On 16 February 2017, CDC filed an action for damages before the Regional Court of Hannover, Germany in relation to the German sugar cartel.

Background – The German Sugar Cartel

On 18 February 2014, the German Federal Cartel Office (FCO) imposed fines of approximately EUR 280 million on Nordzucker AGPfeifer & Langen GmbH & Co. KG and Südzucker AG for their participation in anticompetitive agreements on sales areas, quotas and prices in the sugar market.

The infringements involved the sale of sugar for the processing industry (processing sugar) and sugar for end consumers (household sugar). They took place over several years until the FCO’s surprise inspections in spring 2009 and in part date back to the mid-1990s.

According to the FCO, the sugar manufacturers formed a ‘territorial cartel’ and for many years agreed to generally limit their sales of sugar in Germany to respective ‘home sales areas’. The aim of the agreements was to achieve the highest possible prices for sugar. Further, the cartel members by means of a ‘homogeneous customer and volume management’ coordinated their activities regarding the EU Sugar Market Regulation, the Eastern enlargement of the EU and changes in import-export flows. Central aspects of the agreements were the ‘home market rule’ and the commitment not to interfere with other cartel members. The sugar producers agreed to export overproduction instead of using surplus to competitively increase their respective market shares in Germany.

According to the FCO, the sugar cartel was not caused by the EU Sugar Market Regulation. Despite the quota system and minimum price guarantees, competition for sales areas, customers and customer prices would still have been possible, but instead the cartel members used ‘the resulting high market transparency for coordination purposes which further limited the residual competition.’ The sugar manufacturers have not appealed the decision of the FCO, whose findings therefore became binding for civil courts in damage proceedings.

CDC’s damage action

CDC has purchased damage claims from 63 German retailers and food/beverage manufacturers, which were affected by the anticompetitive agreements and practices as direct or indirect purchasers of sugar and substitute products during the cartel period. On 16 February 2017, CDC filed an action before the Regional Court of Hannover, Germany, seeking a judgment that Nordzucker AG, Pfeifer & Langen GmbH & Co. KG and Südzucker AG are jointly and severally liable for the damages.

CDC has, together with renowned external experts, conducted an economic assessment of the damage caused by the cartel. Having regard to the fact that the cartel had effects on several market levels, the assessment includes a combined horizontal and vertical economic damage analysis.

The assessment concludes that both direct and indirect purchasers of the sugar manufacturers were significantly overcharged for their purchases of processing sugar, household sugar and substitute products, during the cartel period and even beyond due to lingering effects. The peculiarities of the sugar market, such as the EU Sugar Market Regulation, have been taken into account.

The total damage including interest claimed by CDC exceeds EUR 300 million.