Antitrust Law Policy

"We expect every employee to comply with competition law provisions in his or her area of responsibility. Agreements with competitors violating antitrust law, for example on prices or other conditions, are prohibited. If an employee is approached with the aim of eliciting his or her participation in agreements violating antitrust law, he or she must inform his or her supervisor and the compliance officer immediately.

We are committed to fair competition. Unfair practices must be avoided. Suppliers must be engaged in accordance with objective, comprehensible criteria. Subjective criteria must not play any role in the selection process."

This principle set forth in the ElringKlinger Group’s Code of Conduct is a key element of the compliance culture at ElringKlinger. All employees are obliged to comply with antitrust and competition laws and rules. This also applies to the requirements and processes described below.

Not least because of the serious consequences that antitrust violations can have for the company, all employees with knowledge of or information about an antitrust violation must report this to their supervisor or to the Compliance Officer. The report can also be submitted via ElringKlinger’s anonymous whistle-blowing system "Share with us".

1. Objectives

The aim of antitrust law is to protect free competition among market participants. This is based on the idea that only effective competition can ensure ever improving products at reasonable prices. To achieve this, antitrust law addresses the following aspects:

• prohibition of agreements or practices restricting free trade and competition.
• prohibition of abuse of a dominant position and of harmful practices to obtain such a dominant position.
• regulatory control of mergers to prevent harm to competition.

2. Principles

The main principles of antitrust law are essentially the same worldwide. They are clearly explained below. In any case, antitrust issues must always be closely examined by experts. Therefore, please always contact CU Legal & Compliance with any questions about antitrust law.

2.1 Competition

ElringKlinger’s competitors are any companies operating in the same product market. These may even be suppliers or customers of ElringKlinger. Competitors also include companies that could potentially operate in the same market within the next three years.

2.2 Ban on cartels and unlawful restraints of competition

Prohibitions of cartels and unlawful restraints of competition are intended to ensure effective competition. Accordingly, competitors may not coordinate their market behavior with one another or in any other way. Such conduct is prohibited if it is likely to restrict or at least impair competition. However, observation of the market behavior of competitors is permissible.

2.3 Antitrust violations

Antitrust violations or unlawful restraints of competition can come about in particular through oral or written arrangements, via email or other types of conduct. Under certain circumstances, it may not even be necessary for a competitor to react. Thus, cartel violations do not only occur when a formal agreement is concluded.

2.4 Consequences of antitrust violations

Agreements contrary to antitrust law are null and void. Antitrust authorities may impose high fines in case of antitrust violations against companies and responsible employees, which can under certain circumstances endanger the economic existence. Moreover, there are liabilities claims under civil law and criminal charges for the responsible employees.

1. Price fixing/information exchange

Agreements between competitors on prices, price components, discounts or price increases, calculations, pricing strategies, margins, discounts and other contractual, delivery and payment terms and conditions are prohibited. This also applies to the mere exchange of such information.

The aforementioned prohibition also applies to the exchange or unilateral disclosure of what is known as strategic information enabling competitors to coordinate their market behavior. Narrow exceptions apply only if, for example, the aim is to achieve cost savings or other efficiency gains in the form of benchmarking. In this sensitive area, it is necessary to involve CU Legal & Compliance or the Compliance Officer in advance.

Furthermore, third parties may not be used systematically as messengers so to speak for an impermissible exchange of information. However, observing the market behavior of a competitor and using publicly available information is legitimate. In addition to antitrust barriers to obtaining information, information may only be obtained in compliance with contractual and legal requirements. This applies equally if third parties are induced to obtain information.

2. Agreements on markets and quantities

Agreements on the allocation of markets by regions or customers, quantities or capacities are prohibited. This also applies to the exchange of information on such matters.

3. Agreements in bidding procedures

Agreements or the exchange of information within the framework of bidding procedures are prohibited between competitors. This applies in particular to prices and other conditions. Agreements to refrain from submitting bids or the submission of sham bids also constitute violations of antitrust law.

Something different applies in the case of groups of bidders, consortia and purchasing consortia if these are disclosed to the customer or supplier. Such instances of cooperation with competitors are permissible under certain conditions. In any case, their lawfulness must be checked and approved in advance by CU Legal & Compliance.

