Prospects for the failed Corporate Sanctions Act in Germany

The former federal Government has been unable to implement a second legislative project, the Corporate Sanctions Act. The corresponding draft law provided for tougher sanctions, created incentives for the implementation of compliance measures in companies (as they should have a mitigating effect), and contained rules for the conduct of internal investigations. However, in June 2021 the legislative process failed; mainly due to different views on the approach towards internal investigations and the related question of whether or not documents from internal investigations could be seized by prosecution authorities.

Under the new Government, it remains to be seen whether the Social Democratic Party (SPD) and the Alliance 90/The Greens (Bündnis 90/Die Grünen) will be able to prevail over the Free Democratic Party (FDP) with their demand for the introduction of a corporate sanctions law. The SPD and Bündnis 90/Die Grünen have, in the past, supported the introduction of a corporate sanctions law, while the FDP has opposed such a legislative initiative.

However, under the new Government some legal regulation is to be expected. According to their coalition agreement, in the future "honest companies are to be protected from legally dishonest competitors" (p. 111). In order to achieve this goal, the new government aims to revise the rules on corporate sanctions, including the level of sanctions, to improve the legal...

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