Bundeskartellamt fines three manufacturers of consumer goods

Thursday, 24 March 2011

The German competition authority, the Bundeskartellamt, has fined Kraft Foods Deutschland AG (“Kraft”), Unilever Deutschland Holding AG (“Unilever”) and Dr. August Oetker Nahrungsmittel KG (“Dr. Oetker”) for the illegal exchange of competition relevant information. 

The three manufacturers of consumer goods received a fine of in total Euro 38 million. Kraft, Unilver and Dr. Oetker violated competition laws by meeting over a period of several years to discuss negotiations between their company and several retailers. The three manufacturers discussed several products including confectionery, ice cream, dry ready-to-eat meals and frozen pizza’s. Some of the participants also exchanged information on planned price increases for retailers for some of the product areas. The companies met regularly over several years in a discussion group. The meetings were attended by high-ranking sales executives of the companies involved.

The exchange of competitive sensitive information is illegal under both German and European law, because it can restrict free competition. Andreas Mundt, President of the Bundeskartellamt, stated: “Certain types of information exchange between competitors are illegal under competition law. Competition is impaired by such practices, even if they are not classical hardcore agreements about prices, supply areas, customers or quotas.” Knowledge of prospective requests of the retail trade and reactions of the major competitors to these requests could have influenced the manufacturers' behaviour to the same extent as information on price increases planned by their competitors. This type of information is usually treated by the companies with strict confidence, because the information will be very valuable for a competitor.

The German competition authority started the investigation of the exchange of competitive sensitive information by manufacturers of consumer goods after a leniency application by Mars GmbH (“Mars”). As a result of this leniency application Mars received no fine. The OFT states that investigations against a fourth major manufacturer of consumer goods are still ongoing. Henkel AG & Co. KGaA (“Henkel”) also temporarily attended the discussion. Henkel did however not receive a fine because the conduct of this company had already been dealt with in the Bundeskartellamt’s “drugstore products" proceedings.

Kraft, Unilever and Dr. Oetker will not appeal against the decision of the Bundeskartellamt. All three companies have agreed to have the proceedings terminated by settlement.