4. Supply relationships with competitors

Suppliers and customers of ElringKlinger may at the same time be competitors. Therefore, the rules of antitrust law must be observed. Exchanges of information, arrangements and agreements may only relate to the supply relationship, but under no circumstances to the relationship as a competitor. To ensure that this is the case and to be able to demonstrate this, the subject matter of meetings must always be adequately prepared based on an agenda and minutes of meetings must be taken. If in doubt, coordinate with CU Legal & Compliance or the Compliance Officer in such situations.

5. Association activities, trade fairs, standardization, and sponsored projects

Contacts with competitors within the framework of an association activity (in particular, during the informal part) and at trade fairs are permitted if the principles described above on the exchange of information and agreements are observed.

Contacts with competitors entail the risk of topics being discussed that are inadmissible under competition law. For this reason, association meetings in particular should not take place without a predefined agenda that has been checked for its admissibility under antitrust law. Minutes of meetings must be taken. If topics in violation of antitrust law are addressed, you should immediately stop or at least distance yourself from such discussions. Have your protest recorded in the minutes. If your request is ignored, leave the room, take notes of what has occurred and inform CU Legal & Compliance or the Compliance Officer.

The exchange of information within the framework of sponsored projects or standardization committees should be limited to technical content and is therefore not sensitive from the point of view of antitrust provisions. If the exchange goes beyond this framework, antitrust limits must be observed. Working groups with competitors beyond the scope of such projects or committees should be avoided.

6. Agreements on salaries and employee poaching

Agreements between competitors on employee salaries (e.g., starting salaries, salary ranges) or promises not to poach each other’s employees constitute violations of antitrust law.

Agreements with suppliers, distributors and customers who are not competitors of ElringKlinger may also restrict competition and are therefore prohibited. In particular, it would be illegal to impose sales prices on distributors or customers who resell our products. This also applies if such behavior is enforced by means of certain measures (e.g. threats to stop deliveries, sanctions, price incentives).

Exclusivity agreements are permitted within certain limits. To determine whether such agreements are legally watertight, always contact CU Legal & Compliance in advance.

Companies may not abuse a dominant market position. If they do, this constitutes a violation of antitrust law.

The question of whether a company has a dominant market position is complex. The presumption exists if the market share on a given product market (not only for one customer) exceeds 40%. To be able to address the question of market dominance, the relevant product market must be defined factually and geographically, as must the corresponding market share.

A company with a dominant market position may not exploit this position in such a way that it makes it impossible or significantly more difficult for another company to compete with it. Examples include the threat of unjustified suspensions of supplies or situations where customers are no longer able to place orders with competitors due to the existence of tiered pricing or bonus systems. The same applies if the dominant company tries to drive another smaller company out of the market by dumping prices.

The following are essential duties and procedures in connection with antitrust issues.

1. Registration and approval of contacts with competitors

The Compliance Officer must be notified in good time in advance about planned contacts with competitors. The Compliance Officer may refuse to approve the contact if there are antitrust concerns relating to the purpose or the overall circumstances.

If employees of a competitor apply to work for ElringKlinger, for positions in sales, purchasing and R&D, it must be secured that not antitrust law relevant information is exchanged in an unproper manner. In cases of doubt the Compliance Officer shall be informed about the application.

2. Registration of membership of associations

To ensure an overview of activities in industry associations and given that activities in such associations are risky in terms of antitrust law, the membership of such associations must be reported to the Compliance Officer. This applies in the case of corporate membership or membership of representatives of ElringKlinger.

Moreover, employees who wish to participate in planned meetings in the aforementioned meaning must announce this together with the agenda of the meeting to the Compliance officer.

3. Conduct during searches

Searches because of suspected antitrust violations may take place at any time without notice. The purpose of such searches is to obtain and secure evidence during an investigation. Such searches are conducted by the antitrust authorities with the assistance of the police. As part of the investigation, the authorities may, among other things, enter business premises, question employees, and seize business documents and files to examine them. In the event of a search, please observe the following rules:

• Notify CU Legal & Compliance or the Compliance Officer immediately.
• Ask to see the search warrant.
• As a matter of principle, behave in a cooperative manner.
• Do not release documents or make statements without prior coordination with legal counsel, if possible.
• Do not allow investigating officers onto the premises unescorted.
• Do not destroy or conceal any records or information.
• Do not break into officially sealed rooms.
• Record the progress of the search, including search actions and statements. List the documents and items seized.

You may contact CU Legal & Compliance or the relevant Compliance Officer with any questions relating to this policy. They are responsible for the compliance program at ElringKlinger and training courses about antitrust law. For more information on CU Legal & Compliance, the compliance system, and the ways of communication, please visit our intranet page.