Anti-Bribery Law and Commercial Corruption

Anti bribery law in Germany: the short answer

German anti bribery law is found mainly in the Criminal Code (Strafgesetzbuch, StGB). Bribery in commercial practice is a criminal offence under § 299 StGB, covering both the employee or agent who accepts an advantage for unfairly preferring a supplier and the person who offers it, and since 2015 also breaches of duty towards the employer in purchasing (the "principal model").

Bribery of public officials is punishable under §§ 331 to 335 StGB, which distinguish between the acceptance or granting of advantages for the performance of official duties and bribery for acts in breach of duty, and § 335a StGB extends these offences to foreign and international public officials. Corruption in the healthcare sector is covered by §§ 299a and 299b StGB. Companies themselves face fines under §§ 30 and 130 of the Administrative Offences Act, confiscation of proceeds and exclusion from public contracts.

For German companies with international sales, anti bribery compliance also involves foreign laws with extraterritorial reach. This article explains the German offences, the corporate consequences and the practical elements of an effective programme, with a particular focus on third-party due diligence.

Commercial bribery under § 299 StGB

Section 299 StGB applies in business dealings. It punishes an employee or agent of a company who demands, accepts a promise of or accepts an advantage as consideration for unfairly preferring another in the domestic or foreign competition for goods or services (competition model), or who, without the company's consent, accepts an advantage for performing or omitting an act in breach of duties towards the company in the purchase of goods or services (principal model). The mirror offence punishes whoever offers, promises or grants such advantages. The penalty is imprisonment of up to three years or a fine; in particularly serious cases, such as advantages of a large amount or commercial or gang activity, § 300 StGB provides for three months to five years.

The principal model means that payments to purchasing staff can be punishable even where no competitor is disadvantaged, if the employer has not consented. Consent of the employer, for example under a transparent hospitality policy that is communicated to business partners, therefore matters.

Bribery of public officials

The offences of acceptance and granting of advantages (§ 333 StGB for the giver) (§§ 331, 333 StGB) do not require that the advantage is linked to a specific act; it is sufficient that it is given for the official's performance of duties in general, which is why hospitality and gifts to public officials are high risk. Employees of companies that are controlled by the state and perform public tasks can be public officials, which matters in sectors such as utilities, healthcare and transport.

Corruption in the healthcare sector

Since 2016, §§ 299a and 299b StGB criminalise bribery of members of healthcare professions whose training is regulated by the state, such as physicians and pharmacists, in connection with the prescription or purchase of medicines, medical aids and devices or the referral of patients. These offences close a gap left by the Federal Court of Justice's 2012 decision that office-based physicians contracting with statutory health insurance are neither public officials nor agents of the insurers. For pharmaceutical and medical device companies, cooperation agreements with physicians, sponsorship and congress support must be structured according to principles of transparency, separation, equivalence and documentation.

Consequences for companies

Bribery by managers or, through supervisory failures, by employees exposes the company to several consequences:

• Corporate fines under § 30 OWiG of up to EUR 10 million per intentional offence, plus disgorgement of the economic benefit, which can greatly exceed the cap, and fines for supervisory failures under § 130 OWiG;
• Confiscation of proceeds under §§ 73 ff. StGB where no corporate fine is imposed;
• Exclusion from public contracts: bribery is a mandatory exclusion ground under § 123(1) GWB, and convictions are entered in the competition register for up to five years unless self-cleaning is demonstrated;
• Civil liability towards competitors and damaged contracting parties, and voidness of contracts procured by bribery;
• Tax consequences: bribes are not deductible business expenses, and tax authorities must report suspicions to prosecutors.

Individuals face imprisonment, professional consequences and personal liability to the company for damages, including fines imposed on the company, under § 93(2) of the Stock Corporation Act or § 43 of the Limited Liability Companies Act.

Third-party due diligence

Most international bribery cases involve intermediaries: sales agents, distributors, consultants, customs brokers or joint venture partners. Payments through third parties are attributable where the company knows or accepts that part of the remuneration will be used for bribes. Effective anti bribery programmes therefore focus on third-party due diligence:

1. risk-based screening of intermediaries before engagement, including ownership, reputation, qualifications and links to public officials;
2. a documented business justification for engaging the intermediary and for the level of remuneration;
3. contractual anti-corruption clauses with audit rights and termination rights;
4. payment controls: no cash, no payments to third countries or accounts not in the intermediary's name, invoices matching services;
5. monitoring and periodic re-assessment, with red flags escalated to compliance.

