German Report

© Springer-Verlag Berlin Heidelberg 2015
Pierre Kobel, Pranvera Këllezi and Bruce Kilpatrick (eds.)Antitrust in the Groceries Sector & Liability Issues in Relation to Corporate Social ResponsibilityLIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition10.1007/978-3-662-45753-5_26

26. German Report

Susanne Augenhofer 

Civil Law, European Private Law, Comparative Law and Market Regulation through Consumer Law and Competition Law, Humboldt-University, Berlin, Germany



Susanne AugenhoferProfessor

The author would like to thank Carmen Appenzeller for help with editing this report. The report was written in May 2013 and has only been slightly updated for publication. References are kept to a minimum.

26.1 CSR Policies in Germany and Legal Concerns

In Germany, there are various kinds of CSR policies. As the introduction to this book already suggests, CSR policies may be adopted by or together with NGOs, business associations or consumer organisations, and they may address questions of external (e.g., eco/social sponsoring, eco/social-friendly branding) or internal policy (e.g., treatment of employees).

With regard to legal consequences, the main distinction depends on whether or not a CSR policy falls within the definition of a code of conduct (Verhaltenskodex) according to Section 2 subsection 1 No. 5 of the Act Against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb,1 UWG). This provision states that codes of conduct “shall mean an agreement or set of rules which defines the conduct of entrepreneurs who have undertaken to be bound by the code in relation to business sectors or individual commercial practices, without such obligations having been imposed by statutory or administrative provisions”.2 By contrast, the definition of CSR is broader, encompassing any social or environmental issue a business addresses without being legally obliged to do so.3 Consequently, while all codes of conduct can be CSR policies, not all CSR policies are codes of conduct according to the definition of the UWG. For example, the statement by an enterprise that a certain percentage of its profit is donated to charity can be qualified as a CSR policy but not as a code of conduct (cf. the definition of codes of conduct supra).

Within these two main categories, CSR policies can be found in practice with different variations, such as codes of conduct adopted with or without the involvement of public authorities or organisations. As an example of the former may serve the code for quality and safety regarding the online sale of cars and motorbikes (Kodex für Qualität und Sicherheit beim Fahrzeughandel im Internet).4 This code was developed jointly by the Centre for Protection Against Unfair Competition (Zentrale zur Bekämpfung unlauteren Wettbewerbs e.V., abbrev. Wettbewerbszentrale), the German motor industry, the German automobile club and two online selling platforms. Other examples of CSR in the form of codes of conduct are the advertising regulations published by the German advertising self-regulation body (Advertising Standards Council, Werberat).5 Generally speaking, one can note that the reference to CSR policies in commercial practices has increased over the last years. CSR policies are used more often, especially with regard to organic food and environmental issues.6 Most supermarket chains in Germany refer on their homepage to the social and ecological factors under which their products are manufactured. But one can also find CSR policies involving donations to charities or other external activities, e.g., a supermarket claiming that it will plant a tree for every 10 EUR spent by a customer.

In addition, CSR policies are more frequently the subject of public statements in the aftermath of crises. As an example, one can refer to the collapse of factory buildings in Bangladesh in May 2013. Soon after, clothing companies—including German enterprises—published statements and/or codes of conduct aiming to ensure that their clothes are produced respecting the fundamental rights of their workers, particularly regarding adequate safety and working hours. Once again, we can observe the above-mentioned distinction between CSR in the (narrow) form of codes of conduct and CSR policies more broadly: some businesses have signed a code of conduct, the Bangladesh Safety Accord,7 which was developed, i.a., by IndustrieALL and UNI Global Union,8 while others have developed their own CSR policies with regard to worker safety. As will be analysed in the following paragraphs, the UWG is capturing all CSR policies—or rather their violation—regardless of their specific form as long as they can be qualified as “commercial practices” (cf. Section 2 subsection No. 1 UWG). However, different sections of the UWG—with different preconditions—will apply.

