Joint marketing of round timber: CMS achieves partial success for Baden-Württemberg – German Federal Cartel Office suspends immediate enforcement of prohibition decision

Stuttgart – In the competition law proceedings relating to the joint marketing of coniferous stem wood by the Federal State of Baden-Württemberg and its state company, Forst BW, the Federal Cartel Office has now surprisingly reversed its decision concerning immediate enforcement. Initially, the Cartel Office had explicitly rejected suspension of immediate enforcement in the prohibition decision relating to changes to round timber marketing in July 2015. The Federal State of Baden-Württemberg then petitioned Düsseldorf Higher Regional Court for temporary suspension. The Cartel Office has now issued an amending decision. This suspends the immediate enforceability of the prohibition decision and links implementation of the decisions to the administrative finality of the prohibition decision. The Federal Cartel Office is thus forestalling any review of the relevant content by Düsseldorf Higher Regional Court in the application for an interim injunction.

In the application for an interim injunction at Düsseldorf Higher Regional Court, a team from CMS Germany headed by lead partner Dr Harald Kahlenberg represented the federal state in all aspects of the matter. The team argued that immediate enforceability of the prohibition decision must be suspended. In particular, there are serious doubts as to the legality of the prohibition decision. Enforcement of the prohibition decision would also have resulted in undue hardship for the federal state.

This matter, on which CMS is providing the federal state with comprehensive advice, is an important test case for the entire German forestry industry. It will now be possible to clarify some complex, previously unresolved legal issues before Düsseldorf Higher Regional Court in the context of the objection to the prohibition decision. One of the issues in the principal claim will be the question as to whether the Federal Cartel Office was entitled to void a definitive decision on commitments vis-à-vis the Federal State of Baden-Württemberg dating from 2012. Another key matter will be the question of the scope of the term “company” under German and European law (section 1 of the Act against Restraints on Competition (GWB) and Art. 101 of the Treaty on the Functioning of the European Union) with regard to state actions.

In 2008, the Federal Cartel Office formally ended an anti-trust case opened in 2002 against Baden-Württemberg, by means of a decision on commitments. In 2012, the Cartel Office re-opened this case against the federal state. Initially the core claim was that the federal state was not only selling coniferous stem wood from the state's own forests, but also on behalf of municipalities and private forest owners. In 2014, the Cartel Office extended the case to cover the federal state's provision of further forestry services for Baden-Württemberg's municipalities and private forest owners. The federal state initially sought an amicable end to the proceedings by concluding a new decision on commitments with the Cartel Office. Having submitted commitments to the Federal Cartel Office in November 2014, the federal state withdrew them in January 2015. It did so because the Cartel Office, in a post-hearing submission concerning the commitments submitted, presented a legal assessment that was unacceptable to the Federal State of Baden-Württemberg. It would have meant that the legal certainty that Baden-Württemberg was seeking by submitting the commitments would not have been achieved. As a consequence, the Federal Cartel Office issued an immediately enforceable prohibition decision against the Federal State of Baden-Württemberg in July 2015.

CMS Hasche Sigle

Dr Harald Kahlenberg, Lead Partner
Peter Giese
Anne Schroth, all Competition & EU

Press Contact
presse@cms-hs.com