German Federal Cartel Office (“FCO”) publishes “self-cleaning” guidelines
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On 25.11.2021, the FCO published its “self-cleaning” guidelines, specifying the conditions under which companies that have been found by a binding and final decision to have engaged in unlawful conduct (e.g. cartel agreements, bribery, money laundering, tax evasion etc.) and have therefore been “blacklisted” in the country’s national Competition Register (excluding them from public tenders) can request to be delisted. To do so, the company must file an application with the FCO as the registering authority, in which it first proves that it intends to participate in public tenders and therefore has an interest in early deletion from the competition register (the statutory deadline for deletion is 3-5 years). Secondly, the company must fulfil the following three substantive requirements and set out the precise facts and evidence in the application (see the FCO’s press release for details which can be found here):
1. Compensation for damages
The company must provide proof to the FCO of it having compensated the damage “obviously” caused by the misconduct. If the company only submits an obligation to pay it has to give a reason for not paying right away. Additionally, the company must provide detailed information on what damage has been or may have been caused by the misconduct, including inter alia the injured parties, the type of damage and the amount of damage. Particularly in complex antitrust damages cases, however, there is typically no common understanding between the parties of the amount of damages. In this case, the company must present the facts and the state of the dispute and indicate whether and how it has cooperated in clarifying the damage (disclosure of information and documents, admissions of guilt, commitments etc.).
It should be noted that the FCO may, upon request, transmit the decision on the application for self-clearance together with further confidential documents to public authorities claiming damages. It is not conclusively clear which documents are meant here. However, it cannot be ruled out that a public authority could receive sensitive information on the amount of damages caused, etc. and that it will be able to use this information in – pending or coming – antitrust damages court case against the disclosing party. Companies considering a self-cleaning application should therefore carefully balance the upsides of such an application (which include, most importantly, being able to take part in public tenders again) vs. the risk involved in paving the way, potentially, for future damages claims by public authorities.
2. Active cooperation with the investigating authorities
The company must include information on its cooperation with the investigating authorities. It needs to include information on which level within the corporate hierarchy was involved in the clarification of the facts and active cooperation. If the fine was reduced due to leniency, it can be assumed that the applicant actively cooperated with the investigating authority. A settlement is an indication of the company's willingness to cooperate.
3. Measures to prevent further misconduct
Furthermore, companies must show that they have taken appropriate measures to prevent future misconduct of this type. For this purpose, the FCO determines the sufficiency of the measures taken on the basis of a company- and offence-related analysis. For this analysis, the FCO must therefore also be provided with general information about the company, such as size, structure, areas of activity, etc. The introduction of a standardized compliance management system ("CMS") is not generally a necessary condition for self-cleaning but may be an appropriate measure depending on the individual case.
If the company was listed for withholding and embezzlement of remuneration or for tax evasion, self-cleaning only requires payment or obligation to pay the taxes, levies or social security contributions, including interest, late payment and penalty surcharges. Payments must be proven. Again, if the company has only submitted an obligation to pay it has to give a reason for not paying right away.
For more information please contact Dr. Stephan Waldheim and Maren Steiert.
