On November 7, 2023, the eleventh amendment to the German Competition Act (Gesetz gegen Wettbewerbsbeschränkungen, GWB) entered into force in Germany. The amendment’s aim is to enable the Federal Cartel Office (Bundeskartellamt, BKartA) to deal more effectively with market distortions in the interest of consumers. (Explanatory memorandum at 1, 2.) For this purpose, the act expands, once again, the powers of the German Federal Cartel Office. In particular, new competences for the Federal Cartel Office regarding remedial measures were added to make “sector investigations” more effective. In addition, the amendment simplifies the disgorgement of economic benefits gained from anticompetitive behavior. Lastly, the amendment authorizes the Federal Cartel Office to support the European Commission with the enforcement of the EU Digital Markets Act (DMA).
More Effective Sector Investigations
Under the new amendment, the Federal Cartel Office is given additional tools to deal with unfair competition determined in a “sector investigation.” A sector investigation is an investigation by the competition authority to analyze structures and competitive conditions of a particular sector of the economy; for example, when price rigidity or other circumstances suggest that competition may be restricted or distorted within the market. (Competition Act § 32e, para. 1 (new); Explanatory memorandum at 15.) However, a sector investigation is not based on a specific suspicion or aimed at specific companies. Instead, the goal is to gather comprehensive information about the investigated market to “better understand the competition in this sector, the influence of certain types of agreements or conduct, or consumer problems.” (Explanatory memorandum at 15.)
Currently, sector investigations end with a report by the Federal Cartel Office. (Competition Act § 32e, para. 3 (old), English translation.) The amendment authorizes the competition authority to take various actions to address substantial and continuous disturbances of the market that have been identified in the report. (§ 32e, para. 4 (new); § 32f (new).) The Federal Cartel Office may impose behavioral or structural remedial measures on companies that are active in the respective market segment and whose actions or importance contribute substantially to the market disturbance. (§ 32f, para. 3, sentence 6.) For example,
- market access can be made easier for other companies by removing market entry barriers, such as by granting access to data, interfaces, networks, or other facilities;
- concentration tendencies can be stopped by imposing certain requirements on business relationships between companies on the markets under review;
- companies may be obligated to establish transparent, discrimination-free, and open norms and standards;
- companies may be required to establish an accounting or organizational separation of company or business units;
- as a last resort, companies may be unbundled. (§ 32f, para. 3, sentence 7 (new) and para. 4 (new).)
A competition violation is not necessary for the Federal Cartel Office to take action.
Definition of Market Disturbances
Market disturbances are not defined in the Competition Act or in any other act. However, the amendment, for the first time, provides a nonexhaustive list of examples to specify the term. The amendment states that, in particular, unilateral supply and buying power, restrictions to market access, unilateral or coordinated conduct, or compartmentalization of inputs or customers through vertical relationships may result in market disturbances. (Competition Act § 32f, para. 5 (new).)
Profits Resulting from Competition Law Violations
If a competition law violation has been determined, it is now easier for the Federal Cartel Office to ensure the disgorgement of economic benefits gained from the anticompetitive behavior. The amendment introduces a presumption that an economic benefit has been gained once a violation has been determined. Furthermore, it is presumed “that the economic benefit … amounts to at least one percent of the turnover achieved domestically with the products or services related to the infringement.” (§ 34, para. 4 (new).) The change was needed because even though the Federal Cartel Office already had the authority to confiscate economic advantages resulting from a competition law violation before the amendments, this option was not used in practice due to high evidentiary requirements. (Explanatory memorandum at 1; 38–42.)
EU Digital Markets Act (DMA)
The amendment provides the basis for the Federal Cartel Office to support the European Commission with the enforcement of the EU DMA. (Competition Act § 32g (new).) The DMA came into force in November 2022 and ensures fair and open digital markets with big online-platforms as “gatekeepers.” (DMA art. 1.) The European Commission is the main competent enforcement authority to take actions for DMA violations. Nevertheless, national competition authorities may support the Commission with the enforcement of the DMA. (DMA recitals 90, 91; arts. 37–39.) The amendment grants the German Federal Cartel Office the power to enforce certain rules of the DMA, investigate the alleged violations, and inform the European Commission of the results of the national investigations. (Competition Act § 32g (new); DMA art. 38, para. 2.)
Furthermore, the amendment adds that, in addition to EU competition law violations, certain violations of the EU DMA may be enforced by affected individuals in national courts if those individuals derive rights and obligations from the respective provisions of the DMA. (Competition Act §§ 87, 89 (new); Explanatory memorandum at 19, 20.)
Prepared by Lea Marie Ruschinzik, Law Library Intern, under the supervision of Jenny Gesley, Foreign Law Specialist.
November 30, 2023
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