On October 9, 2018, the FCJ quashed the DCA decision that had increased the FCO’s fines on five members of the liquefied petroleum gas (“LPG”) cartel significantly. The FCJ found that the DCA’s calculation of the fines was flawed and referred the case back to the DCA – providing guidance on how to assess the right basis for the fines.
In 2007, the FCO had imposed fines totaling €208 million on seven LPG suppliers for allocating customers and deterring them from switching suppliers. Upon appeal by five LPG suppliers, the DCA reviewed the FCO’s decision and ultimately increased their cartel fines from €180 million to a total of €244 million. In particular, the DCA found that the FCO had determined the suppliers’ additional revenues gained through the infringement (kartellbedingter Mehrerlös) as too low. As these additional revenues provided the basis for the FCO’s calculation of the fines, the DCA increased the individual fines substantially – in some cases by as much as 85%. After its longest cartel fine proceeding until that date (136 days of hearings), the DCA decision marked the first time that the DCA actually increased a cartel fine imposed by the FCO.
While the FCJ confirmed that the DCA was right to base its fine on the additional revenues gained through the cartel infringement, it did not approve of the DCA’s methodology to assess the value of the additional revenues.
The FCJ confirmed that the calculation of additional revenues may – in general – be based on different methodological approaches, inter alia, by comparing prices on a cartelized market with prices on a cartel-free market or on the basis of a cost-based analysis. However, if a court decides to apply a methodology that is not among the generally accepted and well-established economic methods, it must demonstrate its suitability and provide reasons for choosing it.
The DCA, however, did not provide reasons for applying an intra-market price comparison. This method compares the prices of cartel members with the prices of other LPG suppliers in the market that have not been found to have participated in the cartel and does not constitute a generally accepted calculation method. The FCJ considered an intra-market price comparison generally fraught with uncertainties regarding the correct benchmark. In particular, it must be assumed that within a given market, a cartel would typically have an impact on non-cartelists’ pricing decisions (so-called “umbrella effect”).
In particular, the FCJ found that the LPG cartel’s high market coverage and longevity, as well as the homogeneity of the affected products, would rather have corroborated the assumption that the cartel indeed had an inflating (umbrella) effect on the non-cartelists’ prices. In addition, there were a number of other factors that could have had a decisive impact on the LPG suppliers’ pricing decisions – irrespective of any cartel infringement. The DCA would have needed to (but did not) take these factors into account, e.g., by applying safety margins.
The FCJ’s decision once again illustrates the complexity of economic questions and hypotheses that cartel authorities and courts face when determining and reviewing cartel fines. The FCJ pointed out that authorities and courts alike should involve technical experts to take full account of and handle this complexity.
It will be interesting to see how the DCA will implement the FCJ’s guidance and to which result this may lead.
In a parallel proceeding concerning the LPG cartel, the FCJ ruled that if courts want to reject an application for evidence in legally and factually complex cartel fine proceedings, they cannot refer only to a general statement that the taking of evidence was not necessary. Instead, courts are obligated to provide reasons why, in the case at hand, an investigation was not necessary.
 Flüssiggas (B11-20/05), FCO decision of December 14, 2007, a Case Summary is available in English here. Cartel members had agreed to quote not at all, or extremely high, non-competitive prices if customers attempted to switch.
 Under the applicable law at the time of the FCO decision, fines could amount up to three times the additional revenues gained through the infringement. This provision was abandoned with the 7th amendment of the German ARC in 2005.
 This may be a comparison of prices over time in the same market, in other geographic markets or other product markets, or a combination of the comparison both over time and across markets.