothly, the undertaking concerned can keep a certain control over the process (eg, assign a room to the officials, shadow officials, and point them to the information requested rather than having the officials make random searches).
In principle, dawn raids are restricted by the scope of the search warrant issued by the competent court (Bonn local court for the Bundeskartellamt). The investigators may act in their own right only if there is a danger of delay. The GWB does not provide for limitations to the scope of surprise visits, but the respective search warrant of the court defines restrictions for the specific individual situation. The scope of the warrant differs from one search to another, but the courts often use a rather broad wording, so that all information that might be relevant for the case is covered, regardless of the medium on which it is stored.
This means that the authorities can access not only paper documents but also electronic material stored on servers, computers, external hard drives, USB keys, cloud computing services, etc. Electronic information that is located on foreign servers is also covered by most search warrants, as long as it can be accessed from the premises being searched (see 2.11 Obligation to Produce Documents/Evidence Located in Other Jurisdictions).
The company and the employees subject to the investigation are not obliged to co-operate with the Bundeskartellamt; they are only under an obligation to tolerate the search. However, spoliation of information may be punishable as an obstruction of justice, which is a criminal offence according to Section 258 of the German Criminal Code. The GWB does not provide for more specific provisions with regard to cartel proceedings.
In order to safeguard potentially relevant information, the competition authority is entitled to seal rooms and documents in which the cartel officials suspect there is relevant evidence.
Further to the seizure of evidence (see 2.2 Dawn Raids and 2.9 Enforcement Agency's Procedure for Obtaining Evidence/Testimony), the competition authority may question employees and officers as witnesses or accused suspects, and may address information requests to the company. In principle, witnesses must testify, but they can refuse to do so if it would lead to self-incrimination (nemo tenetur) (see 2.13 Other Relevant Privileges).
If the witness is duly summoned and fails to appear or refuses to testify without a reason, the competition authority may impose an administrative fine up to EUR1,000 (Section 57 (2) of the GWB in connection with Section 380 of the German Code of Civil Procedure).
Suspects who are personally accused are entitled to remain silent, and do not have to comment on the accusations. Even if the accused person decides to give a statement, it does not have to be true or complete.
Witnesses and suspects must be informed about their respective status and rights at the beginning of the interview.
Counsel can request access to the file.
The company under investigation and all persons being interviewed (witnesses and accused suspects) by the competition authorities have a right to legal representation. However, the competition authorities do not have to wait for the arrival of the counsel. An in-house counsel may also be present during the interviews, if this does not disturb the investigation. As the in-house counsel represents the company interests, it might be advisable for the person who is questioned to instruct separate counsel (see 2.7 Requirement to Obtain Separate Counsel). In any event, the in-house counsel cannot represent its own employer.
In principle, multiple representation is possible, if no conflicts of interests arise.
A German lawyer may represent the company and a company official at the same time. However, different company officials must be represented by different lawyers, who may belong to the same law firm. A lawyer can represent the company and support employees who are questioned as witnesses. If employees are questioned as suspects, they cannot be represented by the lawyer who represents the company.
Ideally, a dawn raid response team will be routinely instructed before a dawn raid takes place. If a dawn raid takes place, the defence counsel should first take note of the state of play as a basis for further actions. It is advisable to study the search warrant as soon as possible. Furthermore, the counsel should check whether the company intends to co-operate and possibly even make a leniency application (see 2.17 Leniency, Immunity and/or Amnesty Regime).
As laid down in Section 57 (1) of the GWB, the cartel authorities are entitled to conduct all investigations and gather all necessary evidence. This includes questioning witnesses and collecting and seizing documentary evidence (see 2.2 Dawn Raids, 2.3 Restrictions on Dawn Raids and 2.5 Procedure of Dawn Raids), as well as making information requests. The witness is obliged to appear before the competition authority for examination upon its request. The competition authority may also request a written statement.