26.2 Prevention of and Sanctions for Breaches of CSR Policies Under German Law

26.2.1 Relevant Legislation The UWG: General Remarks

The law applicable to breaches of CSR policies in Germany—as long as they can be qualified as commercial practices (Section 2 subsection 1 No. 1 UWG)9—is the above-mentioned UWG. As a result of this broad definition, it is hard to imagine CSR policies that do not fall within this definition as all CSR policies aim at the creation of a positive impression of a business and thereby the enhancement of sale.10

As the first act against unfair competition was already enacted in 1896,11 it is fair to say that the law against unfair competition/commercial practices has a long tradition in Germany. The current UWG was adopted in 200412 but was amended in 2008,13 when Germany had to implement the Unfair Commercial Practices Directive (UCPD).14 The UWG generally applies to B2C and to B2B commercial practices as it aims at the protection of competitors, consumers and other market participants, as well as at the protection of the public’s interest in undistorted competition (cf. Section 1 UWG). However, as a result of the implementation of the UCPD—which applies to B2C commercial practices only—there are slightly different rules applicable to B2C relations. For example, Annex I of the UCPD was implemented only with regard to B2C relations (cf. Section 3 subsection 3 UWG).

It is important to note already at this point that a violation of CSR policies—regardless of whether it can be qualified as a code of conduct or not—is not per se unfair.15

While today references to CSR policies are allowed in commercial practices unless they are misleading, aggressive or unfair under the general clause of Section 3 subsection 2 UWG (for details, cf. the following paragraphs), such statements were considered unfair—and consequently prohibited—under the German law of unfair competition for a long time. Courts held that statements referring to facts that were not directly connected to the characteristics of the advertised product or service would influence consumers in an inappropriate way by putting them under pressure, thus deterring competition on the merits.16 An advertisement by McDonald’s, stating that a certain percentage of profits from all Big Macs sold on a specific date would be donated to a German charity organisation, was held unfair under this former approach.17 CSR in the Form of Codes of Conduct

As stated above, the main distinction—regarding the legal consequences of a business’s breach of its CSR policy—has to be drawn between codes of conduct and CSR policies that do not fit into the definition of codes of conduct provided for in Section 2 subsection 1 No. 5 UWG.18 This definition was adopted from Article 2 lit. f UCPD when the directive was implemented into German law. As a result, Section 2 subsection 1 No. 5 UWG has to be interpreted in light of the UCPD. To be qualified as a code of conduct, a CSR policy consequently must meet the following criteria: agreement or set of rules, in relation to commercial practices, and voluntariness.

Agreement or Set of Rules

Codes of conduct under Section 2 subsection 1 No. 5 UWG require an agreement or a set of rules. From the term “agreement”, it is concluded that there must be more than one party to a code of conduct.19 However, it is sufficient that one party has already undertaken to be bound by the code as long as other businesses have the possibility to sign the code as well.20 It has rightly been pointed out that for the qualification as codes of conduct, it is of no importance what kind of legal nature an agreement or set of rules has and how it is labelled.21 In addition, the qualification as a code of conduct has to be made regardless of the process by which the agreement was developed.22

It has been discussed whether the definition in Section 2 subsection 1 No. 5 UWG requires the code of conduct to have external effects. This discussion seems to be rather hypothetical as codes of conduct used as CSR policy will always have external effects in the sense that it will be made available to the public. Consequently, when a business refers to its having adopted, e.g. the German Corporate Governance Code,23 it has to be regarded as code of conduct in the sense of Section 2 subsection 1 No. 5 UWG as well.24

In Relation to Commercial Practices

The code of conduct must regulate the behaviour of businesses with regard to commercial practices. The term commercial practices is defined in Section 2 subsection 1 No. 1 UWG and has been introduced into the UWG when implementing the UCPD. It follows from this definition, as well as from the jurisprudence of the Court of Justice of the European Union (CJEU), that the term “commercial practices” has to be understood in a broad sense.25 Consequently, the scope of application of codes of conduct is rather wide, basically comprising all activities before, during or after the conclusion of a business transaction, connected with the promotion, the sale or the procurement of goods or services.

