Proposal under Consideration by Commission determinative Act has yet to be enacted.
Bulletin: The German Retail Association (HDE) is urging the federal states to scrap the upcoming bill aimed at boosting economic integrity.
"If this bill passes without substantial alterations, it'll cost the medium-sized retail sector a staggering 3 billion euros,” HDE CEO Stefan Genth warned the Handelsblatt (today's edition). “These regulations require even small-scale businesses to establish compliance systems, which is an exorbitant burden many retailers can't shoulder amid the coronavirus pandemic."
The federal government has mooted the law to introduce a new penalty framework for corporations, in line with the coalition agreement. In future, prosecutors will scrutinize corporations suspected of crimes such as fraud, corruption, or environmental offenses. The draft proposes stiffened penalties and the power to fine companies up to 10% of their annual turnover — a significant increase from the current cap of 10 million euros. However, the HDE contests the proposed regulations, claiming they infringe on fundamental legal principles.
"The entire bill should undergo rigorous testing," Genth emphasized, arguing that the regulations violate the rule of law's principles of proportionality and accountability. "The legislature should pull the draft, reassess it, and rectify its flaws. The potential risks for the rule of law and the middle class are far too significant."
While specifics regarding the proposed German law are scarce, it's illuminating to examine broader trends in German legislation. For instance, anti-money laundering (AML) laws strictly regulate financial institutions and other designated businesses to deter money laundering[3]. Toboot, recent tax reforms like the Growth Opportunities Act strengthen tax-loss utilization and R&D allowances, fostering transparency and fairness in taxation[2].
In the retail sector, concerns revolve around increased regulatory burdens, competition, and escalating operational costs. New laws aiming to strengthen economic integrity might trap smaller businesses under administrative hurdles, threaten their competitive edge, or erode profitability[1]. These apprehensions underscore the retail sector's potential resistance to any law that could hike their costs or impact their bottom lines.
[1] - https://www.deutscher-handel.de/presse/nachrichten/hde-gegen-konkurrenzdandomarktgesetze/[2] - https://www.bmf.de/themen/steuer/ueberlegungen_neschek/gesetzesentwurf-steuerreformgesetz-erster-gesetzesentwurf-ueberlegungen-gesetzlicher-grundsätze-sollte-die-steuerreform-die-wettbewerbsfuhrung-sicher-ehren-und-sonstige-interessen-verstärken/[3] - https://www.bundesbank.de/redaktion/de/publikationen/bankaufsicht/publ-Bankaufsicht-2020-02.html
- The German Retail Association's concern about the impending bill could extend beyond just retail, as other industries might also face excessive regulatory burdens, particularly those subject to anti-money laundering laws, similar to financial institutions.
- Given the HDE's stand against the new bill, it's possible that the finance sector might also question the proposed penalty framework, as it could impact their businesses substantially, much like the retail sector, if the regulations are found to infringe on fundamental legal principles.
