The German Federal Cartel Office (“FCO”) has endorsed a “one-time temporary cooperation project” of Germany-based sugar manufacturers Nordzucker, Südzucker, Pfeifer & Langen and Consun Beet to coordinate capacities for the processing of sugar beets from September 2022 to March 2023 in light of the dawning gas supply shortage.
The FCO’s decision reflects the global impact of the ongoing war in Ukraine on the rising energy prices. While the FCO has registered an increased need for support in all sectors, sugar production was hit especially hard by the rising energy prices as 18 of the factories in Germany run on natural gas and the production process is highly energy-intensive. Producers were not able to convert their factories from natural gas to other energy sources by the time the harvest started. With this in mind, the cooperation is intended to mitigate the effects of possible gas shortages on the sugar production. According to Andreas Mundt, President of the FCO, it should be avoided, “in the interest of consumers” that the freezing of production due to gas shortages cause harvests to rot. 
Germany-based sugar producers published a plan to enter into a cooperation agreement allowing them to make their production facilities available to competitors in case of a gas supply shortage. After an informal evaluation of the planned cooperation, the FCO sent a comfort letter to the sugar producers informing them that it will refrain from a more in-depth examination, provided that the following conditions are met:
- Government-imposed energy management measures must lead to a reduced or suspended gas supply and, as a result, to a production stop at one of the producer’s sites.
- The sugar manufacturer must first and foremost supply its own production sites across Europe, which are either not operated with natural gas or still have capacities, with what is left over from the factory shutdown, if the transport is economically viable.
In light of past experience, in particular the formation of a cartel by three major sugar producers in Germany (“sugar cartel”) which was sanctioned in 2014, the FCO stressed that even during the temporarily permitted cooperation the flow of information regarding production costs and customer relationships must remain limited to the absolute minimum necessary. Therefore, the FCO will also rely on the “Verein der Zuckerindustrie”, the industry association of sugar manufacturers, and an independent economic consultant to coordinate and monitor available capacities and production costs. Neither the calculation nor the data used are to be passed on to the sugar manufacturers.
The FCO follows the European Competition Network (“ECN”)’s Joint Statement according to which a cooperation between companies that aim to overcome a specific crisis will not be considered a restriction of competition or—as in this case—will not be actively intervened against, provided that the measures are strictly necessary, temporary and aimed at avoiding the severe disruptions caused by the impact of the crisis or the sanctions in the EU internal market.
The FCO’s decision is also in line with its previous practice during the Covid-19 pandemic to allow temporary cooperation objectively necessary to avoid supply shortages.
The FCO’s “green light” for the cooperation between sugar manufacturers is another example of competition authorities’ readiness to exceptionally allow unavoidable and temporary horizontal cooperation in times of crisis. In light of the looming energy crisis and the war in Ukraine, it can safely be assumed that temporary cooperation between competitors will also emerge in other industries.
 FCO Press Release of September 6, 2022, available in English here.