Regarding the subject of codes of conduct, they can have rather different contents. As it has to go beyond the already legally binding standard,26 a code of conduct may deal with subjects outside the scope of application of the UCPD. Therefore, codes of conduct may regulate commercial practices in B2B relations27 or questions of taste or decency,28 which are not addressed by the UCPD. It has been discussed whether codes of conduct must not contain commercial practices violating the law.29 Especially, their relationship with the Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB) was disputed. One must know that Section 24 GWB allows for the establishment of competition rules. Codes of conduct may be qualified as such competition rules under Section 24 GWB, but the concept of competition rules is narrower compared to the definition of codes of conduct, as the former can be published only by trade and industry associations as well as by professional organisations. Competition rules are furthermore restricted in their scope of regulation, as they have to promote fair and effective competition (cf. Section 24 subsection 2 GWB).


It follows from the very nature of a code of conduct that it is not sufficient to merely reproduce the state of the law but that it must go beyond that. The definition also seems to require that a business has undertaken to be bound by the code of conduct. However, this requirement is not fundamental for the qualification as a code of conduct but rather for the legal consequences applicable. Codes of Conduct Under Annex I UWG

No. 1 and No. 3 of Annex I of the UWG especially address codes of conduct. Annex I of the UWG lists the 31 commercial practices of Annex I of the UCPD, which are to be regarded as unfair under any circumstances.30 Under No. 1 of Annex I of the UWG, the false statement by an entrepreneur that she is a signatory to a code of conduct is prohibited. It is argued that the business must actually make such statement and that it is not enough that such impression is created by the business as No. 1 of Annex I of the UCPD uses the term “claiming”, whereas, e.g., No. 7 explicitly encompasses “creating the impression”.31 However, the false creation of such impression will be covered by Section 5 UWG in any case.

In addition, according to No. 3 of Annex I of the UWG, it is also prohibited to make “the false statement that a code of conduct has an endorsement from a public or other body”. An example of such an unfair commercial practice would be a business falsely claiming that the signed code was endorsed by the German Federal Consumer Organization (Verbraucherzentrale Bundesverband e.V.) or the Centre for Protection against Unfair Competition.32

Besides these two provisions which directly refer to codes of conduct, No. 2 of Annex I of the UWG might also be of relevance for CSR policies, including those that cannot be qualified as codes of conduct. No. 2 of Annex I of the UWG refers to commercial practices related to quality signs and trademarks and prohibits the display of “a trust mark, quality mark or the equivalent without having obtained the necessary authorization”. This provision may capture situations in which a business falsely refers to a quality sign that promotes, e.g., sustainability or the eco-friendliness of a product. One might also think of applying No. 2 of Annex I of the UWG to the misleading use of test results, especially of Stiftung Warentest and Öko-Test, two German foundations carrying out tests that shall provide consumers with objective information on product quality and safety. However, it is said in German literature that No. 2 of Annex I of the UWG does not refer to test results33 but only to trust marks and quality marks conferred by organisations. Misleading advertising with such test results is prohibited by Section 5 subsection 1 UWG. Indeed, Section 5 UWG, which generally prohibits misleading commercial practices, is of great importance for the regulation of CSR. CSR Policies Under Sections 3, 5 UWG34

According to Section 5 subsection 1 sentence 2 UWG, any commercial practice containing information that is untruthful or otherwise suited to deceive regarding the circumstances enumerated in No. 1-7 leg. cit. shall be deemed misleading. Consequently, all CSR policies containing untruthful statements are prohibited under Section 5 UWG, regardless of whether they were made in connection with a code of conduct or not. A CSR statement prohibited under this provision would be a declaration that 10 % of the daily profits are donated to charity when the actual donation is only 5 %.

The second alternative of Section 5 subsection 1 sentence 2 UWG especially addresses codes of conducts as No. 6 refers to deceptive information regarding “compliance with a code of conduct by which the entrepreneur has undertaken to be bound when he makes reference to such commitment”. As Section 5 subsection 1 sentence 2 No. 6 UWG—as well as especially Article 6 subsection 2 UCPD—requires that the business declared to be bound by a code of conduct, it is assumed that such declaration is not part of the definition of a code of conduct in Section 2 subsection 5 UWG but only a requirement for Article 6 subsection 2 UCPD/Section 5 subsection 1 sentence 2 No. 6 UWG.35

It has been questioned if this provision is in line with the UCPD as Article 6 subsection 2 UCPD in contrast to Section 5 subsection 1 sentence 2 No. 6 UWG only requires that the non-compliance with a code of conduct causes the consumer to take a transactional decision that he would not have taken otherwise, but not that the commercial practice be deceptive.36

Aside from No. 6 leg. cit., Section 5 subsection 1 sentence 2 variation 2 UWG also addresses CSR policies that cannot be qualified as codes of conduct. Of special importance in this regard will be No. 1 leg. cit., which refers to the essential characteristics of the goods or services, including, inter alia, test results. The same is true for No. 4 leg. cit., which refers to “any statement or symbol in relation to direct or indirect sponsorship or approval of the entrepreneur or of the goods or services”. CSR Policies Under Sections 3, 5a UWG

In addition to the provisions already cited, the prohibition of misleading omissions in Section 5a UWG may be relevant for CSR policies. While Section 5a subsection 1 UWG applies to B2C as well as B2B relations, Section 5a subsections 2–4 UWG implement Article 8 UCPD and are restricted to B2C relations. Prior to the implementation of the UCPD, it had been ruled by the German Supreme Court (Bundesgerichtshof, BGH) that a business’ promise to support a charity in exchange for the purchase of its goods or services does not oblige the business to inform customers about the donation in detail unless the advertisement causes a misconception.37 While it seems to be the prevailing opinion that there is still no general and absolute duty to inform unless a—legal or contractual—duty of disclosure exists,38 it has been disputed whether businesses have to inform consumers about their CSR policies under Section 5a subsections 2–3 UWG. Such a duty may especially be discussed under Section 5a subsection 3 UWG. This provision specifies which information has to be regarded as material for commercial practices qualifying as an invitation to purchase. Inter alia, a business has to inform about “all main characteristics of the goods or services to an extent appropriate thereto and to the communication medium used” (Section 5a subsection 3 No. 1 UWG). In the view of some authors, CSR policies fall under “main characteristics”, and they will also influence a consumer’s ability to take a decision, making Section 5a subsection 2 UWG applicable.39 In our view the wording of Section 5a UWG and Article 7 UCPD does not force businesses to inform about their CSR policies unless they want to do so. However, the UCPD only states—even with regard to commercial practices that establish an invitation to purchase—that information about the main characteristics of the good or service has to be given “to an extent appropriate to the medium and the product”. This means that there is no general duty to inform about every aspect of the advertised product or, e.g., its environmental impact unless there do exist legal obligations to provide such information.40 Therefore, neither the wording of Section 5a UWG nor Article 7 UCPD requires businesses to provide information about their CSR policies unless they choose to do so.

As soon as a business refers to its CSR policies, it has to ensure that consumers are given all the information necessary to take an informed decision. This might seem harsh as it requires businesses actively referring to their CSR policies to provide more information than businesses that remain silent in the first place. However, those businesses referring to CSR also enjoy the advantage of attracting customers with their CSR policies. Eventually, the full potential of Section 5a UWG—or rather the underlying Article 7 UCPD—will only be discovered over time, when it is interpreted by the CJEU.41 Other Relevant Provisions of the UWG

