Bundeskartellamt imposes fines totalling 660 million Euro on companies in the cement sector on account of cartel agreements

The Bundeskartellamt has imposed the first fines totalling approx. 660 million Euro in its cartel proceedings against companies in the cement sector. Administrative orders imposing fines have been issued to the six largest German manufacturers, Alsen AG, Dyckerhoff AG, HeidelbergCement AG, Lafarge Zement GmbH, Readymix AG and Schwenk Zement KG.

The accused companies operated anti-competitive market allocation and quota agreements, some of them since the 1970s, and continued to do so until 2002. The geographic markets affected were the four regional cement markets eastern Germany, Westphalia, northern Germany and southern Germany.

The President of the Bundeskartellamt in Bonn, Ulf Böge, attributes the successful breaking up of the cartel mainly to the leniency programme published in 2000 and the establishment in 2002 of the Bundeskartellamt’s Special Unit for Combating Cartels. Following information obtained from the construction industry the Bundeskartellamt carried out a nation-wide search of 30 cement companies in July 2002. This was followed in January 2003 by further searches of eight small and medium-sized cement manufacturers in the southern German area. The evidence seized during the searches and the confessions by the large manufacturers, some of which fully confessed, confirmed the existing suspicions.

Mr Böge stated: “Due to the agreements between the German cement manufacturers which had been going on for decades competition was almost completely excluded in this market. Prices could thus be raised to a level that would have been unattainable under competitive conditions. Buyers of cement and consumers have thus been massively harmed. In addition there is the damage caused to the economy as a whole by artificially keeping up outdated market structures. Therefore it is reasonable that the Bundeskartellamt levied by far the highest fines in its history in these proceedings.” According to Böge, without the comprehensive cooperation by some of the companies the fines would have been considerably higher. The present amount was thus still moderate.

Böge expects company staff at all levels to understand how serious the Bundeskartellamt is about combating such cartel agreements. The high degree of public attention this case has met with will hopefully heighten awareness of the harmfulness and reprehensibility of cartel agreements in other sectors as well. Böge therefore called on those in charge to prevent possible violations of cartel law by means of internal training programmes. This, of course, could only be effective in the sense of a better understanding of competition if company managers were not involved in the creation of a cartel themselves, as had been the case in the cement cartel according to the authority’s findings.