An informal information request can be addressed to the undertaking under investigation or to individuals involved. This request is not binding, so the addressee is free to ignore it. However, if the informal request is neglected, the competition authority can issue another formal request for information (“Auskunftsverlangen”), which obliges the addressee to provide the required information (subject to nemo tenetur) and to supply more general information on its economic situation. Such a request for information must state specific reasons justifying the request in order to ensure the recipient's rights of defence.
The competition authority can request available market studies and other general business information to assess and analyse the relevant market mechanisms.
The obligation to comply with the request is subject to the condition that the addressee has the information required at its disposal. If the required information concerns affiliated companies, the addressee must be in a position to obtain the information on the basis of existing legal relationships (Section 59 of the GWB).
The competition authority may review and examine the business records of companies during normal business hours (Section 57 (1) of the GWB), and may seize documents according to Section 58 of the GWB. Section 81b of the GWB requires the company under investigation to provide all information necessary to determine the amount of the fine, if the imposition of such a fine seems likely.
Section 57 (1) of the GWB gives the competition authorities various investigatory powers in order to enable them to prove alleged cartel behaviour (see 2.9 Enforcement Agency's Procedure for Obtaining Evidence/Testimony). For example, they can seek an expert’s opinion or adduce evidence by personal inspection. The competition authorities do not need to rely on these powers most of the time, however, because most of the relevant information is provided by leniency applicants.
In general, the competition authorities are empowered to require a company to provide documents if the company has direct access to the documents or can procure them on the basis of legal ties (“be able to procure”: Section 59 (1) of the GWB; see 2.9 Enforcement Agency's Procedure for Obtaining Evidence/Testimony). This also applies to evidence located in other jurisdictions.
Data that is stored in the "cloud"/on servers in another jurisdiction has to be produced, if it can be accessed from a local computer on the company's premises.
The obligation to produce evidence located in other jurisdictions cannot be enforced against the company's will without judicial assistance because otherwise foreign sovereignty rights might be violated. The competition authority can request the expeditious preservation of data stored on servers within the territory of other countries in anticipation of the request for judicial assistance, according to Article 29 of the Cyber Crime Convention. As of March 2019, 63 states have ratified the convention, including almost all EU Member States.
A broad understanding of attorney-client privilege originates from common law and has been developed as defence argument in discovery proceedings. German law does not provide for such discovery proceedings, and there is also no broad concept of “legal privilege”. German attorneys can rely on their “duty of confidentiality”, which entails a right to refuse testimony (Section 53 (3) Code of Criminal Procedure) and an exemption from confiscation (Section 97 (1) Code of Criminal Procedure), but these rules are interpreted narrowly.
In its controversial Jones Day decision of 2018, the Federal Constitutional Court confirmed that the confiscation prohibition provided for in Section 97 (1) Code of Criminal Procedure only applies to so-called “defence correspondence”. This covers all correspondence between an external counsel and its client that is prepared in awareness of and in relation to the actual defence in (quasi-) criminal proceedings. Correspondence in cartel proceedings is therefore exempt from seizure, if it concerns representation in the case at hand after the initiation of formal proceedings. This is confirmed by Section 33g (6) of the GWB. All correspondence dating from before the opening of the formal proceedings is not protected.
“Defence correspondence” of a company with its external counsel is privileged, regardless of whether the correspondence is in the hands of the external lawyer or the company. Consequently, such “defence correspondence” is also privileged when it is in the possession of an in-house counsel. At the same time, this is the only case where the prohibition of seizure extends to in-house counsels. In fact, Section 97 (1) of the Code of Criminal Procedure is not applicable to in-house counsels. Therefore, competition authorities are typically allowed to seize internal communication between an in-house counsel and his or her company. This is in accordance with the judgment of the ECJ ruling in Akzo Nobel Chemicals Ltd.
Both witnesses and accused suspects have the right to deny testifying if doing so might lead to self-incrimination (see 2.5 Procedure of Dawn Raids). In addition, witnesses have the right to remain silent if they are a close relative of the accused – eg, the spouse, parent, child or sibling. Both witnesses and accused suspects must be instructed about their right to silence and their right not to incriminate themselves.
