On September 20, 2019, the FCO prohibited SAKRET Trockenbaustoffe Europa GmbH & Co. KG (“SAKRET Europe”) from continuing to undertake distribution activities for its shareholders and sublicensees of the SAKRET brand regarding the sale of dry building materials.[1] In doing so, the FCO revoked an exemption it had granted back in 1982.

The SAKRET brand is owned by a U.S. company, which has licensed the use of the SAKRET brand name and dry mortar formula to independent manufacturers of building materials worldwide. SAKRET Europe, the licensee for Germany and Europe, has issued sublicenses to its shareholders and other construction companies. In addition, SAKRET Europe has centrally organized the distribution activities of its German sublicensees by negotiating prices with do-it-yourself stores. It has also negotiated framework conditions with specialized building materials traders.

In 1982, the FCO had recognized SAKRET Europe and its distribution activities for its shareholders and sub-licensees as a cartel of small and medium-sized enterprises, an exemption expressly provided for under German competition law. The exemption presupposes, inter alia, that the market share of all cartelists does not exceed 10-15%. Since 1990, however, Gebr. Knauf KG (“Knauf”), one of the world’s largest drywall and insulation manufacturers, acquired several of the medium-size companies that were part of SAKRET Europe’s network. This resulted in the network, including Knauf, exceeding the market share threshold. Accordingly, the FCO found that SAKRET Europe’s distribution activities, which harmonized the market behavior of its sublicensees and therefore led to a noticeable restriction of competition, could no longer benefit from the exemption.

Interestingly, the FCO suggested during the proceedings that SAKRET Europe could have continued its distribution activities in accordance with German antitrust law without Knauf’s participation. However, this proposal failed due to the lack of approval by SAKRET Europe’s shareholders.\

[1]              FCO Press Release, September 20, 2019, available in English here.