Germany busts sausage cartel

July 15, 2014: 10:36 AM ET
germany sausage
A sausage stand in the Berlin fan park during the World Cup.
LONDON (CNNMoney)

It's enough to make you choke on your next Frankfurter!

Germany's sausage makers have been ripping off retailers and consumers for years by operating a cartel to raise prices.

Antitrust officials said Tuesday they would fine 21 companies 338 million euros ($460 million) after discovering evidence of collusion dating back decades.

Known as the "Atlantic Circle" after the luxury Hotel Atlantic in Hamburg where it first met, the cartel included small scale producers as well as big international groups such as Herta, owned by Switzerland's Nestle (NSRGF).

"At first glance this fine may appear high but it reflects the large number of companies that took part, the length of time the cartel was operating and the billions in turnover in this market," said Andreas Mundt, head of Germany's cartel office.

The cartel office did not give details on how much each company would be fined but said the penalties ranged from a few hundred thousand euros to many million.

Acting on an anonymous tip, the cartel office launched an investigation that turned up evidence proving the existence of a "basic understanding" that the companies would discuss market developments and prices.

In addition, various producers agreed to force retailers to pay higher prices for different types of products, including raw -- or cured -- sausage such as salami, cooked varieties including Frankfurters and Bratwurst, and ham.

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Eleven companies cooperated with the authorities, and received smaller fines as a result.

Nestle said the cartel office's allegations were unjustified and it would appeal.

"Neither Herta Germany nor any of its employees were involved in any conduct cited in the investigation by the federal cartel office," it said in a statement.

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Germany's meat products industry is a major presence in Europe's biggest economy. It employs about 60,000 people, produces more than 1.5 million metric tons of sausage a year and generates revenue of at least 16 billion euros. Exports are worth well over one billion euros a year.

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