OGH as Cartel Court: Double Jeopardy for Sugar Cartel

Jan 13, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH), in its capacity as the Supreme Cartel Court, has found anti-competitive conduct affecting the Austrian market by Nordzucker AG and Südzucker AG. Unlike the court of first instance, the Supreme Court did not apply the prohibition of double jeopardy.

Background

The case at hand concerned the German market for industrial sugar, which is dominated by three large companies (including Nordzucker AG and Südzucker AG). Historically, the market had been divided into the core sales areas of these producers since the transport costs are decisive for the pricing of sugar, a product hardly distinguishable in terms of quality. From 2004 onwards, EU expansion and a new EU sugar regime led to greater competitive pressure, which is why the German sugar producers agreed not to penetrate each other’s sales territories.

The Austrian market is supplied by a subsidiary of Südzucker AG. Around 2005/2006, the company noticed increasing competition from Slovakia, which could only have come from a subsidiary of Nordzucker AG. As a result, a telephone conversation took place between Nordzucker AG and Südzucker AG in 2006. Südzucker AG expressed annoyance at the deliveries to Austria and hinted at possible consequences for the German market (‘price war’). Nordzucker AG made no promises but took the threat to ‘competitive peace’ in Germany seriously. As a result, sugar deliveries from Slovakia to Austria were reduced to about one third.

Nordzucker AG (having applied for chief witness status under the Leniency Notice) and Südzucker AG were sentenced to pay fines by the German Federal Cartel Office.

Proceedings in Austria

The Austrian Federal Competition Authority (Bundeswettbewerbsbehörde, BWB) applied for a declaration of anti-competitive behaviour under Art 101 TFEU and Section 1 KartG 2005 against Nordzucker and Südzucker because of the telephone conversation in 2006 relating to the Austrian market.

The Vienna Higher Regional Court (Oberlandesgericht, OLG), as the cartel court, dismissed the motion in order to avoid a double jeopardy situation, as the German Federal Cartel Office had already imposed fines.

After having made a preliminary ruling reference to the European Court of Justice, the Austrian Supreme Court did not share the OLG’s view and established anticompetitive behaviour by both companies. There was no violation of the prohibition of double jeopardy (in accordance with ECJ case law) because the German Federal Cartel Office, in establishing and punishing the cartel, had only focused on cartel effects on the German market. The German Bundeskartellamt merely referred to the Austria-related telephone conversation to the extent that the call ‘had reinforced’ the territorial division of the German market. Effects on the Austrian market were not taken into account in the German proceedings.

With regard to the amount of the fines, the OGH referred the case back to the competent court of first instance.

OGH as Cartel Court 16 Ok 2/22p (21 October 2022)