Cartel Investigations and Fines

Cartel investigations in Germany: the basics

Cartel investigations in Germany are conducted by the Federal Cartel Office (Bundeskartellamt), by the competition authorities of the federal states for regional cases, and, for cases affecting trade between member states on a larger scale, by the European Commission. They concern agreements and concerted practices that restrict competition, prohibited by § 1 of the Act against Restraints of Competition (GWB) and Article 101 TFEU: price fixing, market and customer allocation, bid rigging, the exchange of competitively sensitive information and, in some cases, resale price maintenance in distribution. Investigations can also concern abuse of dominance.

Fines on undertakings can reach 10% of the total turnover of the undertaking in the business year preceding the decision (§ 81c(2) GWB), calculated at group level.

For companies, a cartel investigation creates several risks at once: fines on the company, fines on individual managers and employees, criminal prosecution of bid rigging, exclusion from public procurement through the competition register, damages claims by customers, and reputational harm, which can affect relationships with customers, banks and employees. Managing these risks requires quick decisions in the first hours of an investigation, a coordinated strategy on leniency and cooperation, and a careful approach to evidence that will later be used in damages litigation.

This page explains how investigations start, dawn raids, the leniency programme, settlements, the calculation of fines, individual liability, the competition register and the link to damages claims. It is written for general counsel, compliance officers and management. For damages litigation see antitrust damages and litigation.

How cartel investigations start

Most cartel investigations start with a leniency application by a participant, but the authorities also act on complaints from customers or competitors, information from anonymous whistleblowing systems (the Federal Cartel Office operates its own electronic system), findings from sector inquiries, and data analysis of public procurement procedures. Once the authority has sufficient suspicion, it typically conducts unannounced inspections at several companies at the same time, often in coordination with other competition authorities.

The authority's powers depend on the type of proceedings. In administrative proceedings, the Federal Cartel Office can request information and documents and conduct searches of business premises, homes and other property where documents subject to its powers are presumed to be located (§ 59b GWB), generally on the basis of a court warrant.

In administrative fine proceedings, the rules of the Code of Criminal Procedure apply through the Administrative Offences Act, supplemented by specific investigative powers in the GWB (§ 82b GWB). Bid rigging in tenders is also a criminal offence punishable by imprisonment of up to five years or a fine (§ 298 StGB), investigated by the public prosecutor, who often works alongside the Federal Cartel Office.

Information exchange, associations and hub-and-spoke

Not every infringement is a classic price cartel. Exchanges of competitively sensitive information about future prices, capacities or strategies can be infringements in their own right, even without an agreement on prices. Trade associations are a frequent setting, so meetings should have agendas, minutes and legal guidance. In "hub-and-spoke" cases, competitors coordinate indirectly through a common supplier or customer, for example a manufacturer passing pricing information between retailers. Cartel investigations in Germany have repeatedly concerned such indirect forms of coordination, as well as no-poach agreements between employers that restrict the recruitment of each other's staff.

EU and international coordination

The European Commission and the national competition authorities of the EU member states cooperate in the European Competition Network. Cases are allocated to the best-placed authority, and the Commission can take over cases where several member states are affected. Many cartel investigations in Germany are part of international investigations involving authorities in the United States, the United Kingdom and Asia. Companies must coordinate their strategy across jurisdictions, including leniency applications, the timing of disclosures and the treatment of privileged documents, because statements made in one jurisdiction may be used in another.

Dawn raids

Unannounced inspections usually begin early in the morning, with investigators from the Federal Cartel Office, often supported by police, IT forensic specialists and, where applicable, officials of the European Commission. They present a search warrant or inspection decision that defines the subject matter and scope of the investigation. The company must tolerate the search but is not obliged to actively assist beyond what the law requires; employees have rights not to incriminate themselves in fine proceedings, but obstruction is unlawful and can lead to additional consequences. Investigators copy large amounts of electronic data, including emails and chat messages, often by forensic imaging, and may seal premises.

The first hours are decisive. Companies should have a dawn raid protocol that defines who receives the investigators, who is informed, which lawyers are called, how the search is accompanied, how copies of seized documents and data are documented, and how employees are instructed. Legal privilege protects correspondence with external lawyers to a limited extent in German proceedings, and the scope of protection differs from EU proceedings; documents should be clearly marked and kept separately. Every step of the search should be recorded, and objections to the scope or conduct of the search should be noted on the record. After the search, the company should request a copy of the inventory of seized items and review which documents and data the authority has taken.

The internal investigation after a raid

After a dawn raid, the company needs to understand quickly what happened. An internal investigation, typically led by external counsel, reviews the documents and data copied by the authority, interviews relevant employees and assesses the strength of the allegations. Its findings determine whether a leniency application is still useful, whether to cooperate or contest, and what remedial measures are needed. Interviews must respect employees' rights, data protection and, where applicable, the works council's rights. See our page on internal investigations.

Leniency and settlements

The leniency programme allows participants in a cartel who cooperate with the authority to obtain immunity from fines or a reduction (§ 81h(1) GWB). The programme is now set out in the statute itself rather than only in an administrative notice.

