On 18 February 2014, the German Federal Cartel Office (FCO) imposed fines of approximately EUR 280 million on following German sugar manufacturers for having participated in anticompetitive agreements on sales areas, quotas and prices:
The infringements involved the sale of sugar for the processing industry (processing sugar) and sugar for the end consumer (household sugar). They took place over several years until the authority’s surprise inspections in spring 2009 and in part date back to the mid 1990s.
According to the FCO, 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. The aim of the agreements was to achieve the highest possible prices for sugar.
The cartel members by means of a ‘homogeneous customer and volume management’ also coordinated their activities regarding the EU Sugar Market Regulation, the Eastern enlargement of the Union, and changes in import-export flows. Central aspects of the agreements were the home market rule and the commitment not to interfere with other cartel members. The sugar producers also agreed to export overproduction rather than use the surplus to competitively increase their market share in Germany.
According to the FCO, the sugar cartel was not caused by the EU Sugar Market Regulation. In spite of the quota system and minimum price guarantees, competition for sales areas, customers and customer prices would still have been possible, but instead the cartel members used ‘the resulting high market transparency for coordination purposes and have further limited the residual competition.’
The sugar manufacturers have not appealed the infringement decision of the FCO, whose findings are therefore binding for the civil courts in related proceedings for damages.
CDC has purchased damage claims from 63 retail companies and food manufacturers from all over Germany, which were affected by the anticompetitive agreements and practices as direct or indirect purchasers of sugar and substitute products during the cartel period. On 16 February 2017, CDC filed a declaratory action before the Regional Court of Hanover, Germany, seeking a judgment that Nordzucker AG, Pfeifer & Langen GmbH & Co. KG and Südzucker AG are jointly and severally liable for those damages (Case No. 18 O 34/17).
CDC has, together with renowned external experts, conducted an economic assessment of the damage caused by the cartel. Having regard to the fact that the cartel had effects on several market levels, the assessment includes a combined horizontal and vertical economic damage analysis.
The assessment concludes that both direct and indirect purchasers of the sugar manufacturers were significantly overcharged for their purchases of processing sugar, household sugar and substitute products, during the cartel period and even beyond due to lingering effects of the cartel. The peculiarities of the sugar market, such as the EU Sugar Market Regulation, have been taken into account in this regard.
CDC will quantify the damages at a later stage. For the moment, the action pending in Hanover focusses on the liability of the three defendants on the merits.
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