Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Three German sugar manufacturers fined for sales quotas and price fixing, (Feb 19, 2014)

The Bundeskartellamt, the German competition authority, has imposed fines totaling €280 million on three major German sugar manufacturers—Pfeifer & Langen GmbH & Co.KG, Cologne, Südzucker AG Mannheim/Ochsenfurt, Mannheim, and Nordzucker AG, Braunschweig—for concluding anticompetitive agreements on sales areas, quotas, and prices. The conduct involved the sale of sugar for the processing industry (“industrial sugar”) and sugar for the end consumer (“retail sugar”). The agreements took place over several years beginning in the mid 1990’s until the Bundeskartellamt’s investigation in 2009.

Nordzucker AG has cooperated extensively with the Bundeskartellamt within the scope of its leniency program and obtained extensive immunity from fines. In calculating the fines, which are based on a level of fines amounting to 10 percent of the respective total turnover of the respective companies and the gravity of the offense, the Bundeskartellamt also took into consideration the cooperation by the companies. All the companies concerned agreed to have the proceedings terminated by settlement. The fines imposed are not yet final and can be appealed to the Düsseldorf Higher Regional Court.

The investigation uncovered that the agreement between the companies to uphold the home market rule made frequent contacts at director and sales level necessary. The territorial agreement was protected by measures to guarantee prices and quantities in Germany and to control imports and exports. Whenever the basic consensus between the sugar manufacturers to respect key sales areas was endangered or there was need for adjustments, meetings were held on an individual basis. These either took place at director level (strategic perspective) or at sales manager level (operative perspective).

The themes of discussion at these meetings were, for example, plant closures, expansion strategies, the allocation of quotas and agreements on prices for processing and industrial sugar. Issues such as amendments to the European Sugar Market Regulation, European Union eastern enlargement or changes in the import-export flows also triggered consultations to achieve largely homogeneous customer and volume management. In contrast to accounts given by the companies, the Bundeskartellamt has no reliable evidence that representatives of state agencies were involved in these agreements.

“The sugar manufacturers formed a territorial cartel and for many years agreed to generally limit their sales of sugar in Germany to their respective home sales areas and not to get in the way of the other cartel members,” Bundeskartellamt President Andreas Mundt said in announcing the action. “The aim of the agreements between Nordzucker, Pfeifer & Langen, and Südzucker was to achieve the highest possible prices for their sugar. This type of coordination was not permitted under the European sugar market regulation. In spite of the quota system and minimum price guarantees, competition for sales areas, customers and customer prices is still possible in the sugar market and is also necessary to maintain functioning residual competition in order to protect customers against even greater distortion of competition in this sector. The fined companies have used the European quota system, the minimum price guarantee and the resulting high market transparency for coordination purposes and have further limited the residual competition. The case is an expressive example of how extensive market regulation can help to restrict competition to the detriment of customers.”

Companies: Pfeifer & Langen GmbH & Co.KG, Cologne; Südzucker AG Mannheim/Ochsenfurt, Mannheim; Nordzucker AG, Braunschweig

News: Antitrust