Chanel among luxury players to withdraw appeal of German court fines

By Michelle Yeomans

- Last updated on GMT

Chanel among luxury players to withdraw appeal of German court fines

Related tags Appeal

Nine major luxury cosmetics players have withdrawn their appeals against the German Federal Cartel Office (“BKartA”) who fined them for exchanging commercially sensitive information back in 2008.

The appeals relate to a 2008 case where BKartA imposed fines ranging from €250,000 to €2.1m, and totalling €9.66m on nine manufacturers of premium cosmetics, including Chanel, Clarins, Coty, Estée Lauder, L’Oréal and Shiseido for exchanging commercially sensitive information. 

According to BKartA, brand representatives met in a so-called “round table in the castle” (“Schlossrunde”) to disclose and discuss quarterly revenues, advertising expenditure, returns, planned new product launches, behaviour in relation to specific perfumeries, other “strategic items” and, in some cases, intended price increases. 

The German Office reckoned that these exchanges of information restricted competition and were likely to result in a collusion between the participants.

Most of the companies who were the subject of the fines filed appeals to the Düsseldorf Court of Appeals.

Luxury brands faced even higher fines​ for appealing

According to the BKartA, the Court of Appeals indicated to the cosmetic companies that it would side with the BKartA and that the luxury players would face even higher fines because of the new principles on fines for anti-competitive conduct, which the Office adopted in 2013.

Under these new guidelines, the starting point for the calculation of the applicable fine is the “gain and harm potential” of an infringement, which is usually 10% of the turnover of the company generated through the cartelised market/activities. 

This number is then multiplied by a factor determined by the size of the company, and both mitigating and aggravating factors of a specific case have to be considered.

When advising members of the Cosmetics Cartel that it would be likely to increase the fines imposed by the BKartA, the OLG Düsseldorf apparently referred to, and endorsed, the new practice of the BKartA.

The case revealed that it is vital for companies to be cautious and to either avoid, or to carefully limit, disclosing internal data to competitors.

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