The competition authority may request individuals or undertakings to provide information on the allegations and their economic situation (see 2.9 Enforcement Agency's Procedure for Obtaining Evidence/Testimony). Even if only a formal request for information is binding, individuals as well as undertakings tend to co-operate with the competition authority.
Groundless resistance is useless, because competition authorities can use coercive force as laid down in the Code of Criminal Procedure. The competition authority may also impose a fine if the undertaking under investigation fails to provide the information requested, or if the information provided is incorrect or not complete. Furthermore, the undertaking under investigation must respect the rules against spoliation of information (see 2.4 Spoliation of Information).
Against this background, it is best to maintain an open dialogue with the officials. Reasonable doubts as to compliance with procedural rights and requirements should be discussed. If the officials proceed anyway, the counsel can request that an objection is entered into the record.
The competition authorities protect confidential and proprietary information. Following a decision on fines, the Bundeskartellamt publishes a certain minimum amount of information in its press releases or case reports (Section 53 (5) of the GWB).
However, this publication must not contain business secrets, other than certain information on the case and the fine. Once the statement of objections for a cartel infringement is issued, all undertakings concerned have the right to full access to the file, including certain confidential information, if they show sufficient interest in the information. In this case, the competition authority might also have to disclose information obtained on a voluntarily basis from a leniency applicant.
However, the competition authority is entitled to refuse access to information if the interests of the accused prevail, such as confidentiality aspects. The competition authority has to weigh the interests of the requesting and the accused party in the individual case. In practice, the competition authority is very reluctant to grant access to the file and will normally endeavour at least to protect business secrets. Some passages in the files are often blacked out in this regard.
Section 33g (4) of the GWB denies access to leniency statements and settlement submissions.
Defence counsel may submit statements to the competition authority at any time, based on the right to be heard. Defence counsel may also request access to documents, but the competition authority can deny access to the file as long as the investigation is still ongoing and if full access might jeopardise the objective of the investigation.
If the competition authority seized objects outside the judicial warrant, the defence counsel could file an opposition to the competent court.
The German leniency programme is similar to the one operated by the European Commission.
It applies to all participants in a cartel – individuals as well as companies. Complete immunity from fines is granted to the first applicant contacting the competition authorities in order to uncover the cartel, before the authority has sufficient evidence to obtain a search warrant. Immunity can also be granted at a later stage, namely if the competition authorities could not yet prove the existence of a cartel and are provided with key evidence. The ringleader of the cartel and cartel members who coerced others to participate in the cartel are excluded from immunity.
For all other cartel participants who do not meet the conditions for immunity, the fine may still be reduced by up to 50% if they make a significant contribution to proving the offence. The value of the contribution as well as the sequence of the application influence the amount of the reduction.
Both immunity from and the reduction of fines are subject to the continuous and unlimited co-operation of the leniency applicant with the competition authorities.
The competition authority accepts markers (a declaration of willingness to co-operate) from cartel participants. The timing of these markers is crucial because it is decisive for the status of the application and can assure the applicant a good position in the queue of leniency applicants. The marker must contain basic information on the cartel, in particular the type and duration of the infringement, the product and geographic markets affected, and the identity of those involved. Afterwards, a full leniency application has to be submitted within a period of up to eight weeks.
Over half of all cartel proceedings in Germany are triggered by information from leniency applicants.
The competition authority may request witness statements directly from employees, and may summon the witness to appear before it on a certain date. If the witness does not appear without proper excuse, he or she may have to bear the costs of absence. Furthermore, the competition authorities can impose an administrative fine up to EUR1,000 or order a compulsory appearance for questioning (Section 57 (2) of the GWB in connection with Section 380 of the German Code of Civil Procedure).
The competition authority can also seek information directly from the target company. It can collect information either based on a search warrant during a dawn raid or based on requests for information (see Sections 57 and 59 of the GWB). Please see 2.2 Dawn Raids,2.3 Restriction on Dawn Raids and 2.9 Enforcement Agency’s Procedure for Obtaining Evidence/Testimony above for further details.
