17. Aug 17

Cartel Office imposes fine on battery manufacturers for illegal arrangements

The Bundeskartellamt, Germany’s Federal Cartel Office, has imposed fines totalling around 28 million euros against two manufacturers of industrial batteries for entering into illegal arrangements.

While neither company had made general arrangements regarding the price of their batteries, they did agree to introduce what is known as the “Metallteuerungszuschlag” (MTZ) [metal surcharge to cover rising costs] as an industry standard. The MTZ is a significant portion of the price.

The Bundeskartellamt began its investigations in 2014 and concluded them with the imposition of the fines. A third company avoided any fines by participating in the leniency programme as the principal witness.

As noted by the Bundeskartellamt in its press statement, the metal surcharge is in principle a permissible means of accounting for changes to the price of raw materials in the selling price without having to begin new negotiations. The Cartel Office noted that while suppliers and purchasers are absolutely allowed to agree to this type of automatic mechanism, it is not permissible for suppliers to make arrangements amongst themselves to introduce an industry-wide surcharge of this kind. The competition watchdog concluded that this impaired competition and excluded other price models.

In the instant case, the manufacturers had already arranged as early as the beginning of 2004 to reapply the metal surcharge domestically to stationary batteries due to rising lead prices and thus directly pass on the changes in price to the customer. The domestic scope of this arrangement was then reported to have been extended between 2012 and 2014 to include so-called “traction batteries”.

The proceedings against the manufacturers were ultimately brought to a consensual end on the basis of a settlement, with this being taken into account for the purposes of determining the extent of the fines.

We at the commercial law firm GRP Rainer Rechtsanwälte note that violations of competition law or antitrust law can give rise to severe sanctions, and these sanctions are not limited to fines. The cartel members might also be faced with damages claims, for instance, and repercussions under criminal law cannot be ruled out either. Moreover, it is equally possible for the executive bodies of the companies in question to be liable.

Having said all of that, violations of antitrust law are by no means always as blatant as in the case, for example, of illegal price-fixing arrangements. Individual contractual clauses may also be sufficient to violate the applicable laws. For this reason, it is advisable to have agreements reviewed by lawyers who are versed in the fields of competition law and antitrust law with a view to their significance from the perspective of these legal fields. The same is true if violations have already occurred and claims need to be either fended off or enforced.

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