Antitrust law, which is used to protect competition, is becoming increasingly important. The risk of fines in the millions or even billions has increased and can put even market leaders in existentially threatening situations. Knowledge of the 1×1 of antitrust law must not remain a matter for the chief; it should be passed on to all managers and employees in key positions. In this particular case, this facilitates the assessment of any risks (antitrust) that may exist.

The antitrust authorities not only pursue price agreements or market sharing, but also strengthen restrictions of competition between suppliers and customers. The large potential for damage is considerably increased by the possibility of private actions for damages on the part of the injured parties.

This first part of the 1×1 on antitrust rules focuses on the prohibition on cartels and its main points. The starting point is always whether there is a prohibited cartel.

The prohibition of cartels and who it concerns

In Germany and the EU, companies are not allowed to enter into agreements that have the purpose and/or cause restrictions of competition (so-called antitrust ban). Coordinated conduct with the same purpose is also prohibited.

Example
Sales representatives of two public limited companies participating in a tendering process agree that the tender does not undercut a specific offer price. This is a clear agreement that is contrary to antitrust law.

Antitrust law is fundamentally only applied to the economic activities of companies. An economic activity is any offer of goods or services on the market. It is not important to make a profit, so that freelancers as “companies” can also be affected. Antitrust law also applies to associations as associations of undertakings.

Every employee can trigger antitrust liability through his conduct. Employees who commit the infringement of antitrust law do not even have to be authorised to represent their company in legal transactions (see example).

Restrictions of competition within the meaning of the prohibition on cartels are imposed when an undertaking’s supply or demand behaviour (= freedom of competition) is restricted. Typical restrictions of competition include:

Horizontal (= agreed between competitors) infringements:

– Price and conditions agreements
– market sharing (e.B. by sales market, customer or quota)
– Exchange of information/benchmarking
– Purchasing/sales cooperations

Vertical (= agreed between suppliers and customers) violations:

– Price targets
– Best price guarantees, most-favoured-nation or parity clauses
– Obligation to purchase or supply alone
– Exclusive distribution areas/exclusive distribution law
– Selective distribution systems
– (online) trading restrictions

An infringement of antitrust law already exists where a restriction of competition has been objected to. What is irrelevant here is whether the agreements reached have been implemented or not.

Example
Entrepreneur D from Germany and Entrepreneur N from the Netherlands agree that they only supply customers from their respective home countries. Both do not comply with this agreement. There is an infringement of the prohibition on cartels, even if the agreed market sharing did not take place in fact.

Even if a restriction of competition was not objected to, an agreement or concerted practice infringes the prohibition on cartels if it is in fact a restriction of competition.

Relevance

Not every restriction of competition automatically constitutes an infringement of antitrust law, since a restriction of competition implemented or at least by object must also be appreciable. The EU Commission says (de minimis announcement) that agreements between competitors are in principle “not noticeable” if their cumulative market share is not more than 10 percent. In the case of agreements between suppliers and customers, this threshold of appreciability is only reached at more than 15 percent of the market share. If the abovementioned ‘appenciability threshold’ is not reached, there is, in principle, no infringement of antitrust law.

However, this threshold of appreciability is no longer applicable in the case of serious antitrust infringements – these are, above all, intended restrictions of competition, which in any case always indicate their appreciability.

Control instead of cumulation

Exceptions

Nevertheless, even relevant restrictions of competition and specific practices may exceptionally be exempt editis edisly:

Restrictive agreements may be allowed if they increase efficiency (e.B. cost savings or qualitative improvements) and customers receive correspondingly cheaper or higher-quality products.
Furthermore, the prohibition on cartels does not cover agreements and/or concerted behaviour of undertakings and decisions of associations of undertakings which contribute to the improvement of the production of goods or to the promotion of technical or economic progress (= efficiency gains) which allow customers to participate in the efficiency gains to an appropriate extent, provide only for restrictions of competition which are essential for the acquisition of efficiency and which do not eliminate competition for a substantial part of the products concerned.

In order to clarify these exceptions, the European Commission has published appropriate block exemption regulations and related guidelines. Paragraph 2(2) refers to these regulations. 2 Law against Restrictions of Competition (GWB) explicitly. However, the antitrust authorities do not therefore impose ‘licences’: the assessment of the conduct of the company is therefore the responsibility of the companies themselves.

In practice, the so-called horizontal guidelines (dealing with behaviour between competitors) and the vertical guidelines (dealing with agreements between suppliers and customers) are the most important.

Conclusion

Any agreement or practice in the context of economic activities on the market which is liable to impede competition carries the risk potential to a painful antitrust procedure. Antitrust violations can be punished with hefty fines and provoke additional civil claims for damages by the cartel victims. In order to avoid life-threatening fines and claims for damages, the training and awareness-raising of management and employees is essential. Many risks can be avoided in advance thanks to (antitrust) optimized workflows, effective compliance rules and trained personnel.

Questions? Contact us: Tel. +49 (0) 221 430 95 70 | Fax + 49 (0) 221 430 95 71 | info [at] memocine.de

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The following parts of 1×1 deal with fundamental procedural questions concerning antitrust proceedings (before the Federal Cartel Office and before the EU Commission) and address the civil consequences of an antitrust infringement. Finally, there are some preventive measures to prevent antitrust violations – the so-called antitrust “compliance”.