The authority can try to seek information directly from companies or individuals located outside of Germany. In essence, the same rules apply as for seeking information inside the jurisdiction of Germany. As the enforcement powers of the authorities are limited to the territory of Germany, they would address their request to their respective counterparts in the foreign jurisdiction (see 1.7 Principles of Comity).
The competition authority may co-operate and share information with other German agencies (see Section 50c of the GWB). Competition authorities and public prosecution officials co-operate on a regular basis, especially regarding dawn raids.
The Bundeskartellamt is a member of the European Competition Network (ECN), through which it regularly works with the national competition authorities of other EU Member States and with the European Commission (see Section 50a of the GWB). Co-operation also takes place with other competition authorities outside of the EU (see Section 50b of the GWB) – eg, the US Federal Trade Commission (FTC) (see 1.7 Principles of Comity).
If the investigation indicates that criminal offences also occurred (eg bid-rigging), the public prosecutors will be informed. Which authority will take the lead depends on the facts of the case. If the criminal allegations are rather vague, the case may stay with the competition authority. When and if the public prosecutors take over the case and have collected sufficient evidence to prove with a certain probability that the behaviour amounts to a criminal offence, the prosecution will formally indict the individuals involved. Depending on the seriousness of the alleged offence and the plausible future sentence, the case will be heard by either a local court (Amtsgericht) or a lower regional court (Landgericht). All evidence will be presented to the court in a formal hearing.
Defendants always have the right to counsel. The defence counsel may ask for access to all evidence contained in the court files prior to the hearing to prepare the defence.
German procedural law for cartel enforcement does not distinguish "civil cases". Rather, one can distinguish between (1) proceedings by the competition authorities that may (a) be limited to a prohibition or (b) result in a fine, and (2) civil private actions before the civil courts. If a party files a complaint with a competition authority, that authority has discretion as to whether or not it enters into formal investigations (Section 54 of the GWB). However, instead of opening a formal proceeding, the competition authority can choose just to inform a company about a complaint and drop the matter if the company addressed changes its behaviour voluntarily. If the competition authority enters into formal proceedings and issues a prohibition or fining decision, that decision can be appealed to the Düsseldorf Higher Regional Court.
The competition authorities have discretion as to how to structure the proceedings. They can investigate several cartels within the same proceeding or split up proceedings. They will have different file numbers for different companies and individuals. The competition authorities also have the discretion to close a case vis-à-vis one party while continuing the investigation vis-à-vis the other parties.
The competition authority has the burden of proof to establish an infringement. In administrative proceedings that do not concern a fine, the undertakings claiming an exemption under Section 2 of the GWB/Article 101 (3) of the TFEU have to demonstrate that the conditions for justifying their behaviour are fulfilled.
In proceedings for fines and in criminal cases, the investigating authority bears the burden of proof of the infringement and that the conditions for an exemption are not met.
The competition authority acts as the finder of fact according to its burden of proof, and applies the law to those facts when issuing a formal decision. During appeal proceedings, the court takes over such role.
In criminal proceedings, the public prosecutors find the facts and apply the relevant law when deciding whether or not to indict an individual. At a later stage, the competent courts take over both roles.
In principle, evidence obtained in one proceeding may be used in any other proceeding (see 5.4 Admissibility of Evidence Obtained from Governmental Investigations/Proceedings below for private civil litigation).
Evidence acquired during a dawn raid may be used in other proceedings, provided that the competition authority did not abusively exceed its investigatory power by searching specifically for evidence outside the scope of the search warrant.
The evidence submitted by an applicant for leniency may be used in other proceedings as well.
There are no specific presumptions in cartel proceedings, apart from the general burden of proof explained above (for private civil claims, see 5.1 Private Right of Action below).
The competition authority may commission experts during an investigation. This does not usually occur in fine proceedings that concern restrictions by object. In addition to economists to be questioned on the consequences for competition in the affected markets, sometimes experts with industry knowledge are also involved. However, experts are more commonly engaged in follow-on private damages claims to determine the damages incurred by the claimants.
Please see 2.13 Other Relevant Privileges, above.
The competition authority and the public prosecutors may investigate cases in parallel proceedings.
The Bundeskartellamt and other National Competition Authorities may investigate the same case at the same time as well. If the Bundeskartellamt is already acting on a case, the European Commission shall only initiate proceedings after consulting with the Bundeskartellamt (Article 11 Regulation (EC) No 1/2003).
Based on Section 81 of the GWB, the competition authority has authority to impose administrative fines on whoever infringes the cartel provisions of the TFEU or the GWB. Such administrative offence may be punished by a fine of up to EUR1 million. A higher fine may be imposed on an undertaking or an association of undertakings, but must not exceed 10% of the total group turnover of such undertaking or association of undertakings achieved in the business year preceding the decision of the authority.
The Bundeskartellamt has published Guidelines for the setting of fines in cartel administrative offence proceedings (Sections 81-86 of the GWB). These Guidelines lay down how the Bundeskartellamt is to fine infringements of competition law and which criteria are to be used for the imposition of fines. In setting the fine, the economic situation of the undertaking or the association of undertakings is taken into account. Therefore, the Bundeskartellamt can take fines imposed by other competition authorities into consideration.
Further to imposing fines, the Bundeskartellamt may order the disgorgement of profits and require the undertaking to pay a corresponding sum (Section 34 of the GWB). So far, the possibility to order the disgorgement of profits is of no practical relevance.
The Bundeskartellamt is prepared for settlements. The law does not specify any formal requirements. The procedure is set out in the Information Leaflet entitled “Settlement procedure used by the Bundeskartellamt in fine proceedings”. There are no fixed rules on the timeframe. Both sides can propose settlement discussions any time before the termination of the proceedings.
In principle, a settlement agreement requires a settlement declaration by the person or company that is charged. The settlement declaration must contain a statement of confession that describes all circumstances that are relevant for setting the fine.
Furthermore, the person or company that is charged must accept the fine up to the amount announced by the Bundeskartellamt. However, the settlement declaration contains no waiver of the right to appeal. A settlement declaration is considered a mitigating circumstance that results in a reduction of the fine by a maximum of 10%.
Section 33b of the GWB stipulates that decisions by competition authorities can be binding for German courts in follow-on proceedings – ie, a court shall be bound by a finding that an infringement has occurred, as made in a final decision by the competition authority, the European Commission, or the competition authority – or court acting as such – in another Member State of the European Union, in particular where damages are claimed for an infringement of the cartel prohibition in the GWB or the TFEU. The same applies to such findings in final court judgments on appeals against such decisions.
The binding effect of decisions for fines can be mitigated by a settlement because decisions for fines after a settlement contain fewer facts than decisions for fines without a settlement.
Competition law infringements may lead to the initiation of hearing proceedings for the debarment from tender proceedings. The contracting authority may inquire from the bidders concerned whether and to what extent self-cleaning measures have restored their reliability under public procurement law. Whether or not a settlement can be part of a self-cleaning process will depend on the circumstances of the individual case.
In principle, competition law violations do not lead to criminal liability. However, cartels that amount to bid-rigging are a criminal offence under Section 298 of the German Criminal Code. Any offender shall be liable to imprisonment not exceeding five years, or a fine. In principle, only natural persons can be charged in criminal proceedings, not companies. However, companies are liable for fines if the company representative infringed criminal law (Section 30 of the OWiG). The fine is intended to exceed the economic advantage the offender derives from the administrative offence. If the legal maximum is insufficient for this purpose, it may be exceeded (Section 17 of the OWiG). Sanctions and penalties are applied by the competent judges upon the request of the public prosecutor.
In administrative proceedings, the competition authority may order the cartel behaviour to be brought to an end (Section 32 of the GWB), take interim measures (Section 32a of the GWB) or accept commitments (Section 32b of the GWB).
