Antitrust fine on Kraft and Unilever may act as 'deterrent' to others, lawyer

By Jane Byrne

- Last updated on GMT

Related tags Unilever

The German cartel office’s fine of €38m imposed on Kraft Foods, Unilever and Dr Oetker for illegal disclosure of ‘competition relevant information’ may act as a deterrent to other brand owners and help end such practices, claims an antitrust expert.

The three companies were found guilty of violating competition laws by meeting over a period of several years to discuss negotiations with retailers on products including confectionery, ice cream, dry ready-to-eat meals and frozen pizzas, said the Bundeskartellamt last week.

The exchange of competition sensitive information is illegal under German and European competition law.

Antitrust lawyer at Eversheds, Andrew Collinson, told this publication that the German cartel office’s fine of €38m in terms of fiscal magnitude was certainly "not massive"​ in comparison to recent UK fair trading cases.

But he stressed that the move reflects a tendency on the part of competition authorities throughout the bloc “to focus on the damage to competition caused by this exchange of sensitive information” ​and sends out a strong message to others in the industry that further anti-trust behaviour will not be tolerated.

Andreas Mundt, president of the Bundeskartellamt, said in relation to the case that: “Competition is impaired by such practices, even if they are not classical hardcore agreements about prices, supply areas, customers or quotas."

Authorities were alerted to the Kraft, Unilever and Dr Oetker discussions by a worker at the German division of the US conglomerate Mars, which under cartel authority rules will not be fined as a result.

The German authority said that a probe is ongoing into a fourth major food manufacturer. In addition, it revealed that it is following up “the suspicion of agreements on price increases between two leading manufacturers of confectionery in two further proceedings”.

The orders imposing the fines could be appealed at the Düsseldorf Higher Regional Court. However, the cartel office said that all three food manufacturers have agreed to have the proceedings terminated by settlement.

Collinson said he was not surprised at the companies’ decision to settle due to “the uncertainty and costs involved in antitrust cases, in addition to the fact that they are extremely time consuming for top management.”

He added that often it is more reputation enhancing for brand owners to ‘own up and get a case settled swiftly’​ than going down the appeal route that obviously attracts a lot of unwarranted negative publicity.

Kraft Foods was unavailable for comment prior to publication, while pizza manufacturer Dr Oetker declined to respond to this publication's requst for information.

But a​statement from Unilever revealed: “The settlement brings this matter to an early conclusion and is considered to be in the best interests of Unilever.”

According to that company, the German competition authority opened an investigation into several food manufacturers in 2008, including Unilever, over the supply of certain food products in Germany.

“Regarding Unilever the investigation focused on information exchanged in 2006, and does not concern ongoing operations,” ​stressed the food group.

Unilever added that it is fully committed to respecting all applicable laws and it is its policy to co-operate fully with the competition authorities. “In addition, Unilever reinforces and enhances its internal competition law compliance procedures on an ongoing basis.”

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