Notarized undertaking to refrain from conduct effective?

Does a notarized undertaking to refrain from conduct without a contractual penalty promise eliminate the risk of repetition existing in cases of competition law infringements in the same manner as the provision of a penalty-backed undertaking to refrain from conduct? This question of law, initially answered in the affirmative by the Regional Court (LG) Cologne, has now been decided in the second instance by the Higher Regional Court (OLG) Cologne.

The parties to this dispute are competitors and conduct business on Amazon dealing in bicycle accessories. Due to misleading product descriptions, one Amazon merchant issued a cease-and-desist letter to the other online merchant and demanded that his competitor provide an undertaking to refrain from conduct with a contractual penalty promise.

The conduct in question was undisputedly contrary to competition law. Nevertheless, the recipient of the cease-and-desist letter did not sign the penalty-backed undertaking to refrain from conduct attached to the cease-and-desist letter, but instead undertook by notarized deed to cease the objected-to conduct. In this respect, he submitted himself by virtue of the notarized title in favour of his competitor to immediate enforcement.

The competitor considered this notarized undertaking to refrain from conduct as insufficient, since sanctions would only become available once the copy of the notarized deed had been served on the recipient of the cease-and-desist letter by a court bailiff and the court had ordered the threat of a penalty.

The first instance ruled in favour of the competitor of the Amazon merchant (we have reported on this), so that he had this question of law decided by the appellate court.

Court's decision

The Higher Regional Court (OLG) Cologne amended the judgment of the first instance by judgment of 10.04.2015 (Az.: 6 U 149/14) and rejected the undertaking to refrain from conduct without a contractual penalty promise.

If the debtor in a competition law cease-and-desist matter provides a notarized undertaking to refrain from conduct, the risk of repetition ceases only upon service of the order threatening a penalty and not already upon delivery of the notarized undertaking to refrain from conduct. An undertaking to refrain from conduct without a contractual penalty promise therefore does not in itself constitute a valid alternative to the provision of a penalty-backed undertaking to refrain from conduct.

Leave to appeal to the Federal Court of Justice (BGH) was granted.

Conclusion

It remains to be seen whether the Amazon merchant sued will file an appeal and thus the dispute concerning the effectiveness of a notarized undertaking to refrain from conduct will obtain a final assessment. Should the Federal Court of Justice (BGH) confirm the decision of the Higher Regional Court (OLG) Cologne, the notarized undertaking to refrain from conduct is unlikely to become established in practice. Until such a decision is made, we cannot recommend this otherwise interesting alternative.