Comparative Guides

Welcome to Mondaq Comparative Guides - your comparative global Q&A guide.

Our Comparative Guides provide an overview of some of the key points of law and practice and allow you to compare regulatory environments and laws across multiple jurisdictions.

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4. Results: Answers
Cartels
6.
Penalties and sanctions
6.1
What penalties may be imposed in criminal proceedings on companies? What penalties may be imposed on individuals?
Germany

Answer ... There is no criminal liability of companies under German law.

German law generally does not provide for criminal sanctions for cartel conduct against individuals, except for Section 298 of the German Criminal Code, which provides for a prison sentence of up to five years for bid rigging in tender proceedings. According to a Federal Court of Justice decision, depending on the circumstances of the individual case, bid rigging could also be regarded as a particular form of fraud (warranting a prison sentence of up to five years). If the Federal Cartel Office (FCO) discovers cases involving bid rigging, it must refer the proceedings against individuals to the state prosecutor. The corresponding proceedings against companies stay with the FCO.

There are no additional sanctions for individuals (eg, director disqualification).

For more information about this answer please contact: Mathias Stöcker from Shearman & Sterling LLP
6.2
What penalties may be imposed in civil proceedings on companies? What penalties may be imposed on individuals?
Germany
Fines can be imposed on companies up to a maximum of 10% of worldwide turnover in the last full business year. Unlike at the EU level, this 10% threshold is interpreted by the Federal Court of Justice and consequently also by the FCO as the upper limit of any fine, not as a cap on an otherwise unlimited fine. The FCO can also take into account the proceeds gained from the infringement when determining the level of the fine.

The level of fines for individuals amounts to up to €1 million for participation in serious infringements (ie, hard-core cartel activity such as price fixing, bid rigging, allocation of quotas, customers or territories) and up to €100,000 for less serious infringements.

For more information about this answer please contact: Mathias Stöcker from Shearman & Sterling LLP
6.3
How are penalties in cartel cases determined? In deciding on the applicable penalties, will the enforcement authorities consider penalties imposed in other jurisdictions?
Germany

Answer ... As mentioned, the upper limit of the framework of fines for serious intentional cartel administrative offences amounts to 10% of the total turnover achieved in the business year preceding the authority’s decision. For negligent offences, the maximum fine amounts to 5% of the total turnover achieved.

Within this statutory framework, the FCO determines the amount of a fine based on the affected turnover, taking into account aggravating and mitigating factors. The methodology applied by the FCO is set out in its Fining Guidelines, which are available on its website (www.bundeskartellamt.de).

Importantly, the Dusseldorf Higher Regional Court, which is the court of appeal for fine decisions of the FCO, is not bound by and does not apply the methodology for the calculation of fines according to the FCO Fining Guidelines. As a result, the court will determine the amount of the fine in cartel cases on appeal within its sole discretion, irrespective of the affected turnover, taking into account the 10% threshold as the upper limit of the fine framework.

The practical consequence is that undertakings which appeal a fine decision of the FCO run a considerable risk that the fine imposed by the FCO will eventually be (significantly) increased on appeal, even if the appeal is partially successful with respect to some infringements determined by the FCO in its fine decision.

The FCO may, within its discretion, consider penalties imposed in other jurisdictions, but is not obliged to do so. It will not normally consider such penalties if they specifically relate to the effects of a cartel within the territory of such jurisdictions.

For more information about this answer please contact: Mathias Stöcker from Shearman & Sterling LLP
6.4
Can a defendant company pay the legal costs incurred by and/or penalties imposed on its employees?
Germany

Answer ... In the past, companies have frequently covered the legal costs and fines imposed on company employees or directors (including former employees and directors). However, this has been viewed more critically in recent years and, in addition to potential tax implications, it may well be possible that courts will prohibit such conduct in the future.

For more information about this answer please contact: Mathias Stöcker from Shearman & Sterling LLP
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Cartels