World News

07.17.14

Germany’s Sausage Cartel is the Wurst

For over a decade, pork industry leaders held secret meetings to raise the price of sausage—but then someone squealed.

The most popular producers of Germany’s national dish have been handed an unprecedented half a billion-dollar fine for conning meat-lovers in a great 21st-century sausage swindle.

A bratwurst cartel has been meeting in secret for years to force up prices and ensure maximum profits for their products, according to the authorities who said someone had squealed on the pork industry.

Nothing, it seems, is sacred. Germans have a special bond with their wurst; like pizza and Italians; sushi and the Japanese; or beer and, well, the Germans. In the eyes of commerce, however, cultural heritage be damned. Perhaps Adam Smith had it right in 1776: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

More than two hundred years later, the titans of reconstituted pork would gather in secret at the Hotel Atlantic Kempinski in Hamburg to hatch a dastardly plot. The landmark hotel, with its green copper roof, was previously known as the site of James Bond’s battle against villainy in Tomorrow Never Dies. It has now leant its name to a shadowy cabal known within the German meat-processing industry as the Atlantic group.

According to Germany’s Federal Cartel Office, the Atlantic group has been holding clandestine meetings since 2003 to fix the price supermarkets will have to pay to restock their shelves. Keeping up with demand is no easy feat in a country where people eat more than a Bratwurst a day (380 per person per year, according to the meat industry association).

The competition watchdog has imposed a fine of $460 million on 21 manufacturers including the country's biggest producer, Zur-Mühlen-Gruppe.  "The price-fixing agreements were practiced over many years," said Andreas Mund of the Federal Cartel Office. "The overall amount of fines seems high at first glance but has to be seen in perspective in view of the large number of companies involved, the duration of the cartel, and the billions in turnover achieved in this market."

Lawyers involved in the case said they could not comment on the ongoing dispute, but Zur-Mühlen-Gruppe denied the allegations. Nestlé, the Swiss owner of sausage-making subsidiary Herta, told The Daily Beast they would launch an appeal.

“We do not believe that the Federal Cartel Office’s allegations are justified,” a spokesman said. “Neither Herta Germany nor any of its employees were involved in any conduct cited in the investigation by the Federal Cartel Office.”

The cartel office said they received an anonymous tip-off about the price-fixing, which affected cooked and cured meats including salami, Frankfurters, Bratwurst and ham. Eleven companies cooperated with the investigation and had their fines reduced.

That’s little comfort to millions of Germans who have been paying over the odds for their sausage supply since the turn of the century. And there’s no point turning to beer for solace: the industry catering for Germany’s other great love has been caught ripping off the nation in exactly the same way. Earlier this year, the Federal Cartel Office handed out fines worth $320 million to five German brewers and the Danish beer producer Carlsberg for colluding to fix prices.