Other relevant provisions of the UWG with regard to CSR policies are Section 4 No. 1 and No. 2 UWG in conjunction with Section 3 UWG, as well as the general clause of Section 3 subsection 1 UWG. Section 4 No. 1 UWG states that “commercial practices that are suited to impairing the freedom of decision of consumers or other market participants through applying pressure, through conduct showing contempt for humanity, or through other inappropriate, non-objective influence” shall be regarded as unfair. According to Section 4 No. 2 UWG, “commercial practices that are suited to exploitation of a consumer’s mental or physical infirmity, age, commercial inexperience, credulity or fear, or the position of constraint to which the consumer is subject” are prohibited as well. Section 4 No. 1 UWG was the main provision applied to CSR policies before the implementation of the UCPD. As stated earlier, German jurisprudence used to regard commercial practices referring to CSR policies without direct link to the characteristics of the advertised product as unfair, as it was argued that such commercial practices unduly influenced the ability of a consumer to make a rational choice.42 As noted above, the BGH has abandoned this jurisprudence in 2007, holding that such commercial practices were not per se establishing a violation of Section 4 No. 1 UWG.43 Within the scope of application of the UCPD, any other view would contradict the model of the rational average consumer as defined in the jurisprudence of the CJEU—since a reasonably circumspect consumer should be able to recognise CSR policies as commercial practices. Furthermore, the UCPD aims at full harmonisation (Article 3 subsection 5 UCPD). Accordingly, only the commercial practices listed in Annex I of the UCPD can be regarded as unfair without considering any further circumstances.44 Consequently, Section 4 No. 1 UWG cannot render all CSR policies unfair but is applicable only to situations in which pressure was put on the consumer in a way that can be qualified as aggressive under Articles 8, 9 UCPD.45

In addition, CSR policies might also fall under the general clause of Section 3 subsection 1 UWG or—with regard to B2C relations—Section 3 subsection 2 UWG, which prohibits any commercial practice that is contrary to the requirements of professional diligence and is “suited to tangible impairment of the consumers’ ability to make an information-based decision, thus inducing him to make a transactional decision which he would not otherwise have made”. Even though this general clause has the function of a safety net, it does not seem likely in practice that many CSR policies fall under Section 3 subsection 2 UWG seeing that Nos. 1–3 of Annex I of the UWG, as well as Section 5 and Section 5a UWG, are the more specific—and therefore prevailing—provisions. As pointed out earlier, the violation of a CSR policy as such is not per se unfair, but only if it is misleading, aggressive or can be deemed unfair under the general clause.46 On the other hand, codes of conduct do not provide for a safe harbour because they can be prohibited under specific provisions. CSR policies in the form of codes of conduct, however, can help to interpret the general clause when applied to other CSR policies.47 Other Legislation

Provisions Within the Framework of Unfair Competition Law

There are laws outside the UWG that also establish bans on misleading practices. For instance, rules regarding food can be relevant within the context of CSR when food is promoted as organic or sustainably harvested. Those laws, like Section 11 of the German Law on Food and Feed Safety (Lebensmittel- und Futtermittelgesetzbuch, LFGB) or Article 16 of the General Food Safety Regulation,48 are applicable beside Sections 5, 5a UWG.

General Civil Law

CSR policies that influence the decision of the buyer (not necessarily a consumer) to purchase a certain product or service that then does not live up to the statements made can constitute a defect according to Section 434 subsection 1 sentence 3 German Civil Code (Bürgerliches Gesetzbuch, BGB).49 Misleading CSR policies may also create a mistake or violate the pre-contractual obligation not to infringe upon the other party’s interests. However, the law on the sale of goods in general precedes the law of mistake (at least with regard to Section 119 subsection 2 BGB) and pre-contractual duties.50 But within the framework of CSR policies, this hierarchy must be the subject of further examination. Finally, Section 826 BGB can be taken into account, which states that a “person who, in a manner contrary to public policy, intentionally inflicts damage on another person is liable to the other person to make compensation for the damage”. However, due to the exigent requirement to prove the intentional infliction of harm, Section 826 BGB will not be of great importance in practice with regard to CSR policies.

