Discount Demands and Antitrust Law

Aug 4, 2020 | Uncategorized

Germany”s Federal Cartel Office, the Bundeskartellamt, has thrown its weight behind suppliers faced with demands for excessive discounts, and a furniture store chain has had to come to terms with limitations being imposed on its demands by antitrust law.

Businesses are not allowed to abuse their market power and put pressure on their suppliers as a means of obtaining undue advantages for themselves. That was the verdict of Germany”s Federal Supreme Court – the Bundesgerichtshof (“BGH” for short) – with respect to so-called “Hochzeitsrabatte” (wedding discounts). A supermarket chain had demanded discounts and other perks from its suppliers following its acquisition of numerous stores from a discount supermarket. We at the commercial law firm MTR Rechtsanwälte can report that in a ruling from January 2018, the BGH held that, in doing so, the company was abusing its market power (Az.: KVR 3/17).

A similar situation arose concerning a furniture store chain. In this case, the Bundeskartellamt was able to persuade the chain to back away from its blanket demand for an anniversary discount from its suppliers – potentially a violation of antitrust law. Instead, the discounts have now been negotiated individually with each supplier.

As indicated by the Bundeskartellamt on February 27, 2020, the original demands for a special discount from small and medium-sized furniture manufacturers potentially amounted to abuse. It noted that even though discounts of this kind are not prohibited as a rule, the suppliers that are dependent on their supply relationship with the furniture store chain needed to be offered appropriate consideration, e.g. in the form of additional exhibition space or a performance guarantee. The cartel office went on to state that in particular small and medium-sized enterprises are meant to be protected by the so-called “Anzapfverbot”, i.e. the prohibition on demanding unjustified benefits from suppliers, thus ultimately maintaining variety for consumers.

The furniture store chain has since replaced its demand for a blanket discount with individually negotiated anniversary discounts with its suppliers. According to the Bundeskartellamt, this has resulted in discounts that are on average significantly lower than what was originally demanded. It also reported that arrangements had been concluded regarding consideration.

The arrangements were all submitted to the Bundeskartellamt, which did not raise any further concerns. Accordingly, the cartel office will not be passing any further judgment on the original discount demands.

Businesses must not abuse their market power, as such behavior can easily constitute a violation of antitrust or competition law. Violations of this kind may be met with severe penalties. Lawyers with experience in the field of antitrust law can offer advice.

For more information:

https://www.mtrlegal.com/en/legal-advice/antitrust-law.html

Advantages of Arbitration

Aug 4, 2020 | Uncategorized

The courts are not the only venue for settling legal disputes. Arbitration proceedings are a good alternative in many domestic and international cases.

Arbitration proceedings have several advantages over judicial proceedings. The former can be conducted more quickly, are less expensive, and are closed to the public. Moreover, the parties are able to choose the arbitrators, provided the latter are free and independent. One benefit of this is that it means real experts who are well acquainted with the subject matter can be chosen. We at the commercial law firm MTR Rechtsanwälte note that the outcome of these proceedings replaces a court judgment and can be enforced both domestically and abroad.

Another important benefit of arbitration proceedings is the fact that they often achieve legal certainty much more quickly. Whereas the parties to court proceedings can potentially appeal multiple times to higher courts, the outcome of arbitration proceedings is normally binding and final at first instance, there being no opportunity to appeal. Indeed, the decision can only be contested in limited circumstances by a regular court of law.

For arbitration proceedings to be initiated, the parties must have concluded a binding arbitration agreement. This can be agreed within the framework of contractual negotiations and affords the parties considerable leeway, it being possible at this early stage to determine key aspects such as the location and language of proceedings, the arbitrations rules, the arbitrators, and, in particular, the applicable substantive laws. That being said, it is equally possible to conclude the arbitration agreement shortly before a legal dispute comes to a head.

The choice of applicable laws or the language of proceedings is particularly significant in cases involving international trade relations. Arbitration proceedings allow the parties to avoid getting themselves into unknown legal territory or involved in litigation risks that are difficult to assess. The final outcome is internationally recognized and enforceable.

Experienced lawyers can advise on concluding arbitration agreements as well as other issues relating to arbitration.

For more information:

https://www.mtrlegal.com/en/legal-advice/litigation/arbitration.html

Criminal tax law continues to apply to requests for tax deferral during the coronavirus crisis

Aug 4, 2020 | Uncategorized

Tax evasion is constituted by sharing inaccurate or incomplete information with the authorities. This also holds true during the coronavirus crisis, tax relief notwithstanding.

To help weather the economic impact of the crisis surrounding the coronavirus, Germany”s federal government has decided to pass tax relief that allows companies and the self-employed to, among other things, defer payment of income tax, corporation tax, and sales tax without incurring interest. It will now also be possible to adjust advance payments. The relevant applications can be submitted to the competent tax office. However, this does not amount to a free ride. We at the commercial law firm MTR Rechtsanwälte note that the information needs to be accurate and complete, otherwise those responsible may be guilty of an offense.

Section 370 of the German Fiscal Code (Abgabenordnung, AO) cites as behavior constituting tax evasion, among other things, sharing inaccurate or incomplete information about facts of material relevance from a tax perspective with the tax authorities or other government agencies, or failure to disclose facts of this nature to the authorities, resulting in lower taxes or other unjustified benefits. The legislation also provides that merely attempting to do so is punishable. Possible consequences arising from a tax offense include fines as well as custodial sentences.

Naturally, this provision equally applies to requests for tax deferral stemming from the coronavirus crisis. Deferring taxes is also viewed as a tax benefit. At the very least, a frivolous understatement of tax as defined in section 378 AO is on the cards. Fines are a possibility here as well.

Anyone accused of committing a tax offense ought to take action immediately, as tax offenses are systemically punished with fines or custodial sentences. In particularly egregious cases, a prison term of anywhere between six months and ten years is possible. Germany”s Federal Supreme Court – the Bundesgerichtshof (“BGH” for short) – starts from the premise that a case is particularly egregious from as little as 50,000 euros in evaded taxes, though the prison sentence may ultimately be suspended.

Having said all that, the first thing that needs to be assessed is whether the charge is, in fact, justified. Should proceedings ensue, an attorney-client relationship based on trust and discretion is essential to coordinating an effective approach.

The extent of the tax evasion also has a major influence on sentencing. If accusations are made on the back of company audits or tax investigations in connection with requests for tax deferrals stemming from the coronavirus crisis, lawyers with experience in the field of criminal tax law should be consulted as soon as possible.

For more information:

https://www.mtrlegal.com/en/legal-advice/tax-law/criminal-tax-law.html