German firm fined millions in 'sausage cartel' case

02.10.2018

Sausage prices had been artificially inflated in Germany for decades, according to the nation's anti-cartel authority. Food producer Wiltmann faces a large fine after refusing to hide behind the "sausage loophole."

Germany's "sausage cartel" included over 20 companies that had conspired to keep sausage prices high by using their "sandwich position" between meat suppliers and supermarkets, a regional court in Düsseldorf ruled on Tuesday.

The court rejected the appeal of food producing company Wiltmann and ordered it to pay a fine of €6.5 million ($7.5 million) for price fixing. Company executive Wolfgang Ingold should personally dish out €350,000.

The court found that the north German company was involved in the scheme between 1997 and 2009, but Germany's anti-cartel watchdog believes that the conspiracy first started in the early 1980s.

"The cartel was set up to last," presiding judge Ulrich Egger said on Tuesday, comparing the sausage producers to a "small family."

According to the judge, the firms' representatives would consult by telephone and agree on raising the prices of their products.

"It was also determined who would lead the way, based on tactical reasons," the court said.

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'I'm not aware of any wrongdoing'

The Tuesday ruling is only the latest turn in a yearslong saga, which started with an anonymous tip to Germany's Bundeskartellamt. In 2014, following a monthslong investigation, the anti-cartel authority imposed fines worth a total of €338 million on 22 companies and 33 individuals for price fixing.

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However, less than a third of that money reached state coffers due to a controversial loophole. The legal quirk, now known as the "sausage loophole," allowed parent companies to avoid paying fines simply by shuttering the subsidiaries that had been ordered to pay.

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Most of the remaining companies either paid the fines or managed to halt the proceedings. However, Wiltmann's top executive at the time, Ingold, decided to push on, ultimately leaving his company alone in the legal battle against the regulators. He also said he would not use the "sausage loophole" to avoid paying fines.

"I am not available for any deals," Ingold told the dpa news agency in December 2017. "I'm not aware of any wrongdoing."

Following the Tuesday verdict by the Higher Regional Court, the company is now considering taking the case to Germany's Federal Court of Justice, which is the nation's top criminal court. It's highly likely that this would be Wiltmann's last chance at an appeal.

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dj/msh (dpa, AFP)

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