Cartel offences

Prohibition of cartels

A cartel is said to exist when several competing companies coordinate their behaviour on the "relevant market", which must be specified in each individual case, in order to impair competition. In the case of public sector tenders, for example, this occurs through price or contract agreements, otherwise through agreements on quantities or territories. As such agreements prevent, restrict or distort competition, they are prohibited under Article 101 (1) of the Treaty on the Functioning of the European Union (TFEU) and Section 1 ARC.

Vertical restraints of competition

In contrast to cartels, vertical restraints of competition have an effect at different economic levels, e.g. between suppliers and customers. Vertical restraints of competition are also prohibited in principle.

A simple example of such a restriction of competition is when a goods manufacturer dictates to a retailer what prices the latter should charge end consumers.

However, there are exemptions from the prohibition of vertical restraints of competition, which can be found in the European Commission's so-called Vertical Block Exemption Regulation of 20 April 2010 (OJ L 102/1).

According to the Vertical Block Exemption Regulation, typical agreements between companies at different stages of production or distribution are exempt from the prohibition of vertical restraints of competition if the share of both the supplier and the buyer in the relevant market in which they sell the contract goods or services does not exceed 30%.

The Vertical Block Exemption Regulation also regulates important exceptions to this exemption. For example, the prohibition of "resale price maintenance" applies; however, the supplier may set maximum selling prices and make price recommendations, provided that these do not actually have the effect of fixed or minimum selling prices as a result of the exercise of pressure or the granting of incentives.

In addition, there are exceptions for essential clauses in selective distribution systems (e.g. the restriction of sales to dealers not authorised by the supplier).

Special regulations on the prohibition of fixed prices are contained in the Act on Fixed Prices for Publishing Products (BGBl 2002 I p. 3448) and Section 30 GWB, which applies to newspapers and magazines.

Abuse of a dominant market position

Dominant companies may not exploit their market position for abusive behaviour, such as demanding excessive prices.

A company is dominant if it has no competitors on the relevant market, is not exposed to any significant competition or has a superior market position in relation to its competitors. A dominant market position is presumed to exist from a market share of at least 40%, see Section 18 (4) ARC. Special regulations apply to water suppliers that have a monopoly in their supply area (Sections 31 et seq. ARC).

In particular, dominant companies may not unfairly hinder other companies, treat them differently from similar companies without objectively justified reason or demand charges that would not arise in the case of effective competition.

Companies with a strong market position on which small and medium-sized enterprises are dependent are also prohibited from certain types of behaviour by the ARC. In particular, they may not unreasonably hinder the companies dependent on them or demand that they grant them advantages without an objectively justified reason. Unfair obstruction is deemed to exist, for example, if a company with a strong market position demands higher prices for the supply of goods than it itself charges on the distribution market (margin squeeze) or sells food below cost price.

The boycott prohibition applies to all Companies regardless of their market position. This prohibits companies from requesting other companies to block supplies or purchases from third parties.

As such agreements prevent, restrict or distort competition, they are prohibited under Article 101 (1) of the Treaty on the Functioning of the European Union (TFEU) and Section 1 of the ARC.

Vertical restraints of competition

In contrast to cartels, vertical restraints of competition have an effect at different economic levels, e.g. between suppliers and customers. Vertical restraints of competition are also prohibited in principle.

A simple example of such a restriction of competition is a goods manufacturer dictating to a retailer what prices the latter should charge end consumers.

However, there are exemptions from the prohibition of vertical restraints of competition, which can be found in the European Commission's so-called Vertical Block Exemption Regulation of 20 April 2010 (OJ L 102/1).

According to the Vertical Block Exemption Regulation, typical agreements between companies at different stages of production or distribution are exempt from the prohibition of vertical restraints of competition if the share of both the supplier and the buyer in the relevant market in which they sell the contract goods or services does not exceed 30%.

The Vertical Block Exemption Regulation also regulates important exceptions to this exemption. For example, the prohibition of "resale price maintenance" applies; however, the supplier may set maximum selling prices and make price recommendations, provided that these do not actually have the effect of fixed or minimum selling prices as a result of the exertion of pressure or the granting of incentives.

In addition, there are exceptions for essential clauses in selective distribution systems (e.g. the restriction of sales to dealers not authorised by the supplier).

Special regulations on the prohibition of fixed prices are contained in the Act on Fixed Prices for Publishing Products (BGBl 2002 I p. 3448) and Section 30 GWB, which applies to newspapers and magazines.

Abuse of a dominant market position

Dominant companies may not exploit their market position for abusive behaviour, such as demanding excessive prices.

A company is dominant if it has no competitors on the relevant market, is not exposed to any significant competition or has a superior market position in relation to its competitors. A dominant market position is presumed to exist from a market share of at least 40%, see Section 18 (4) ARC. Special regulations apply to water suppliers that have a monopoly in their supply area (Sections 31 et seq. ARC).

In particular, dominant companies may not unfairly hinder other companies, treat them differently from similar companies without objectively justified reason or demand charges that would not arise in the case of effective competition.

Companies with a strong market position on which small and medium-sized enterprises are dependent are also prohibited from certain types of behaviour by the ARC. In particular, they may not unreasonably hinder the companies dependent on them or demand that they grant them advantages without an objectively justified reason. Unfair obstruction is deemed to exist, for example, if a company with a strong market position demands higher prices for the supply of goods than it itself charges on the distribution market (margin squeeze) or sells food below cost price.

The boycott prohibition applies to all Companies regardless of their market position. This prohibits companies from requesting other companies to block deliveries or purchases from third parties.