Antitrust Law Newsletter
Universal successors are liable for cartel infringements perpetrated by their legal predecessors if their role is solely that of a legal and commercial cloak for such predecessor. The successor cloaks the predecessor if the predecessor’s assets remain economically independent and constitute a substantial part of the successor’s overall assets. This criterion is now deemed sufficiently met if the assets assumed (co)define the successor and do not entirely or almost entirely recede into the background (Federal Court of Justice (FCJ) [Bundesgerichtshof, BGH] decision dated 27th January 2015, KRB 39/14 – Kaffeeröster).
In the circumstances up for judgement by the FCJ, the Federal Cartel Office (“FCO”) [Bundeskartellamt, BKartA] had fined Melitta Kaffee GmbH a sum of EUR 55 million. Subsequent to filing an opposition against the penalty notice, Melitta Kaffee GmbH was merged in November 2012, together with Melitta Haushaltsprodukte GmbH & Co. KG, into Melitta Europa GmbH & Co. KG. The original addressee of the penalty notice ceased to exist upon the execution of the merger. The Higher Regional Court [Oberlandesgericht, OLG] of Dusseldorf subsequently enforced the penalty liability against the universal successor Melitta Europa GmbH & Co. KG in opposition proceedings.
The FCJ confirmed Melitta Europa GmbH & Co. KG’s responsibility for its predecessor’s cartel infringement on grounds that the assets of the cartel infringer Melitta Kaffee GmbH were substantially contained in an undiminished form in the assets of the assuming universal successor. Following the merger, the business areas of the former companies Melitta Kaffee GmbH and Melitta Haushaltsprodukte GmbH & Co. KG had continued to exist and now – cloaked by the universal successor Melitta Europa GmbH & Co. KG – co-existed separately in terms of premises, staff and organisation. The coffee business of the former Melitta Kaffee GmbH continued to operate from the same business establishment under the same management and with the same staff within the scope of the universal successor. The FCJ therewith deemed at least the assets of the former Melitta Kaffee GmbH to be definitive for the overall assets of the universal successor, especially since the overall enterprise generated more than half of its turnover with the coffee business contributed by Melitta Kaffee GmbH. This justified the universal successor’s liability for the cartel infringement of
The FCJ’s decision is significant for the liability of legal successors of cartelising enterprises because it weakens, respectively extends, the liability conditions that have been established by jurisprudence to date. Jurisprudence previously required the fulfilment of three criteria for the direct liability of the legal successor (fundamentally: see FCJ decision dated 10th August 2011 – KRB 55/10 – Versicherungsfusion): (1) the “liable assets” must be separate from the assets of the new legal entity, (2) they must be used in the same or similar manner as before and (3) they must constitute a substantial part of the overall assets of the new legal entity. Thus, on grounds of the last criterion, direct liability was only permissible in exceptional cases, namely when the cartelised enterprise was continued (virtually) unchanged by the new legal entity and the new legal entity‘s assets essentially receded into the background in relation to the other assets. This approach was even reconfirmed by the FCJ in December 2014 in the 'Silostellgebühren' case (FCJ decision dated 16th December 2014 – KRB 47/13).
In contrast hereto, according to the FCJ’s Kaffeeröster decision, the legal successor’s liability is now also to be possible if the assets of the enterprise involved in the cartel only (co)define the new overall enterprise and do not entirely or almost entirely recede into the background. In the case up for judgement by the FCJ, such co-definition was deemed established on grounds that the merged enterprises came from different branches and their diverse branch activities – under the cloak of the overall successor – had continued to co-exist separately in terms of premises, staff and organisation.
This contradiction of previous jurisprudence creates considerable uncertainty regarding the successor enterprise’s liability for cartel infringements, especially with respect to all of those reorganisations which were executed prior to the statutory extension of the successor’s liability as per 30th June 2013. In practice, companies will have to closely examine – bearing in mind the new FCJ’s Kaffeeröster decision – whether the prerequisites for the successor’s liability have been fulfilled after a reorganisation.
If a reorganisation was executed after 30th June 2013, then pursuant to Sec. 30 Subsec. 2a German Administrative Offences Act [Gesetz über Ordnungswidrigkeiten, OWiG] a fine can already be imposed by law against the legal successor if the reorganisation led to a universal succession or partial universal succession by way of division. Still unanswered, however, is the question of whether reorganisations by spin-off or individual legal succession can lead to a liability of the legal successor. An escape from penalty liability through corporate reorganisations will therefore remain a current topic and will continue to occupy the courts.
Dr. Daniel Dohrn
Telephone: +49 221 2091 441
Telefax: +49 221 2091 333
Dr. Andrés Martin-Ehlers, LL.M.
Telephone: +49 69 707968 182
Telefax: +49 69 707968 111
Brazil, Central and South America, Mexico, Portugal, Spain
Dr. Simon Spangler, LL.M.
Telephone: +49 69 707968 183
Telefax: +49 69 707968 111