(28) Contingent liabilities
Accounting and measurement policies
Contingent liabilities
To identify contingent liabilities from litigation and tax matters, the Group draws on the knowledge of the legal department and the tax department as well as the opinions of external consultants and attorneys.
The key factors in the identification of contingent liabilities are as follows:
The validity of the arguments brought forward by the opposing party or the tax authority and
The legal situation and current court rulings in comparable proceedings in the jurisdiction in question
The amount of the contingent liabilities is based on the best possible estimate which, in turn, is based on the likelihood of possible outcomes of proceedings.
Significant discretionary decisions and sources of estimation uncertainty
Contingent liabilities
The identification and the measurement of contingent liabilities are both subject to considerable uncertainty.
This applies with regard to assessing the likelihood of an outflow of resources as well as determining its amount.
Contingent liabilities in the amount of € 219 million (December 31, 2024: € 224 million) related almost exclusively to litigation and tax matters.
The contingent liabilities from tax matters primarily related to the determination of earnings under tax law, customs regulations and excise tax matters. Contingent liabilities from litigation mainly related to obligations under labor law and tort law.
We are involved in various legal disputes with Merck & Co., Inc., Rahway, NJ, United States, and its affiliated companies (outside the United States and Canada: MSD), among other things due to breach of the coexistence agreement entered into between the two companies and/or trademark/name right infringement regarding the use of the designation “Merck”. In 2016, MSD filed a lawsuit in the United States against the Group for breach of contract, trademark infringement, trademark dilution, misleading advertising, so-called cybersquatting, and unfair competition.
MSD is demanding compensation from the Group on the basis of a decline in MSD’s sales within the fertility products business, as well as the disgorgement of the profits generated by the business sectors in the US over a period of approximately two years. The Group considers the allegations to be unjustified.
The Group has also filed lawsuits in connection with corresponding infringements by MSD in various other countries. The Group expects to be able to resolve the legal disputes with MSD by mutual agreement and without incurring any further financial obligations – except costs for legal defense.