In a decision of 26 February 2013, the German Federal Court of Justice has confirmed the constitutionality of Section 81(4), 2nd sentence, of the German Act Against Restraints of Competition (GWB). Pursuant to this provision, fines imposed by the German Federal Cartel Office (FCO) or a court on an undertaking or an association of undertakings "must not exceed 10 per cent of the total turnover of such undertaking or association of undertakings achieved in the business year preceding the decision of the authority". Section 81(4), 2nd sentence, GWB was introduced into the GWB in 2005 and reflects the provision of Article 23(2) of Regulation No. 1/2003 at the EU level.
In 2003, several grey cement producers and one individual were fined by the FCO for their participation between 1990 and 2001 in a cartel on the German cement market. In 2009, the Higher Regional Court of Düsseldorf, on appeal, imposed fines totalling € 278.6 million on these companies. In their final appeal before the Federal Court of Justice, the appellants argued, amongst other things, that Section 81(4), 2nd sentence, GWB was invalid because of a lack of certainty.
The Federal Court of Justice essentially upheld the fines imposed by the Higher Regional Court of Düsseldorf. Most importantly, the Court confirmed that Section 81(4), 2nd sentence, GWB, if interpreted correctly, is sufficiently precise and clear and thus in conformity with the German Constitution. However, according to the Court, the correct interpretation of Section 81(4), 2nd sentence, GWB requires to understand the provision not as a cap for fines, such as under Article 23(2) of Regulation No. 1/2003, but as a strict ceiling for fines, which cannot be exceeded at any point in time in the calculation of any fine.
This interpretation follows a general principle in German criminal law, according to which a judge must fix fines within the strict limits prescribed by the applicable legal provision. The prescribed lower and upper limits for sanctions provide the range in which the calculation criteria, which also must be prescribed by law, have to be applied by the judge. Contrary to a ceiling for fines, a cap for fines does not provide such a reference system, as it does not apply in the course of the calculation of the fines but only prohibits the imposition of fines the final amount of which would exceed a certain threshold.
Finally, it is noteworthy that in compensation for significant delays in the procedure which were found to be contrary to the rule of law – it had taken the FCO and the Chief Public Prosecutor of Düsseldorf nearly two years to prepare a joint counterstatement to the final appeal – all appellants were granted a 5 % reduction of their fines.
In a press release of 10 April 2013, the FCO welcomed the decision of the Federal Court of Justice and announced that it will align its guidelines for the calculation of cartel fines with the ruling. The FCO further announced that, in its opinion, the application of the approach taken by the Federal Court of Justice might result in higher fines being imposed on large, diversified companies in the future.
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