The German Federal Cartel Office (FCO, Bundeskartellamt) has imposed total fines of € 280m against the three major German sugar manufacturers Nordzucker, of Braunschweig, Pfeifer & Langen, of Cologne, and Südzucker, of Mannheim, and seven individuals. Nordzucker benefitted from a substantial reduction in its fine following a leniency application.
- The FCO found that the sugar manufacturers had shared the German markets for both “processing sugar” (Verarbeitungszucker or industrial sugar) and household sugar, by respecting each other’s distribution areas as early as in the mid 1990s, and there were various contacts between these players for implementing this basic agreement. They secured and reinforced such demarcation by measures to uphold prices and quantities and to manipulate imports and exports. When, after 2005, the European Union reduced production quotas and implemented reform of the organisation of the sugar market, Nordzucker, Pfeifer & Langen and Südzucker co-ordinated future production quantities and renunciation of part of their quota within the framework of an economic association relating to sugar. According to merchant buyers of sugar, their actions caused price increases and shortages in sugar supply.
- The perpetrators raised a defence that Government representatives had taken part in the agreements. The FCO rejected this contention for lack of appropriate evidence, but emphasised that the agreements would have been illegal even if official bodies had actually approved or instigated them.
The fact that the processing sugar market is very stable and transparent and that sugar manufacturers respected each other’s distribution areas had already been established in the Nordzucker/Danisco merger case in early 2009 (Case B2 – 46/08). It seems that the FCO has now found collusive agreements, in addition to the oligopolistic structure of the market.
- All manufacturers concerned have agreed to follow the FCO's settlement procedure. The fines are still subject to potential variation through appeal to the Düsseldorf Court of Appeals. The amount of the fines is among the highest ever imposed by the FCO. This may be due to the duration of the infringements, but also to the size of the sugar manufacturers. Their worldwide aggregate turnover ranges from in excess of €1 billion to several € billion. The new guidelines for the setting of fines, effective since June 2013, allow for substantially higher fines for larger businesses.
- Customers of the manufacturers and consumers may be entitled to damages. Under applicable legislation, limitation of claims is suspended until the decision of the FCO is no longer appealable, so injured parties may claim damages at least back to 2005. While the attempt by Cartel Damages Claims to bundle and assert damages claims of multiple customers of the cement cartel has failed in the Düsseldorf District Court (Judgment of 17 December 2013, Case 37 O 200/09, appeal pending), parties injured by the sugar cartel will include major food manufacturers.
- To the extent those injured parties have increased their own prices because of cartelized sugar prices, the sugar manufacturers may assert a passing on defence, but will bear the burden of pleading and proving that the cartel surcharge was actually passed on. Customers of such injured parties may also have standing to claim damages. However, they in turn will be required to plead and prove such indirect damage (see the Judgment of 28 June 2011 of the Federal Court of Justice, Bundesgerichtshof, Case KZR 75/10- ORWI). Unless claims can be settled out of court, sugar litigation may give the courts an opportunity to refine (!) the relevant case law.