Immunity is available to the first applicant that provides information and evidence enabling the authority to obtain a search warrant or, once the authority already has such evidence, to prove the infringement, provided that the applicant was not the sole ringleader or coerced others. Later applicants can obtain reductions depending on the value of their contribution and their position in the queue. Applicants must cooperate fully and continuously, end their participation in the cartel and keep the application confidential.

A marker system allows a company to secure its place in the queue with limited information and to complete the application within a set period. Where the European Commission or several authorities are competent, applications may need to be filed in parallel, as there is no one-stop shop for leniency. Leniency protects against fines, but not against damages claims; however, immunity recipients benefit from limits on their joint and several liability towards claimants.

Many cases end with a settlement. In exchange for a confession and acceptance of a simplified procedure, the Federal Cartel Office reduces the fine, typically by up to a certain percentage. Settlements shorten proceedings and reduce costs but involve an admission that will be relevant in follow-on damages actions. The settlement decision itself is usually shorter than a contested decision, which can make it harder for claimants to prove the details of the infringement, although the binding effect of the finding of an infringement remains. The decision whether to settle requires a careful assessment of the evidence, the fine exposure and the consequences for civil litigation.

Fines and individual liability

Fines are set according to the gravity and duration of the infringement (§ 81d(1) GWB). For cartels, the Federal Cartel Office's fining guidelines start from a percentage of the turnover achieved with the products concerned during the infringement, adjusted for aggravating and mitigating factors and for the size of the undertaking, within the overall cap of 10% of group turnover.

Since the GWB was aligned with EU law, the fine can be imposed on the undertaking as an economic unit, so parent companies are liable for infringements of their subsidiaries, and successors and acquirers can be liable after reorganisations. Mitigating factors include compliance efforts made before and after the infringement, under conditions now set out in the statute.

Individuals involved in cartel infringements can be fined up to EUR 1 million (§ 81c(1) GWB), and managers who failed to prevent infringements through adequate supervision can be fined under § 130 of the Administrative Offences Act. Bid rigging leads to criminal prosecution of individuals. Companies often pay fines and legal costs for their employees within limits; whether they can recover fines from managers through damages claims is a contentious question that has been before the courts. See our page on white-collar crime and corporate defence.

Abuse of dominance and digital platforms

The Federal Cartel Office also investigates abuses of a dominant position or of relative market power, such as exclusionary pricing, refusals to supply, discrimination and exploitative terms. Large digital platforms designated as undertakings of paramount significance for competition across markets are subject to an additional regime under § 19a GWB, which allows the authority to prohibit specific practices. Such proceedings are usually administrative proceedings without fines in the first instance, but they can lead to far-reaching obligations. Unlike cartel investigations, they often involve extensive economic analysis and market testing of remedies.

Duration and appeals

Cartel investigations in Germany typically take several years from the dawn raid to a final fine decision. Fine decisions can be challenged by objection, which leads to a full trial before the Higher Regional Court of Düsseldorf, and the court is not bound by the authority's assessment and can increase the fine. Appeals on points of law go to the Federal Court of Justice. Companies should weigh the costs and risks of litigation carefully against the benefits of a settlement.

The competition register and damages

Final decisions imposing fines of at least EUR 50,000 for cartel infringements, and convictions for bid rigging, are entered in the competition register kept by the Federal Cartel Office (§ 2(2) WRegG). Public contracting authorities must consult the register before awarding contracts above certain values, and an entry can lead to exclusion from public tenders. Companies can apply for early deletion if they demonstrate self-cleaning: compensation of damage, active cooperation with the authorities, and concrete technical, organisational and personnel measures to prevent future infringements. See our page on public procurement.

Cartel decisions are binding on civil courts hearing damages claims (§ 33b GWB), and customers benefit from a rebuttable presumption that a cartel causes harm (§ 33a(2) GWB). Every strategic decision in cartel investigations in Germany, from the content of a leniency application to the acceptance of a settlement, should therefore consider the impact on future damages litigation. Our page on antitrust damages explains the civil side.

Communication requires equal care. Listed companies must assess whether an investigation or a potential fine is inside information requiring disclosure, lenders and insurers may need to be informed under contractual obligations, and customers often ask questions after media reports. Statements should be consistent with the legal strategy and should not contain admissions that could be used in damages actions. Provisions for fines and damages in the financial statements require an assessment of the likely outcome, which should be coordinated with the auditors.

• Maintain a dawn raid protocol and train key staff.
• Investigate internal reports of possible cartel conduct promptly.
• Assess leniency options in all relevant jurisdictions at once.
• Consider damages exposure before settling with the authority.
• Prepare self-cleaning measures to protect public procurement access.

How TRW & Co helps

We advise companies and individuals in cartel investigations in Germany and before the European Commission. We support clients during dawn raids, assess evidence, file leniency applications and markers, negotiate settlements, and represent clients in fine proceedings and appeals. We conduct internal investigations into suspected cartel conduct, advise on self-cleaning and deletion from the competition register, and coordinate the defence of the company with that of individual employees. We also design antitrust compliance programmes and dawn raid protocols. To discuss a situation, please contact us immediately.