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Germany: Fines against cosmetics manufacturers for anti-competitive exchange of information stand judicial review

  • Germany
  • Competition, EU and Trade


Participants to an alleged cartel in the luxury cosmetics industry, fined by the German Federal Cartel Office (“BKartA”) in 2008, have withdrawn their appeals against the fines imposed by the BKartA after the Düsseldorf Court of Appeals (“OLG Düsseldorf”) indicated that BKartA’s decision is likely to stand judicial review.

1. The appeals related to a case in which the BKartA fined nine manufacturers of premium fragrances and cosmetics, including Chanel, Clarins, Coty, Estée Lauder, L’Oréal and Shiseido, for exchanging commercially sensitive information.  According to the BKartA, the cartel members met in a so-called “round table in the castle” (“Schlossrunde”) – a suitable setting for luxury products – to disclose and discuss their quarterly revenues, advertising expenditure, returns, planned new product launches, behaviour in relation to specific perfumeries, other “strategic items” and, in some cases, intended price increases.  The “castle round” comprised all major luxury cosmetics players.  Moreover, the information was exchanged in a way which allowed it to be attributed to specific participants.

2. The BKartA held that these exchanges of information restricted competition and were likely to result in a collusion between the participants. In 2008, it imposed fines ranging from €250,000 to €2.1m, and totalling €9.66m on the companies involved and on several individuals.  Most of the companies and individuals who were the subject of the fines filed appeals to the Düsseldorf Court of Appeals (“OLG Düsseldorf”).

According to the BKartA1, the OLG Düsseldorf indicated to the appellants that it would side with the BKartA and that the  companies would face even higher fines because of the new principles on fines for anti-competitive conduct, which the BKartA has adopted following the ruling of the Federal Court of Justice (“Bundesgerichtshof”, or “BGH”) of 2013 in the “Grauzement” case2.

3. The Grauzement case concerned a cartel of Portland cement suppliers.  Upon judicial review of the BKartA decision in that case, the BGH provided guidance for calculation of fines under the current Act against Restraints of Competition (“Gesetz gegen Wettbewerbsbeschränkungen”, GWB):  The GWB, as revised in 2005, allows for fines of up to 10 % of a company’s annual turnover.  The BGH held that the 10 % of the annual overall group turnover was the fine intended for the most serious infringements and that the competition authority should consider this figure as the highest possible outcome when setting a fine.  The BGH also urged the BKartA to take into account, within that framework, the size of a business in terms of turnover of all the entities of a group, so that sanctions reflect the economic capability of a company (its so called “sensitivity to punishment” analysis).

Following the BGH’s judgment, the BKartA adopted new guidelines for the setting of fines.  Under these guidelines, the starting point for the calculation of the applicable fine is the “gain and harm potential” of an infringement, which is usually 10 % of the turnover of the company generated through the cartelised market/activities.  This number is then multiplied by a factor determined by the size of the company, and both mitigating and aggravating factors of a specific case have to be considered.

4. When advising members of the Cosmetics Cartel that it would be likely to increase the fines imposed by the BKartA, the OLG Düsseldorf apparently referred to, and endorsed, the new practice of the BKartA.


The cosmetics case shows that the BKartA considers exchange of strategic information between competitors as anti-competitive, even if the information does not relate to prices, quantities or negotiations with customers in the first place, and is willing to fine participants.  Furthermore, the approach of the OLG Düsseldorf in the same case shows that this strict policy is likely to stand up to judicial review.

It is vital for companies to be cautious and to either avoid, or to carefully limit, disclosing internal data to competitors.

1 No decision with detailed reasons has been published on this case.

2 Decision of 26 February 2013, Case KRB 20/12.