The Bundeskartellamt has been reluctant to take a compliance programme into account as a mitigating factor for setting the fine. However, the Federal Supreme Court ruled on 9 May 2017 that, if a fine is imposed, the installation of an effective compliance system designed to prevent violations of the law can lead to a reduction in the fine.
German law does not provide for government proceedings for mandatory consumer redress.
A decision for fines becomes final and enforceable if no appeal is lodged. The appeal can be lodged with the competition authority within two weeks of notification of the fine. Following an appeal, a more disadvantageous decision may also be taken for the person concerned.
In the event of an appeal, the Düsseldorf Higher Regional Court decides on the accusation in a trial. It may also decide by decision without hearing if the person concerned and the Public Prosecutor's Office do not object to this procedure.
Appeals have become less frequent after the Düsseldorf Higher Regional Court applied harsher fining standards than the Bundeskartellamt. As set out in the Guidelines for the setting of fines in cartel administrative offence proceedings, the Bundeskartellamt has a strong focus on the gain and harm potential that can be drawn from the domestic turnover achieved from the infringement. The Düsseldorf Higher Regional Court puts higher emphasis on the possible upper limit of the fine – ie, 10% of the group turnover in the previous business year. This often leads to higher fines, in particular where the cartel conduct was limited to a certain part of the business and did not affect all group turnover.
Both private companies and individuals have a private right of action. Pursuant to Section 33a of the GWB, “Whoever intentionally or negligently commits an infringement [of German or European Competition Law] … shall be liable for any damages arising from the infringement.” A claimant can also request injunctive relief and rectification (Section 33 of the GWB). Thus, any private company or individual that has been directly or indirectly negatively affected by a competition law infringement can bring a claim for damages or injunctive relief.
Pursuant to Section 87 of the GWB, lower regional courts (Landgerichte) have exclusive jurisdiction over private competition claims, regardless of the quantity of damages claimed. Most of the German federal states have established special chambers within their regional courts that have competence over competition law.
Geographic jurisdiction is determined by either the registered seat of the defendant or a location where the cartel was conducted or damages occurred.
Private competition law actions can either be brought as “follow-on” cases (ie, following a decision by a competition authority), or on a “standalone” basis (ie, without any such authority decision). In practice, the vast majority of cases are brought as follow-on litigation, because the burden of proof is significantly reduced for the claimant. Pursuant to Section 33b GWB, the finding of a cartel infringement by a court or a competition authority is a final and binding decision for the civil courts. In contrast thereto, in a standalone situation a claimant would have to prove all facts that constitute an infringement of the competition rule, and a defendant is free to prove the facts that give rise to justification pursuant to Article 101 (3) of the TFEU or Section 2 of the GWB.
In addition to the legally binding effect of the operative part of a decision, courts tend to place great importance on any finding by a competition authority contained in a reasoning of a decision, and such decisions are taken as prima facie evidence.
In German civil procedures, it is up to the parties to provide the evidence for all facts that they rely on in their written submission. The claimant may use any evidence available to him or her, including written documents, witness statements, expert opinions and, in certain circumstances, witness statements from the parties themselves. The standard of proof is considerably reduced in regard to the loss suffered. According to Section 287 of the ZPO (the German Code of Civil Procedure), the court can estimate whether and in which amount the claimant has suffered any loss. The claimant can seek compensatory damages for the loss arising from the infringing behaviour. The financial and commercial situation of the claim at the time of the judgment has to be compared with the hypothetical situation were it not for the defendant’s competition law infringement. Interest is also recoverable and may amount to significant value in cartel damages proceedings. Cartelists have to pay default interest as of the day the damage occurred – ie, in the amount of 5% points above the base interest rate of the European Central Bank.
German law provides for the joint and several liability of all cartel members so that the claimant can sue all members of the cartel for its whole suffered loss.
By far the most commonly sought form of relief is compensatory damages.
German competition law does not provide for collective or US-like class actions. However, in practice, claimants are using an assignment-based model whereby the cartel victims assign their individual claim to a claimant vehicle. Such claim vehicles will require a permit under the legal services act, as well as sufficient funding in order to have legal standing for bundling and enforcing the claims.
