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German sausage makers hit by €338m fine

What's the wurst that could happen? German sausage makers who colluded to fix prices of what is probably the country's best-known cuisine now have the answer: a €338m ($460 million) fine.

According to the Federal Cartel Authority, some of Germany's most successful sausage producers have been colluding for decades to fix prices of sausages and related products.

Sausage at an agricultural fair in Berlin, Germany
Krisztian Bocsi | Bloomberg | Getty Images
Sausage at an agricultural fair in Berlin, Germany

The cartel has been dubbed the "Atlantic Circle" – named after the Hotel Atlantic in Hamburg where the sausage producers first met. According to the cartel authority, 21 producers and 33 individuals, all of whom will share the fine, made concrete agreements to jointly raise prices to the detriment of consumers.

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"These price agreements have been practised for many years," said Andreas Mundt, president of the cartel authority. "The total penalty seems high at first glance but makes sense against the backdrop of the large number of companies involved, the duration of the cartel and the billions in sales earned in the market."

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The cartel office said it was tipped off about the price-fixing activities. Eleven companies co-operated, which helped reduce their fines; other companies face individual fines into the high millions.

The list of sausage makers includes some of Germany's best-known producers – including Böklunder, Wiesenhof and Rügenwalder.

The country's largest sausage producer, Zur-Mühlen-Gruppe, which owns the Böklunder and Könecke brands, said on Tuesday it planned to contest the fines and denied the allegations of price fixing.

While cow, sheep and goat meat production has fallen in Germany in the past decade, pork production has gone up from 3.9m tonnes (4.3m U.S. tons) in 2001 to just over 5m tonnes (5.5m U.S. tons) last year, according to the German Meat Association.

Yet the number of craft butchers has been falling steadily as family-owned businesses find it difficult to attract workers, and discount supermarkets such as Lidl and Edeka take their toll. At the end of 2012 there were 14,372 butcher shops across the country, according to the German Butchers' Association – down from nearly 16,000 in 2010.

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The sausage fines are the latest penalty to be announced this year by the Federal Cartel Authority against retail producers in Germany. Eleven breweries – including the Danish brewer Carlsberg – were hit with total charges of €338m ($460 million) for price fixing this year.

In February, Germany's three largest sugar producers were fined €280m ($381 million) for price fixing by the cartel office.

The authority has imposed record fines of more than €900m ($1.2 billion) this year, compared with total fines of just €240m ($327 million) in 2013.

-- By Alice Ross of The Financial Times

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