New guidelines on the setting of fines published: Germany’s Federal Cartel Office (“FCO”) adopts new approach to setting fines, accepting compliance as a mitigating factor

New approach to setting fines

The new Fining Guidelines reflect on the fact that before, going on appeal bore a significant risk of being off worse than before as several court decisions even increased the amount of the fines a company had to pay under the FCO decision for an infringement of competition law (“reformation in peius”). For example, on 28 February 2018, the Düsseldorf Higher Regional Court increased the fine imposed on the German drugstore chain Dirk Rossmann GmbH (“Rossmann”) for vertical price fixing in the sale of roasted coffee from EUR 5,25 million (FCO) to EUR 30 million (court).

The new Fining Guidelines are intended to put an end to such (extreme) discrepancies, which some have seen problematic even under German constitutional law. The president of the FCO, Andreas Mundt, commented on the changes as follows: “The method of calculation, in particular, has been changed and adapted more closely to court practice. However, the turnover achieved from the infringement of competition law still remains the key factor. All in all, the level of fines will therefore not change significantly”.

The main change is that the gravity of the infringement now plays a larger role when setting the fine, by also determining the reference value of the fine on the basis of the turnover generated from the infringement (and not only on the total turnover as was the case until now).

The Fining Guidelines therefore state that the reference value is determined by the turnover linked to the infringement and the size of the undertaking, which again is measured by its total worldwide group turnover and ranges from 10% (for undertakings with a total turnover of < 100m EUR) to more than 30% (for undertakings with a total turnover of > 100bn EUR). Once the reference value is set, the concrete level of fines imposed on an undertaking is determined taking into account all aggravating and mitigating factors of the individual case at hand (e.g. the type and duration of the infringement, whether the company was a cartel leader or whether it had an effective compliance system in place, see below).

Consideration of compliance systems

Furthermore, under the new Fining Guidelines, effective compliance systems can now work in favour of the infringer as a mitigating factor to fines. In the Fining Guidelines the FCO assumes that compliance is effective if it has helped discover and report an incident. This applies even if the compliance system did not prevent the infringement because one or more individual employees committed an intentional malpractice despite having been properly trained under the companies CoC etc.

This is a significant change, since under the old guidelines the fact that a company had breached the applicable competition law rules was seen as prove that, rather to the contrary, the existing compliance measures taken by such company apparently did not function properly. However, it should be noted that even under the new Fining Guidelines compliance cannot work in favour of the infringer if the infringement was committed by members of its senior management.
These are just some of the (as we believe most important) changes introduced by the New Fining Guidelines. Read the full text version of the New Guidelines here (in German only).

For more information, please contact Dr. Stephan Waldheim and Maren Steiert.