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German flour cartel slammed down with €41m fines

By Kacey Culliney , 20-Feb-2013
Last updated the 20-Feb-2013 at 17:32 GMT

German cartel office Bundeskartellamt has closed a lengthy case and imposed fines against over 20 flour mills for anti-competitive behavior including price fixing, customer allocation and market sharing agreements.

The case closed yesterday following a five-year investigation.

Bundeskartellamt imposed €41m in fines on 22 companies and the association of German Mills Verband Deutscher Mühlen.

VK Mühlen was fined €24m under the same case back in October 2011.

A majority (17) of the 23 companies reached a settlement with the cartel office – ensuring a reduction of up to 10% of the fine. The remaining seven companies did not settle.

Fines have been shared based on the seriousness and duration of involvement as well as the economic viability of each company.

“Since 2001 representatives of the milling companies involved had agreed on prices, customer allocation and supply volumes in regular rounds of talks,” said Andreas Mundt, president of the Bundeskartellamt.

“The agreements applied to all forms of flour distribution, for example, to industrial customers such as bakery product manufacturers and bakery chains, artisan bakers and the direct sale of flour in small packages (maximum 1kg packets) to food retailers,” Mundt continued.

The cartel office added that the companies also coordinated capacity planning by shutting down mills or preventing closed mills to return to operation.

Bundeskartellamt would not comment further on explicit details of the cartel agreements.

It did however explain the involvement of the association of German mills: “A representative of the association of German mills also participated in the cartel discussions and assisted the representatives from the various mills in organizing meetings of the cartel and coordinating the agreements.”

Appeals not expected

Speaking to BakeryandSnacks.com, spokesperson for Bundeskartellamt Kay Weidner said that the office did not anticipate any appeals on the decision.

“The case is itself is closed; it’s finalized but every company has the possibility to appeal. With those who agreed on the settlement, the chance is smaller,” Weidner said.

“We haven’t heard of any appeals against the decision announced yesterday,” he said.

He said that any appeals would have to be taken to the Düsseldorf Higher Regional Court.

When asked what level of impact this cartel has had on the bakery sector, he said that it was difficult to say.

“It has an impact; that is crystal clear. There is an effect, but to give numbers, figures or a percentage is really, really difficult,” he said.

Five year investigation and previous cartels

The German cartel office started its investigation back in 2008 just weeks before dawn raids on mills throughout the country, Weidner said.

Bundeskartellamt said that after raids, several companies filed applications for leniency and offered cooperation in clarifying facts of the case.

French and Dutch competition authorities have already imposed heavy fines on German mills for their involvement in other agreements, the Bundeskartellamt said.

The cartel office explained that French authorities were closely involved in current proceedings as a result.

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