With the amendments to the cartel fine procedure introduced by the 9th amendment of the GWB the legislator intends a harmonization with EU-law and significantly extends the liability for cartel fines.
With the 9th amendment of the GWB, the legislator again attends to the closing of the so called “sausage gap”. This sanctioning gap in the German competition law derives its name from the sausage manufacturer Tönnies who was able to evade a three-digit million fine imposed by the Federal Cartel Office (FCO) by a clever corporate restructuring of his sausage empire. The essential assets of the legal entities responsible under antitrust law were transferred to other group companies and the legal entities ceased to exist.
This was possible because initially pursuant to sec. 30 (1) of the German Act on Regulatory Offences (OWiG) the liability for antitrust violations only applied to the legal entity whose own management committed the cartel law infringement. When this legal entity did not exist anymore the fine that was imposed on this entity could no longer be enforced. The universal legal successor (Gesamtrechtsnachfolger) was only liable in case of a so called “almost economic identity (wirtschaftliche nahezu-Identität)”. According to the decision practice of the Federal Court of Justice (BGH) there were very few cases to which this actually applied.
In 2013, as part of the 8th amendment of the GWB, the legislator already tried to restrict the possibility to evade fines by restructuring measures, by inserting sec. 30 (2a) OWiG, pursuant to which the fine could also be imposed on the universal legal successor of the entity responsible under antitrust law. However, this requires that the legal entity responsible under antitrust law does not exist anymore. Additionally, sec. 30 (2a) OWiG limits the liability of the universal legal successor to the value of the acquired assets. Furthermore, the legislator introduced the possibility of ordering an attachment in rem in order to secure fines, sec. 30 (6) OWiG.
The 9th amendment of the GWB significantly extends the liability for fines imposed in cartel fine proceedings. It introduces the liability of the economic unit, it tightens the liability of the successor and it introduces a contingent liability. By this the legislator goes beyond simply closing the “sausage gap”. He rather intends a full harmonization of the German law regarding the liability for cartel fines with the European practice.
- Liability of the economic unit, sec. 81 (3a) GWB: Following the European model, also under German law a single economic unit will now be simulated. After the reform fines can now in particular be imposed on the group parent company but also on other group companies, insofar as the companies formed a single economic unit at the time of the infringement and direct or indirect decisive influence on the management of the entity involved in the cartel law infringement was exercised. The introduction of the liability of the economic unit faces harsh criticism. The critics claim a violation of the principle of legal certainty, the principle of fault and the in-dubio-pro-reo principle and consider the new Sec. 81 (3a) GWB to be unconstitutional.
- Unlimited liability of the (partial) universal legal successor, sec. 81 (3b) GWB: The fine can also be imposed on the (partial) universal legal successor of the legal entity responsible under antitrust law. Other than sec. 30 (2a) OWiG, sec. 81 (3a) GWB does not limit the liability to the value of the acquired assets if an offence pursuant to sec. 81 (1)-(3) GWB is concerned.
- Liability of the economic successor, sec. 81 (3c) GWB: sec. 81 (3c) GWB stipulates that a fine can also be imposed on a company that is only the economic successor of an entity responsible under antitrust law. This means that the universal legal successor is not only liable in cases where the legal entity responsible under antitrust law does not exist anymore. In fact also singular legal successors (Einzelrechtsnachfolger) are now liable – even if the legal entity continues to legally exist but has become economically irrelevant. Thus, every transfer of a business segment that was involved in cartel law infringements can cause a liability for fines. This regulation bears a significant risk for M&A transactions.
- Contingent liability during the transition period, sec. 81 a GWB: This new regulation was introduced because the principle of non-retroactivity prevents the application of the liability extension to cases in which the infringement has already been terminated when the new law came into force but the cartel proceedings are still ongoing. It shall prevent the transfer of assets and restructuring measures until the above described regulations become fully effective. The contingent liability is applicable if the legal entity, against which cartel proceedings have been initiated, ceases to exist or if its assets are being transferred to other companies after the announcement of the initiation of the proceedings so that a fine cannot be imposed on this legal entity anymore or its legal successor or the fine will most likely not be enforceable. Also in these cases the law now provides for the liability of the group companies which are liable pursuant to sec. 81 (3a) GWB and the liability of companies that became the universal legal successors within the meaning of sec. 81 (3b) GWB or the economic successors within the meaning of sec. 81 (3c) GWB after the announcement of the initiation of the proceedings. The amount of the fine corresponds with the fine which would have been appropriate pursuant to sec. 81 (4) and (5) GWB. Pursuant to sec. 81 a (2) GWB the universal legal successors and economic successors of the legal entities that would have been liable pursuant to sec. 81 a (1) GWB, are also liable.