If a company abuses its market power, this constitutes a violation of antitrust law. In a ruling from January 23, 2018, the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, has bolstered the Bundeskartellamt, Germany’s Federal Cartel Office (Az.: KVR 3/17).
Companies with superior market power are not allowed to put pressure on suppliers to obtain undue advantages for themselves. This kind of abuse of market power constitutes a violation of the Gesetz gegen Wettbewerbsbeschränkungen (GWB), the German Act Against Restraints of Competition. This so-called “Anzapfverbot”, i.e. prohibition on demanding unjustified benefits from suppliers, is applicable not only to businesses in a dominant market position; we at the commercial law firm GRP Rainer Rechtsanwälte note that it also applies in cases where small or medium-sized companies are dependent on a buyer and the latter therefore has superior market power.
The issue of when this kind of abuse can be said to have occurred has since come to the attention of the BGH. The case in question concerned a supermarket chain that had acquired a number of stores from a discount supermarket. Talks took place with the suppliers during the course of the acquisition with a view to obtaining favourable terms in the form of so-called “Hochzeitsrabatte”, i.e. wedding discounts. In addition to demanding the best possible terms in each case, other benefits, such as “Partnerschaftsvergütung”, a.k.a. partnership compensation, were also requested.
The Bundeskartellamt deemed this to be an abuse of market power by the supermarket chain and thus a violation of the GWB (Az.: B2-58/09). The Cartel Office’s decision was then overturned by the Oberlandesgericht (OLG) Düsseldorf, the Higher Regional Court of Düsseldorf. The OLG proceeded on the assumption that the negotiations involving the supermarket chain and the suppliers were between two parties in an equally strong position. The Court held that the supermarket chain had not abused its market power and that the discounts had been permissible.
The BGH has now overridden important aspects of the OLG Düsseldorf’s judgment in appeal proceedings. The former concluded that the supermarket chain had violated the prohibition on demanding unjustified benefits from suppliers, stating that the supermarket chain had not been allowed to choose dates as deadlines for the comparison of terms that came significantly before the discounter’s acquisition. Moreover, payments such as the aforementioned partnership compensation in relation to which there is no consideration cannot be requested.
Violations of competition law or antitrust law can give rise to severe penalties. That being said, these violations are by no means always obvious. Even individual contractual clauses can be in violation of applicable law. Lawyers who are experienced in the fields of antitrust law and competition law can advise businesses as well as enforce or fend off claims in the event of violations of either antitrust law or competition law.