Cartel scandal before the court: illegal price agreements among well-known sausage producers

One of the biggest antitrust scandals in german economic history is being reopened. The court is about millionaire jacks for the "sausage cartel". But also the "wurstlucke", many companies were allowed to escape a penalty as a result of this.

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According to the federal cartel office, consumers in germany have been paying too much for cold cuts for years because of illegal price agreements between sausage producers. In 2014, the competition authority imposed fines totaling 338 million euros on 22 sausage producers and 33 persons responsible for the case.

As of tuesday, the so-called "sausage cartel" employs the dusseldorf higher regional court. Four sausage producers have lodged appeals against the fines of millions of euros.

One of germany's biggest antitrust scandals

One of the biggest cartel scandals in german economic history will be reopened in courtroom BZ5 of the higher regional court. A scandal not only because consumers may have been harmed over a long period of time, but also because a whole series of accused companies were able to escape the fines imposed on them through a legal loophole.

The case: according to investigations by the federal cartel office, 22 sausage producers had coordinated their price demands in negotiations with the food trade for years in order to be able to enforce better payment. Both the prices for goods in the fresh food counters and the prices for packaged sausage in the self-service counters were affected. "The price agreements were practiced for many years", cartel office president andreas mundt explained the unusually high fines in 2014.

Because of a regulatory loophole that existed until recently, the so-called "sausage loophole", however, a whole series of companies were able to escape the fines imposed on them by restructuring internally. They loved to have liable subsidiaries disappear from the market without further ado, which meant that they were no longer available. Proceedings involving a total of around 238 million euros had to be discontinued.

Wiesenhof, rugenwalder muhler and co.

The trial now beginning in dusseldorf therefore only concerns the sausage manufacturers wiesenhof geflugelwurst, rugenwalder muhle, franz wiltmann and heidemark masterkreis, as well as a total of five persons responsible for these companies. They had appealed against the decisions imposing bailout fines on them totaling 22.6 million euros. A total of 40 trial days are scheduled for the proceedings until may of next year.

Wiltmann's managing director wolfgang ingold told the "lebensmittel zeitung" newspaper, his company had also been offered the "sausage swallow" by consultants to use. "But we have nothing to reproach ourselves for, and I want to see that confirmed by a court."

The step before the court is not without risk. "Statistically, most cartel decisions in the past have been upheld by the courts", says antitrust lawyer rene grafunder from the law firm dentons. Only recently, in a similar case against wallpaper manufacturers, the dusseldorf higher regional court significantly increased the bubble fines imposed by the federal cartel office.

However, throws the "wurstlucke" a shadow over the proceedings against wiesenhof, rugenwalder and co. Antitrust lawyer grafunder, at least, says: "it makes you feel strange that small, medium-sized companies should have to pay million-dollar fines while their larger competitors get away without punishment."