On 25 June 2013, the German Federal Cartel Office ("FCO") published new fining guidelines replacing the FCO's previously applicable guidelines. This step was generally expected after the FCO had announced in April 2013 that it would revise its fining guidelines in reaction to a decision by the German Federal Court of Justice ("FCJ") of 26 February 2013, confirming the constitutionality of Section 81(4), 2nd sentence, of the German Act Against Restraints of Competition ("GWB") and clarifying the correct interpretation of this provision (see VBB on Competition Law Volume 2013, No. 4, available at www.vbb.com).
Section 81(4), 2nd sentence of the GWB provides that fines imposed by the 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" and reflects Article 23(2) of Regulation No. 1/2003 at the EU level.
Whilst the FCO's previous guidelines had interpreted the 10% rule in accordance with the European Commission's practice, i.e. as a cap for fines, the new guidelines follow the FCJ's decision in interpreting the 10% rule as a range for penalties, a concept that is also used in German criminal law and German administrative offences law. This means that the FCO will henceforth calculate any individual fine within the range of penalties provided by the GWB, i.e., between € 5 and 10% of the group-wide annual turnover of the undertaking concerned.
As it had been the case under the previous guidelines, the FCO will also under the new guidelines take into consideration both the group-wide annual turnover of the undertaking concerned and the turnover which the undertaking achieved in the cartelised market during the infringement period.
However, under the new guidelines the size of an undertaking will play a more important role in the fine calculation. The exact upper limit for a fine will be determined by the FCO on a case-by-case basis. More precisely, the FCO will calculate an amount within the range of 10% of the respective undertaking's turnover achieved in the cartelised market during the entire infringement period and multiply it by a factor that is dependent on the size of the undertaking (the larger the group-wide annual turnover, the bigger the multiplier). The result of this calculation will, as a general rule, further limit the range of penalties at the upper end if it is below the 10% threshold. In all other cases, no further limitation to the range of penalties applies. It is only within the so established range that the FCO will determine the final fine by considering all aggravating and mitigating circumstances.
The FCO's rules on exemption from fines or reduction of fines in accordance with its leniency programme as well as the rules on reduction of fines for an agreement to settle proceedings remain unchanged.
According to the FCO, the overall level of fines will not change significantly but it can be expected that future fines on smaller mono-product undertakings will be lower than under the previous practice. Future fines on diversified corporations, however, might turn out to be higher, especially in cases where the anti-competitive conduct concerns only one product of the corporation's large portfolio of products and/or services.
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