Last week, the Higher Regional Court of Düsseldorf overturned a decision by the German Federal Cartel Office (FCO) due to a formal violation of the law. While the full decision has not yet been published, a prior preliminary injunction provides insight into what is likely the court’s main reasoning. Among other points, the court criticized the FCO’s handling of its case files. This is not the first time the regulator has faced accusations of careless record-keeping – as my research below shows.
The airline case
The German airline Condor uses Lufthansa’s (Germany’s by far largest airline) short-haul flights together with its own long-haul services to sell passengers a single, seamless connection. Condor was part of Lufthansa until 2009, and the two companies had a special arrangement for settling prices. Lufthansa ended this agreement in 2020.
In August 2022, the FCO ruled that by ending the deal, Lufthansa had violated antitrust law. It required Lufthansa to put in place new special agreements that meet specific conditions. Upon Lufthansa’s appeal, the Higher Regional Court of Düsseldorf, by decision of 10 May 2024, ordered the suspensive effect of the appeal until a ruling in the main proceedings, due to serious doubts as to both the formal and substantive legality of the FCO’s decision, and ultimately annulled the FCO’s decision last week, solely due to formal reasons.
According to what can be taken from the preliminary injunction, the court had serious doubts as to whether the FCO had investigated the case with an open mind and free from political influence. These concerns stem from a call between the FCO and the German Federal Ministry of Economics at a time when responsibility for handling Condor’s complaint had not yet been determined, no statement from Lufthansa was available, the administrative proceedings had not been opened, and no investigation had been initiated. The FCO documented this call in a note.
However, according to the court, when Lufthansa later requested access to the file, it was provided with a different version of the note in which certain passages from the original had been omitted. The court found that this strengthened the concern of bias against the FCO, particularly because the version made available to Lufthansa during the file inspection excluded the wording that had given rise to such concerns.
The plant protection products case
In early 2020, the FCO imposed fines totalling EUR 157.8 million on eight producers of plant protection products for their participation in a cartel. After the fine proceedings had become final and the penalty had been paid, one of the parties involved, BayWa AG, brought a public liability action before the Regional Court of Bonn, seeking damages of approximately EUR 73 million for the FOC allegedly breaching official duty during the preliminary investigation.
The lawsuit concerned the fact that, on 12 January 2015, the FCO had contacted three companies to inform them about anonymous tips it had received. One company applied for leniency on the same day, another the following morning, while the third remained silent. The FCO, however, did not prepare a memorandum of the calls until 18 February 2015 – backdated to 27 January 2015 – after internal discussions as to whether such a memo was necessary. The memo stated that the FCO official had selected these companies because he believed they were committed to compliance with antitrust law and were not central players in the cartel.
The Regional Court of Bonn held that although the memo – an important piece of evidence – had been backdated, the behaviour of the FCO did not constitute a violation of the principle of equal treatment. This ruling was subsequently upheld by the higher courts.
The sausage case
In 2014, the FCO imposed fines totalling EUR 338.5 million on 21 sausage producers for their participation in the so-called “sausage cartel”. However, some participants never paid their fines due to a (meanwhole closed) loophole in the law – famously referred to as the “Wurstlücke / sausage gap”. Other companies that could not benefit from this loophole appealed the decision.
During one of these proceedings before the Higher Regional Court of Düsseldorf in 2018, notable issues regarding the FCO’s file management came to light. The FCO’s files were allegedly incomplete: For example, they contained no record of contacts between the leniency applicant and the regulator prior to the leniency application, even though the applicant maintained that such contacts had occurred months before the investigation began. Moreover, when applying to the Regional Court of Bonn for a search warrant, the FCO failed to disclose the existence of its key witness. Instead, an FCO official claimed that the investigation had been triggered by an anonymous tip. Finally, when asked why a potentially exculpatory half-sentence had been removed from a transcript, an FCO representative reportedly explained that the omission was due to a technical error.
The case against this claimant was eventually discontinued but not because of inconsistencies in the FCO file.
The practitioner’s takeaway
Access to the case file is one of the most important procedural rights granted to parties in antitrust proceedings. It ensures transparency, enables an effective defence, and allows parties to verify whether the authority has conducted its investigation properly and lawfully. As the cases above illustrate, exercising this right should not be treated as a mere formality. On the contrary, a thorough review of the case file can be decisive.
Careful examination may reveal inconsistencies, omissions, or procedural irregularities that would otherwise remain hidden. In some situations, such findings can fundamentally change the dynamics of a case – sometimes even turning what initially appears to be a hopeless situation into one with strong arguments for the defence.
Photo by Mr Cup / Fabien Barral on Unsplash
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