26.2.2 Enforcement of the Relevant Laws Public Authorities and Private Organisations

Foremost, it has to be noted that in Germany, there is no public authority in charge of the enforcement of the UWG (in contrast to the law against restraints of competition, where such a public authority—the Federal Cartel Office (Bundeskartellamt)—does exist). Rather, enforcement lies in the hands of competitors and those private organisations that were granted standing in Section 8 UWG. According to Section 8 subsection 3 No. 1 UWG, competitors, business associations meeting the criteria set out in Section 8 subsection 3 No. 2 UWG,51 entities meeting the criteria set out in the Injunctions Directive,52 as well as the chambers of commerce and industry or craft chambers, may bring a claim for elimination53 and for an injunction.

It has to be noted that Section 8 UWG requires that Section 3 UWG or Section 7 UWG has been violated. Consequently, Section 8 UWG is applicable to all the above-stated provisions of the UWG, which can be of importance for CSR provisions.

Before bringing an action before the court, plaintiffs will try to get an undertaking (Unterlassungserklärung), including a penalty clause, signed by the business to amend or cease the unfair commercial practice. The organisations that in practice are most likely to bring a claim under Section 8 UWG are the Centre for Protection against Unfair Competition54 and the Federation of German Consumer Organisations (Verbraucherzentrale Bundesverband) or one of the 16 consumer centres in the German federal states (Verbraucherzentralen).

In contrast, those organisations will not have standing to bring a claim under civil law if Section 434 BGB is violated as they are not a party to a contract. However, under Section 4 No. 11 UWG, commercial practices infringing “a statutory provision that is also intended to regulate market behaviour in the interest of market participants” are unfair and consequently prohibited. It has been discussed whether remedies for defective goods according to civil law are statutory provisions in the sense of Section 4 No. 11 UWG.55 The German Supreme Court ruled that the laws of warranty may be qualified as such statutory provisions.56 However, it is questionable whether Section 4 No. 11 UWG is in line with the UCPD as it basically introduces additional per se prohibitions.57 As long as Section 4 No. 11 UWG is upheld in German law, the organisations named in Section 8 UWG, as well as competitors, will have the possibility to sue for an elimination and injunction when warranty claims are violated. In addition, those organisations—but not competitors—may sue for an injunction under Sections 2, 3 of the German Injunctions Act (Unterlassungsklagengesetz, UKlaG). Consumers

The German UWG does not explicitly grant consumers standing. In 2004, when a new German act against unfair competition law was adopted, there was a discussion on whether a right to redress for the individual consumer should be introduced.58 It has been disputed whether the UWG can be qualified as protective law (Schutzgesetz), which would give consumers at least the right to sue for damages under Section 823 subsection 2 BGB in conjunction with the UWG. However, the prevailing opinion does not qualify the UWG as such a protective law,59 despite the fact that Section 1 UWG states that it aims at the protection of consumers as well.

Consumers, however, have remedies under civil law when a good or service is defective as defined in Section 434 BGB. They have the right to have the defective good repaired or exchanged, or—as repair or exchange will most likely not be possible when a CSR policy is misleading—to reduce the price or to rescind the contract if the defect is not only minor (Section 437 BGB60).

It should be noted that consumers have the possibility to turn to the regional consumer centres for advice and may also cede any claims resulting from a violation of CSR policies to allow for enforcement by the consumer centre.61 Competitors

As stated above, competitors62 can sue for elimination and bring a claim for an injunction under Section 8 UWG as long as they are direct competitors of the business infringing the UWG. In addition, competitors may sue for damages under Section 9 UWG if the business violating the UWG acted with intent or negligence. Competitors may also sue for injunctions or damages when a business violates other statutes than the UWG and those statutes fall under Section 4 No. 11 UWG (cf. above Suppliers and Purchasers

As suppliers and purchasers are not competitors, they do not have standing under the UWG. A purchaser—regardless of whether it is a consumer or another business—will have contractual rights when a misleading CSR leads to a defect (Section 434 BGB) of the product or service.63

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