On 11 February 2014, the Düsseldorf Higher Regional Court decided that Melitta Europa GmbH & Co. KG as the legal successor of Melitta Kaffee GmbH, was liable for the fines the German Federal Cartel Office (“Bundeskartellamt”) had imposed on the latter on 21 December 2009. The importance of the case is that it confirms it is difficult to restructure a company to avoid regulatory fines.
In 2009 the Bundeskartellamt accused four coffer roasters for agreeing price increases from at least early 2000 until July 2008. The Cartel Office imposed fines totalling €159.5m on Alois Dallmayr Kaffee oHG, Melitta Kaffee GmbH and Tchibo GmbH while Kraft Foods Deutschland GmbH was not fined due to its application for leniency.
Melitta Kaffee GmbH had appealed against its fine and was then merged by its partners into one of its affiliates, Melitta Europa GmbH & Co. KG, by way of a process known as universal succession. The Bundeskartellamt assumed that the partners of Melitta Kaffee GmH carried out the restructuring in order to avoid liability for the fines.
Before the 8th amendment of the Act Against Restraints of Competition - ARC (“GWB”) in June 2913, there was no provision in German legislative law which regulated the liability of legal successors for fines imposed in anti-trust proceedings. According to the case law of the German Federal Supreme Court, fines could only be imposed on legal successors provided that, from an economic point of view, the assets of the original entity and the legal successor were almost identical. The courts had stated that further clarifications could only be made by the legislator.
In 2013, the German legislator created an explicit legal basis for determining fines to be imposed on legal successors by amending section 30 of the German Regulatory Offences Act (“OWiG”). The provision now clarifies that fines can be imposed on legal successors when succeeded by way of universal succession. To ensure fairness, no fine imposed on a legal successor may exceed the value of the assets taken over or the amount of the fine that would have been imposed on the legal predecessor.
Section 30 OWiG does not apply to forms of successions other than ‘universal succession’, e.g. it does not apply to singular successions or spin-offs or carve-outs where the original legal entity remains existent. The Bundeskartellamt therefore claimed that the amendments of the law were still inadequate and that the legislator still needed to provide further clarity in order to prevent companies from trying to escape liability for cartel violations by carrying out reorganisations.
In the current case of Melitta, the restructuring measures were even taken prior to the amendment of section 30 of the German Regulatory Offences Act. The Düsseldorf Higher Regional Court still however held Melitta Europa GmbH & Co. KG as the legal successor of Melitta Kaffee GmbH. The former would be liable for the fines imposed on the latter because, from an economical perspective, Melitta Kaffee GmbH and Melitta Europa GmbH & Co. KG could be assumed to be identical. The companies fulfilled the criteria set up by the case law of the German Federal Supreme Court which was applicable prior to the legislative amendments.
This decision is however, not yet final. Melitta Europa GmbH & Co. KG has appealed against the decision to the Federal Court of Justice on points of law. Whatever the outcome, German Court’s are likely to take a dim future view of any companies who restructure to try and avoid regulatory fines.