For details, see our article on third-party due diligence in compliance.

Gifts, hospitality, sponsorship and donations

Most day-to-day anti bribery questions concern ordinary business courtesies. German law does not set fixed monetary thresholds. Courts assess whether an advantage is socially adequate, taking into account its value, the occasion, the position of the recipient, transparency and timing, for example during a pending tender. Invitations to events with a genuine business purpose and modest hospitality are generally acceptable for private business partners; luxury trips, entertainment for spouses or invitations during contract negotiations are not.

For public officials, the rules are much stricter, because many public employers prohibit their staff from accepting gifts beyond token items and require approval for invitations. Companies should know the rules applicable to their public counterparts and should not offer what the official may not accept. Sponsorship and donations can also be problematic if they are linked to pending decisions, benefit a decision-maker personally or lack transparency. A central register of gifts, invitations, sponsorships and donations, reviewed by compliance, allows patterns to be detected. Periodic analysis of this register, combined with spot checks of expense claims, is one of the simplest and most effective controls available to mid-sized companies in Germany.

Anti bribery risks in M&A

Acquirers inherit the target's anti bribery history. Corporate fines can be imposed on the legal successor under § 30(2a) OWiG, confiscation claims follow the assets and competition register entries remain attached to the company. Pre-acquisition due diligence should review the target's sales model, intermediaries, public sector business and past investigations, and the purchase agreement should contain specific warranties and indemnities. After closing, the target should be integrated into the acquirer's compliance programme quickly, with a review of existing intermediary contracts and termination of relationships that cannot be justified.

Elements of an anti bribery programme

An effective anti bribery programme combines a clear policy and tone from the top, a risk assessment covering countries, sectors and business processes, rules on gifts, hospitality, donations, sponsorship and facilitation payments, controls on third parties and payments, training adapted to roles, a whistleblowing channel under the HinSchG, investigation procedures and sanctions for breaches. Many companies align their programmes with ISO 37001 and have them audited, for example under IDW PS 980.

Facilitation payments deserve particular mention: German law does not contain an exception for small payments to speed up routine official actions. Such payments can constitute granting advantages to foreign officials or other offences, and many companies prohibit them altogether, subject to an exception for payments under duress to protect health and safety.

Foreign anti-corruption laws

German companies operating internationally must also consider foreign anti-corruption laws with extraterritorial reach. The US Foreign Corrupt Practices Act can apply to German companies listed in the United States, acting through US territory or using US persons, and the UK Bribery Act contains a corporate offence of failure to prevent bribery that can apply to companies carrying on business in the UK, subject to a defence of adequate procedures. In addition, the OECD Anti-Bribery Convention has led most trading partners to criminalise foreign bribery. A single global programme designed to meet the strictest applicable standards is usually more practical than separate national programmes.

When suspicions arise

When indications of bribery emerge, companies must act quickly and carefully. Immediate steps include preserving evidence, securing payment records and e-mails, assessing whether ongoing payments to intermediaries must be stopped and deciding who leads the investigation. The question whether to report to prosecutors is strategic: German law does not generally require companies to report past offences, but cooperation can reduce corporate fines and is a prerequisite for self-cleaning in public procurement. Tax implications must also be considered, because amended tax returns may be needed if bribes were deducted.

Illustration: a hypothetical German engineering company wins infrastructure contracts in a non-EU country through a local agent paid a success fee of 15 per cent. Internal audit finds that the agent has no staff and is owned by a relative of a ministry official. The company stops payments, preserves records, commissions an investigation by external counsel and assesses its exposure under § 335a StGB and § 30 OWiG, as well as possible disclosure to German prosecutors.

How TRW & Co helps with anti bribery compliance

We advise companies on anti bribery law and compliance in Germany and in cross-border business. We design and review anti-corruption programmes, assess intermediaries and joint ventures, draft contract clauses, conduct internal investigations and defend companies and individuals in criminal and administrative proceedings. We also advise on self-cleaning and early deletion from the competition register. Our work connects with our white-collar defence and compliance management systems practices. See also the competition register and self-cleaning. To discuss your programme or a suspected case, contact us.