Political, Legal, and Regulatory Environments

Political Environment

The Federal Republic of Germany is a democratic, federal and social constitutional state. Together with the basic rights, these principles form the inviolable core of the constitution, adherence to which is guarded over by the Federal Constitutional Court. It fast became a successful model and a prime export: After the Second World War, the Basic Law provided freedom and stability – albeit initially only for the Germans in the West of the nation that remained divided until 1990. The primacy of the basic rights, the definition of the principles of a democratic and social federal state, and the foundation of a supreme court that watches over adherence to the constitution – these are the basic cornerstones of German democracy.




Legal Environment

In Germany, the administration of justice is divided into five branches: ordinary, labor, administrative, social and financial courts. In a normal case there are three higher tiers that can re-assess court decisions. The plaintiffs and the accused can appeal against a court ruling. Thereupon the litigation goes before a “higher” court and a ruling is handed down. Not until the third level has been reached is there no longer any right of appeal and the litigation thus comes to an end.

The law of the Federal Republic of Germany applies to virtually all aspects of life; as a result, legislation today consists of adjustments and amendments to existing laws to take social developments into account and to cope with social problems. Germany's legal system has been shaped by constitutional law but is also influenced by the law of the European Union and by international law. The body of federal laws now encompasses approximately 1,900 acts and 3,000 statutory instruments. Laws are passed by the Bundestag, and decrees on the basis of laws are enacted by the Federal government. State law is mainly concerned with such matters as schools and universities, the press, radio and television, as well as the police and local government.

In surveys on political and legal stability, foreign investors put Germany second only to Great Britain. This legal stability attracts foreign companies and is to the benefit of investments and entrepreneurial activity in Germany.

Regulatory Environment

Business-life in Germany is based on the principle of competition. Still, the competitive market environment needs to be protected against unfair practices.
To control unfair market behavior is within the responsibility of the Federal Cartel Office (Bundeskartellamt) in Bonn. Fair competition is also safeguarded by the Act Against Unfair Competition (Gesetz gegen unlauteren Wettbewerb, UWG). It prohibits explicitly misleading advertising and governs comparative advertising as well as direct marketing activities. It provides the basis for legal claims against unfair behaviour of competitors.

Trademarks and patents enjoy strong protection in Germany. For sales into Germany, this means a two-fold challenge. First, trademarks or other intellectual property used in or on the merchandise must not infringe older rights that have already been established in the German market. Second, any intellectual property related to the merchandise can be legally protected against counterfeiting by means of registration. For Germany, the German Patent- and Trademark Office (Deutsches Patent- und Markenamt) is in charge of these registrations.

When exporting to Germany, various aspects have to be considered: Customs and taxes, quality and environmental standards, trademark and competition rules are just a few of them.
In general, the importer is responsible for clearing the items to put the goods in circulation in Germany. Exporters need to be informed on prerequisites of penetrating the German market, if only for pricing purposes. In reference to customs duties for goods which are exported to Germany, the goods' country of origin is of utmost importance.

Imported goods must be accompanied by a customs declaration, which has to be submitted in writing, and an invoice in duplicate. Normally the German importer files this declaration. The commercial invoice must show the country of purchase and the country of origin of the goods.

Like most of the member states of the European Union, Germany adheres to the metric standard. Quantities and qualities of goods must therefore be quoted in metric units or units derived from them.

As consumer protection and information are of fundamental importance, there are precise regulations on labelling products, especially for food, which are bound for the Single European Market. For safety aspects of several kinds of products, Germany has established the Federal Institute of Risk Assessment.