Permission cartel

In Germany, until July 2005, a license cartel was understood to be the amalgamation of legally independent companies of the same production or trade level ( cartel ), which was exempted from the general ban on cartels through the approval of the cartel authority. Authorization cartels were therefore cartels that required authorization. The approval was regularly granted by the antitrust authorities for three years and could contain requirements, conditions or restrictions.

Legal basis

The Act against Restraints of Competition , or GWB for short, contains a general ban on cartels in Germany. This general prohibition in GWB §1 was not shown to be absolute, however, because a merger of legally independent companies of the same production and trading level could be approved by the competent state authority ( Federal Cartel Office ). On the occasion of the European legal harmonization, the competition law regulations of the German GWB were in conformity with those at European level. Article 81 (cartels) and Article 82 (market abuse) of the EU treaty signed in 1997, as well as the European regulation on merger control (ECO) had been aligned with national law against restraints of competition.

The 7th GWB amendment of July 1, 2005 changed some of the GWB fundamentally. Since then, there is no longer a permit cartel.

The exceptions to the ban on cartels were set out in § 2 to 6 of the GWB. Cartels that received express permission from the cartel authority (Bundeskartellamt) for their approval were referred to as so-called licensing cartels . They were basically subject to approval.

Other permitted forms of cartel formation were registration cartels, which were legally legitimized simply by registering with the Federal Cartel Office, and contradiction cartels, which became legal if the competent authority did not object within a period of three months.

The German Cartel Office not only had the power to decide whether to permit or prohibit it, but also checked and monitored compliance with the legal regulations for cartel formation in Germany. The approval for a cartel was always granted by the Federal Cartel Office for three years and could contain specific requirements, restrictions and / or conditions and thus it was largely at the discretion of the Federal Cartel Office.

In addition to the explicitly stated exceptions to the ban on cartels, there was a catch-all clause in Section 7 that went beyond the possible exceptions. This clause served as room for interpretation if there were no norms and type cartels, rationalization, structural crises or medium-sized cartels. This type of catch basin, if not achievable through the above-mentioned forms of cartel, served to improve possibly merged companies as long as it did not lead to a dominant position.

Basically, the regulations drafted in the GWB aim at two fundamental economic goals: First, the prohibition of cartels is intended to ensure the highest possible intensity of competition and thus overall economic welfare. Second, disruption, exploitation and distortion of the market and its members should be prevented.

Types

The implementation of the exceptions that a horizontal merger corporate connection of two companies allow welcomed permission cartels. They had to be approved by the Federal Cartel Office upon application and were exempted by an order from the cartel authority. Permission cartels included norms and types, specialization and rationalization, structural crises and medium-sized companies.

• Standards and types cartels are contractually combined company the same production and marketing stage, in which the participating companies have agreed to the uniform application of types and standards. In reality, companies agree on standardized dimensions or properties of their products, such as the use of standardized returnable bottles or the use of standardized screws or wheel sizes. Such agreements not only have positive consequences for the consumer, but also represent sensible rationalization measures for the participating companies. Standard and type cartels must be registered with the competent authority and approved.

• Specialization and rationalization cartels are business combinations that limit themselves to certain products or services for rationalization purposes. This specialization is reflected in the focus of the offer on a few products or even on a single product. This improves the profitability of the company, as well as their technical and organizational production processes. In reality, the merged companies agree who specializes in which product. If this form of cartel does not lead to the formation and / or expansion of a dominant position, it can be permitted by the Federal Cartel Office. The market share of the companies involved must not exceed 20%, so it must not constitute a core restriction on competition.

• Structural crisis cartels occur when there is a sustained decline in demand . If the companies are likely to suffer from long-term production or supply overcapacities, the structural crisis cartel is supposed to share the remaining demand among the contractually associated companies. This is a planned adjustment of the capacities to the changed demand quantity, approved by the Cartel Office. Like all licensing cartels, the structural crisis cartel is also subject to approval. Since the distribution of demand represents a significant restriction of competition, the Bundeskartellamt lays down particularly strict requirements and conditions for this type of license cartel in order to improve the common good.

• SME cartels are contractually grouped small and medium-sized enterprises of the same production and trade level, which aim to improve the competitiveness of the enterprises. The contractual association must aim at the rationalization of economic processes through inter-company cooperation. Fundamental for the formation of such medium-sized cartels is the compensation of disadvantages compared to the large companies in the market. Like all licensing cartels, such a merger must also aim to improve overall economic welfare (see economic welfare ) in order to be approved.

Economic justification

The economic sense of licensing cartels consisted in the fact that the reduction in the number of independent decisive competitors can be offset by effects of cartel formation which, taken in isolation, increase overall economic welfare .

• In the case of standard and type cartels as well as condition cartels , the welfare-increasing counter-effect can be an increase in market transparency . The product range can also be reduced by agreeing and standardizing the individual parts. This can be done to the advantage of larger production quantities with corresponding cost degression potential.

• Specialization cartels and rationalization cartels can, as long as neither lead to the creation or strengthening of a dominant market position, bring about the realization of economies of scale ( e.g. in production) as a welfare-increasing counter-effect. Because specialization cartels distribute the entire range of goods and services to the various members, they enable a massive division of labor in the production area.

• Within a structural crisis cartel, in the event of massive changes in economic conditions, agreements can be made that prevent or end a ruinous competition . These include agreements on reducing production volumes and reducing excess capacities .

• A possible welfare-increasing counter-effect of medium- sized cartels is the formation of a counterweight to large, possibly dominant companies with the result of increased competition. For example, the intensity of competition in a market with one very large and ten small independent decision-makers can be lower than with three independent decision-makers of the same size.

Examples

The practical examples show that licensing cartels were clearly the exception. For example, there have only been two structural crisis cartels approved by the Federal Cartel Office . For the first time ever, the office approved such a limited-term cartel in 1983 for the manufacturers of welded wire mesh. Four years later, the producers of lightweight panels enjoyed this benefit.

The Bundeskartellamt seemed to be distinguished by its particular severity, as even the EU Commission had been more generous in such cases and, among other things, had released structural crisis cartels for man-made fibers, zinc and bricks.

decisions

• Humana and Nordmilch were allowed to merge the distribution of their dairy products.
• Tolerance of the cooperation between arena and premiere .

literature

• Michael Baron: The new cartel law , Cologne 1999.
• Rainer Bechtold: GWB Kartellgesetz Law against Restraints of Competition , Munich 2013.
• Günter Knieps: Competitive Economy , Heidelberg 2005.
• Bernd Woeckener: Strategic Competition , Heidelberg 2007.

Web links

• Rechtslexikon-online.de
• Competition law - legal text
• Lexicon - economic policy
• Business glossary BPB
• Competition law
• EC Treaty - Competition Rules
• German and European merger control (PDF; 145 kB)

Individual evidence

1. ↑ Press release of the Federal Cartel Office of June 9, 2009 (pdf; 52 kB)  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.  
2. ↑ Press release of the Federal Cartel Office of July 18, 2007 ( Memento of the original of April 18, 2008 in the Internet Archive ) Info: The archive link was inserted automatically and not yet checked. Please check the original and archive link according to the instructions and then remove this notice.