The number of companies listed in Germany’s national competition register, a database of businesses that have committed violations of law or criminal offenses, has seen a substantial increase. This follows a parliamentary inquiry by the Left party, as reported by newspapers within the Funke-Mediengruppe.
Data reveals a significant rise, from 4,632 companies at the end of 2022 to 21,456 firms as of March 31, 2024. The register aims to identify companies engaged in specific economic crimes and entry can have significant consequences for the affected businesses. Currently, companies listed in the competition register are excluded from public procurement contracts exceeding a value of €30,000.
A large proportion of the increase is attributed to violations of Section 266a of the German Criminal Code, often related to employers failing to properly pay social security contributions. The number of companies listed under this category has risen from 2,271 to 9,847. The register also documents violations of the Posted Workers Law (AEntG), the Minimum Wage Act (MiLoG), the Temporary Work Act (AÜG) and the Act on the Prevention of Unfair Labour (SchwarzArbG).
The German government is planning changes to public contract awarding procedures. A draft law aimed at accelerating the process is scheduled for discussion in the cabinet next week. The draft includes increasing the threshold for exclusion from public procurement. Currently, companies are excluded if the contract value exceeds €30,000; this threshold is proposed to rise to €50,000. This adjustment has drawn criticism from Left party member Meiser, who argued that the move effectively allows companies that profit from illegal practices to more easily secure public contracts. He expressed concerns that the expanded possibility of direct awards would also eliminate the obligation for procuring entities to consult the competition register.
Meiser further stated that companies that adhere to legal and ethical practices would ultimately suffer, facing unfair competition from businesses engaging in illicit activities. He called for amendments to the draft law, advocating for the preservation of existing consultation obligations of the competition register. He maintained that business models based on illegal practices should not be granted access to public funds.
A spokesperson for the Federal Cartel Office noted that the register was first introduced in 2021, with a mandatory reporting obligation commencing on December 1, 2021. They emphasized that the increase in listed companies is, therefore, a natural consequence of the new register’s implementation and it is too early to identify definitive trends.