Germany amends the law against restraints of competition

Germany

On 20 January 2021, extensive amendments to German competition law came into force with the enactment of the 10th amendment to the German Act against Restraints of Competition (GWB), which was passed as the GWB Digitalisation Act. This act is the legislator's response to rapid changes in business models, markets and economic power as a result of digitalisation. The GWB Digitisation Act tightens provisions dealing with the abuse resulting from a dominant position in the digital economy, mitigates the burden on companies in the area of merger control, makes it easier for competition authorities to enforce competition law and transposes the ECN+ Directive.

Tightening provisions against anti-competitive abuse of a dominant position in the digital economy

The most important amendment is a new intervention option for the German Federal Cartel Office which can be found in section 19a German Act against Restraints of Competition for cases where competition is put at risk by companies with so-called "paramount importance for competition across markets". In particular, this refers to large digital groups. The Cartel Office can prohibit, even as a preventive measure, such companies from carrying out certain actions (e.g. giving preference to the group's own services or obstructing access to the market by third parties by withholding certain data). 

This amendment represents an extraordinary reduction in the steps necessary for appeals against decisions of the Federal Cartel Office based on section 19a German Act against Restraints of Competition. Such appeals can go directly to the German Federal Court of Justice.

Furthermore, the legislator has specified the provisions of classic abuse of a dominant position, and has expanded them to include the following internet-specific criteria: 

  • When measuring market power, the law now explicitly provides for consideration of access to competitively significant data and the question of whether a platform has "intermediation power". 
  • The obstruction prohibition on companies with relative or superior market power is no longer limited to small and medium-sized enterprises, and now extends to large companies.
  • For the benefit of dependent companies, it is now explicitly regulated by law that market-dominant and market-strong companies must grant access to data, subject to certain preconditions in return for an appropriate fee. (This is a competition law data access claim).
  • There are also intervention options for the competition authorities in cases where a platform market is at risk of "tipping" in the direction of a large provider with superior market power.

Amendments in the area of merger control

In the future, significantly fewer merger projects will be subject to notification. The domestic turnover thresholds are being increased significantly: hence, planned mergers will only be subject to merger control if, among other things, one of the companies involved has an annual turnover in Germany of at least EUR 50 million (previously EUR 25 million) and another company has an annual turnover in Germany of at least EUR 17.5 million (previously EUR 5 million). As in the past, a notification is necessary if, among other requirements, the value of the merger exceeds EUR 400 million.

Even where the turnover thresholds are not met, companies will be required by the Cartel Office to notify mergers in certain economic sectors. For this, certain requirements, including thresholds, must be met and the Cartel Office must first conduct a sector inquiry into one of the economic sectors concerned.   

In accordance with the "mini market clause", mergers will not be prohibited if the requirements for prohibition are met exclusively on a market with a market volume in Germany of less than EUR 20 million (previously EUR 15 million) in the previous calendar year.

Tightening provisions concerning fine proceedings

In the course of transposition of the EU's ECN+ Directive, the competences of the Federal Cartel Office in competition law fine proceedings are being expanded. In particular, dawn raids by the German Federal Cartel Office will be conducted differently in future: the right of affected companies and their employees to remain silent is practically being abolished. In future, companies and their employees will have a duty to provide information for the purpose of clarifying the facts.

The competition authority will in future also be the competent prosecuting authority in judicial fine proceedings even after an appeal against a fine decision has been filed. The competition authority will have the same rights as the public prosecutor's office. 

The criteria for calculating fines have also been supplemented. In future, the gravity and duration of the infringement, the conduct after the infringement and, in particular, the turnover affected by the infringement will be taken into account when determining the amount of the fine.

Furthermore, the leniency programme has now been enshrined in law.

Acceleration and facilitation of administrative competition proceedings

The requirements for the Cartel Office to issue interim measures are being lowered to allow for faster intervention. 

In administrative competition proceedings, hearings can be held orally in future.

The provisions allowing parties to proceedings or third parties to inspect the files have been expanded. 

The practice of the "chairperson's letter" is now regulated by law. Through such a letter, the competition authority informs requesting companies that it will refrain from initiating proceedings due to its discretion in taking up cases).

Facilitating the enforcement of competition law damages claims

In the future, the law now provides for the following rebuttable presumption: legal transactions by suppliers or customers of a cartel with companies participating in the cartel are affected by the cartel.

This is the legislator's response to the case law of the German Federal Court of Justice. For more information on this amendment and its provisions, contact your CMS partner or CMS experts: