Concept and significance of administrative cartel proceedings
Das Administrative cartel proceedings is a public administrative procedure serving the enforcement and supervision of competition law. Its task is to monitor, enforce, and, if necessary, sanction violations of antitrust regulations. The purpose of the procedure is to maintain and protect competition in a market and to secure fair market conditions. In Germany, administrative cartel proceedings are conducted in particular according to the provisions of the Act Against Restraints of Competition (GWB).
Legal basis of administrative cartel proceedings
Act Against Restraints of Competition (GWB)
The central legal framework for administrative cartel proceedings in Germany is the Act Against Restraints of Competition (GWB). This law is aimed at agreements, abusive conduct by dominant undertakings, as well as inadmissible mergers, and regulates the procedure for monitoring and sanctioning such antitrust infringements.
Other legal sources
In addition to the GWB, in cross-border matters and in accordance with overriding legal requirements, the provisions of the European Union, in particular the Regulation (EC) No. 1/2003 on the implementation of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), also apply. The relevant regulations on administrative procedures are further supplemented by the general provisions of the Administrative Procedure Act (VwVfG), unless the GWB contains more specific regulations.
Course of administrative cartel proceedings
Administrative cartel proceedings consist of several phases. As a rule, they are conducted by a cartel authority, in Germany primarily by the Federal Cartel Office,. The basic steps are as follows:
Initiation of the proceedings
The initiation may occur
- upon application by an affected party or third party,
- by a notification to the authority,
- or ex officio by the cartel authority itself if there are indications of antitrust violations.
Investigation procedure
Following initiation of the proceedings is the investigation phase. The authority is entitled to take all necessary measures to clarify the facts. These include in particular:
- Requests for information (§ 59 GWB),
- Searches and seizures (§ 58 GWB),
- Hearings of the parties,
- Witness interviews and expert opinions.
The parties involved are obliged to cooperate in clarifying the facts and to provide the requested information, unless there are legitimate grounds for refusal.
Statement and hearing
The affected companies or individuals may comment on the matter during the proceedings. The right to a hearing is a fundamental component of the right to be heard and ensures that the decision-making process takes the interests of those involved into account.
Decision of the cartel authority
After completing the investigation, the cartel authority renders its decision. It may:
- terminate the procedure,
- order remedial measures,
- impose prohibitions,
- or impose fines.
The decisions made are delivered to and explained to the parties concerned. In certain cases, publication of the decision is required.
Legal remedies and legal protection
Legal remedies against decisions of the cartel authority may be lodged within specified deadlines. The competent court at first instance is the Higher Regional Court, usually the Higher Regional Court of Düsseldorf (§ 63 ff. GWB). In the course of judicial proceedings, the legality of the cartel authority’s actions is reviewed.
Parties involved in administrative cartel proceedings
Parties to the proceedings
The parties include:
- Companies and associations of companies against whom the proceedings are directed,
- other directly affected parties (e.g., customers, competitors),
- other parties designated by law.
Role of the Federal Cartel Office
The Federal Cartel Office is the central German cartel authority. It conducts proceedings, carries out investigations, issues decisions, and monitors their implementation. In some cases, the state authorities, the European Commission, or other national competition authorities within the EU are also competent.
Special features and specific types of proceedings
Abuse proceedings
A major area of the administrative cartel procedure is Abuse proceedings. These mainly concern abuse of a dominant position (§ 19 GWB) or relative market power (§ 20 GWB). Such proceedings examine whether companies holding market power are abusing their position with respect to competitors or market partners.
Merger control proceedings
Within the framework of merger control the Federal Cartel Office examines intended mergers of companies with significant market importance for their compatibility with antitrust requirements (§§ 35 ff. GWB). The aim is to maintain functioning competitive structures. The merger control proceedings constitute a specific form of administrative cartel proceedings with their own procedural rules, including notification obligations, deadlines, and examination phases (preliminary examination, main examination phase).
Fines proceedings
For the sanctioning of serious violations, the Fines proceedings is significant. It follows the provisions of the Administrative Offences Act (OWiG) and the GWB. The authority can impose substantial fines on companies and natural persons.
Procedural principles and rights of the parties involved
Principle of the right to be heard
The right to be heard under Art. 103 (1) of the German Basic Law (GG) obliges the authority to give all parties the opportunity to make statements. This right is implemented through access to files, hearings, and reasons for decisions.
Official investigation and taking of evidence
The procedure is subject to the principle of official investigation, meaning that the cartel authority investigates the facts ex officio and is not bound by submissions from the parties. The authority is entitled to use any means of evidence suitable for clarifying the facts.
Confidentiality and access to files
The GWB provides for special interests in confidentiality, particularly with regard to trade and business secrets. Access to files is restricted in such cases but must generally be granted unless overriding interests stand in the way.
Significance of administrative cartel proceedings in practice
Administrative cartel proceedings are a key instrument for ensuring genuine competition in the context of a functioning market economy. It protects consumers and market participants from cartels, price agreements, and abuse of market power, secures competitive market structures, and fosters innovation. At the European level, the procedure operates cross-border to establish uniform competition conditions within the EU.
Literature and further sources
- Act Against Restraints of Competition (GWB)
- Regulation (EC) No. 1/2003
- Federal Cartel Office: Procedural guidelines and publications
- Literature on the fundamentals and practice of antitrust law
By comprehensively considering all relevant aspects, this article provides an in-depth overview of administrative cartel proceedings, their regulated processes, parties involved, and their impact on the economy and society.
Frequently Asked Questions
What rights do parties have during administrative cartel proceedings?
Participants in administrative cartel proceedings, such as companies, their legal representatives or other affected parties, have a broad range of rights, which essentially derive from the provisions of the Administrative Procedure Act (VwVfG), competition law (primarily GWB, i.e., the Act Against Restraints of Competition), the Basic Law, and relevant EU regulations. The most important rights include the right to be heard (Art. 103 para. 1 GG), the right to access files under § 29 VwVfG or in proceedings under § 56 GWB, and the right to legal assistance. In addition, there is a right to comprehensive information regarding the allegations made against them; the authority’s powers to intervene must be proportionate and based on law. Affected companies also have the right to submit statements and provide evidence. Under certain conditions, they also have remedies such as appeals, complaints, and legal actions, the admissibility and scope of which depend on the specific stage of the proceedings. The principle of fair proceedings must always be observed, as must the right to due process and, if necessary, effective legal protection before the courts.
How is evidence taken in administrative cartel proceedings?
The taking of evidence in administrative cartel proceedings generally follows the rules of administrative procedure law and the specific requirements of the GWB. The facts must be clarified ex officio, i.e., the cartel authority must investigate both incriminating and exonerating circumstances (§ 24 VwVfG, § 57 GWB). This means that the taking of evidence is not limited to facts presented by the parties, but is independently conducted by the authority. Evidence may include, in particular, documents, witnesses, expert opinions, physical inspections, or the conduct of searches. The evaluation of evidence is the responsibility of the cartel authority, which must adhere to principles of the rule of law, in particular proportionality and objectivity. Evidence gathered must be documented and made accessible to the parties, in order to guarantee the right to be heard. Evidence is inadmissible if, for example, it was obtained in violation of mandatory procedural rules, particularly in cases of serious violations of fundamental rights.
What obligations do companies have during ongoing administrative cartel proceedings?
Companies subject to administrative cartel proceedings have various duties to cooperate, the scope of which depends on the stage and type of proceeding. In principle, under the provisions of the GWB – such as § 59 GWB – there is an obligation to provide information and submit documents. However, these obligations are limited by the fundamental right to protection against self-incrimination (nemo tenetur principle); companies do not have to make statements or present documents that would expose themselves or employees to administrative offences or criminal prosecution. Business and trade secrets must also be protected as far as possible. Companies must comply with official orders, such as tolerating and enabling searches. If they refuse without good reason, the authority may impose coercive measures, in particular fines, according to administrative enforcement law.
What means of legal protection are available against official measures in administrative cartel proceedings?
Various means of redress are available to parties affected by official measures in the context of administrative cartel proceedings. Depending on the nature and intensity of the intervention, an objection may be lodged with the respective authority – if this is provided for. In addition, applications for interim relief may be filed with the competent administrative or cartel court to suspend or annul the measure. In cases of serious interventions, such as search orders, there is also the possibility of filing a complaint pursuant to § 63 GWB. In the main proceedings, an action may be brought, particularly an action for annulment against adverse administrative acts under the Administrative Court Rules (VwGO) or GWB. Judicial review covers both formal and substantive legality of the measure, especially with regard to compliance with principles of the rule of law.
What legal remedies are available after completion of administrative cartel proceedings?
After completion of administrative cartel proceedings, parties may use different legal remedies, depending on the decision taken and the relevant appeals process. Appeals against decisions of the Federal Cartel Office are generally admissible under § 63 GWB, which are decided by the Higher Regional Court (usually the OLG Düsseldorf). Against the decision of the Higher Regional Court, a further appeal on points of law of fundamental importance may be lodged with the Federal Court of Justice (§ 74 GWB). In individual cases, interim legal protection applications pursuant to §§ 35 ff. GWB (emergency proceedings) or administrative law standards may also be filed. If decisions are taken at the European level, the remedies of the European Commission and the European courts (GC and CJEU) must also be observed.
What is the significance of the right of access to files in administrative cartel proceedings?
The right of access to files is a key procedural guarantee in administrative cartel proceedings. It enables parties to adequately defend themselves against the allegations and ensures the right to be heard. The right of access to files generally extends to all written and electronic documents that may be relevant to the decision (§ 56 GWB, § 29 VwVfG). There are restrictions regarding confidential information, in particular trade and business secrets of third parties, as well as internal official considerations. The authority must balance interests when deciding the scope of access and must provide reasons for any refusal. Judicial review is possible against denial of access. The right of access to files is instrumental in safeguarding equality of arms between the authority and the parties concerned.
Under what conditions can a consensual settlement (“settlement”) be reached?
An amicable termination of proceedings, also known as a “settlement,” is possible in both German and European antitrust law. The basic prerequisite for this is the willingness of the affected companies to cooperate and to acknowledge the established facts and the legal infringements identified. The specific structure of a settlement is subject to the requirements of the Federal Cartel Office or the European Commission, which issue special guidelines. Generally, companies willing to cooperate benefit from a significant reduction in fines. A settlement requires that the authority and the parties involved formally agree on the key procedural issues, such as the amount of sanctions and the course of proceedings. A waiver of legal remedies can be part of such an agreement, but does not relieve the authority of its obligation to conduct the proceedings in accordance with the rule of law. Settlements do not mean acquittal or the elimination of sanctions, but rather enable a shortened and more predictable conclusion to the proceedings for both parties.
