B) Antitrust law
Competition and free market economy are essential elements of a free society. Their protection is in the interests of our company. All directors, officers and employees who are in contact with competitors, customers or other business partners must comply with antitrust laws at all times.
Disregarding antitrust laws may result in serious sanctions for KRAIBURG. In the past, antitrust authorities have imposed drastic fines upon companies that could amount to up to 10% of their annual group turnover. Additionally, customers and suppliers can claim compensation for damages in such cases. Under German law, drastic fines can also be imposed on employees involved in the violation. In the U.S. and in some European countries misconduct can be penalized with imprisonment.
1. Restrictive agreements among competitors
Restrictive agreements among competitors are usually violating competition (antitrust) laws and therefore prohibited. The term „agreement“ is interpreted extensively. Even informal conduct and mere exchanges of information are included. The most important restrictive agreements include:
- Fixing and coordination of prices, mark-ups or other pricing matters (e.g. discounts, allowances, terms of credit) with competitors;
- Agreements among competitors that determine capacities or procurement quantities;
- Partitioning of markets, particularly allocating customers and territories to each other and demarcating product ranges or series;
- Non-compete obligations that restrain a company from supplying customers of a competitor;
- Exchange of non-public sensitive industry information, such as turnovers, prices, strategies, customer data or market shares.
Provided that economic cooperation among competitors is beneficial to the public, it may be exempt from competition (antitrust) regulations under strict conditions. Among other things, this includes purchasing groups, research communities, development communities and production communities as well as agreements on technical standards.
2. Agreements with customers and suppliers
Agreements with customers or suppliers may be subject to competition (antitrust) legislation as well. Companies not only run the risk of having fines imposed on them, but also the danger that distribution and purchasing agreements that violate competition (antitrust) regulations will be invalid and thus unenforceable. The following agreements may be affected:
- Agreements that oblige the customer to resell at minimum or fixed prices;
- Supply agreements that bind the customer to buy 100 percent of its requirements for a certain product from a specified supplier;
- Exclusive distribution agreements; Agreements that restrain customers or suppliers from buying certain products from or supplying specified goods to specifically named companies.
3. Abuse of a market dominant position
Market-dominating or strong companies must not abuse their position to weaken competition at the expense of competitors, customers or suppliers (unless there is an objective justification). Market domination is usually thought to exist at a market share of 33%–40% (defining correct individual market demarcations may be difficult).
The following examples may constitute an abuse of a dominant market position:
- Discrimination between similarly situated customers or suppliers
- Refusal to supply (e.g. delisting of customers)
- Demanding excessive prices
- Predatory pricing (i.e. pricing goods below costs)
- Loyalty rebates that reward the customer retroactively for pooling their purchases at a market-dominating company