Pursuant to Section 34a of the GWB, consumer bodies can disgorge cartel profits and apply for injunctions in settings where a multitude of customers is affected. However, in practice, consumer bodies have not played any relevant role, because such actions are not incentivised as any disgorged profits have to be handed over to the federal government.
Both direct and indirect purchasers can bring claims for damages suffered from cartels. The passing-on defence is applicable pursuant to Section 33c of the GWB. A defendant has the burden of proof that the cartel-related overcharge has been passed on from the direct purchaser to its customer. However, the claimant can still request lost profits from volume effect – Section 33c (1) of the GWB.
Section 33c (2) of the GWB provides for a statutory presumption that competition law infringement led to higher prices for the benefit of indirect purchasers. Again, the burden of proof lies with the defendant to rebut the presumption that passing-on to the indirect customer occurred.
Any evidence from governmental investigations or proceedings is generally admissible in civil courts. Final fining decisions of competition authorities from any EU Member State are binding for civil courts pursuant to Section 34b of the GWB. Such decisions can be introduced as documentary evidence in the proceeding. However, it will be difficult for a claimant to obtain any additional information from the competition authorities' file. Section 89c of the GWB provides for a right to request information from the Bundeskartellamt or other relevant competition authorities. However, such a request from competition authorities is subordinated to discovery between the parties or third parties provided for in Section 33g of the GWB. Also, it is explicitly provided that leniency statements and information in connection with settlement discussions cannot be requested by the claimant. In practice, the binding effect of the competition authorities’ decision is of the greatest importance for fact-finding.
The majority of damages claims are settled prior to judgment, often without any court proceedings.
The length of proceedings in these matters in the first instance is often two or more years, if the case is comprehensive and complex and many parties are involved. Parties have a strong tendency to settle such cases before the issuance of a judgment, in which case the proceedings can be significantly shorter.
Costs are regulated by a fixed-cost recovery scheme, which is based on the value of the claim derived from the amount of claimed damages. The cost recovery is based on the principle that the loser pays. In the event that the claimant wins the case only partly, the costs are shared according to the success quota. Contingency fees are allowed only exceptionally, provided that potential claimants would otherwise be prevented from enforcing their rights due to their economic situation. In competition damages they have not played a role yet because the disputes are carried out among rather affluent companies.
Even though, in practice, clients generally consent to a different remuneration ratio scheme with their attorneys, the statutory rates will set the upper limit for the amount recoverable by the winning party.
Pursuant to the loser-pays rule, an unsuccessful claimant has to pay the defence costs, as provided for by the fixed-cost recovery scheme and determined by the value of the claim. The cost scheme provides for a value-related cap for any claims in excess of EUR30 million. Therefore, for claims of that amount, an unsuccessful claimant would have to pay roughly EUR275,000 in attorney fees to each defendant, and roughly EUR280,000 in court fees for the first instance. The fees for the second instance are slightly higher (roughly 15%).
German law provides for an automatic right of appeal for any claim above EUR600. The appeal is on the full merits and on points of law. A court of appeal is entitled to reappraise the facts stated by the parties, and to take evidence. However, other than in exceptional cases, neither party is entitled to introduce new facts that were not brought forward in the first instance.
The appeal decision by the court for appeal may only be further appealed to the federal appellate court either if any such further appeal has been explicitly allowed by the court of appeals in its appeal judgment or if the Federal Appeals Court has explicitly allowed a further appeal after an application by one party. As a rule of thumb, such a further appeal would take at least two years.
The Düsseldorf Higher Regional Court uses different standards to calculate fines from the Bundeskartellamt. This may lead to a significant increase of the fine following an appeal against the fining decision of the Bundeskartellamt (see 4.8 Available Forms of Judicial Review or Appeal). Against this background, judicial review of fining decisions of the Bundeskartellamt can be risky for the undertakings concerned.
The Bundeskartellamt has published the following guides relating to cartel conduct and enforcement that can be found on www.bundeskartellamt.de: