Major Developments in German Competition Law in the second half of 2023
In addition to the entry into force of the 11th Amendment to the ARC, the reporting period saw a number of non-horizontal mergers and unabated enforcement against abuse of dominance. For the second year in a row, the Federal Cartel Office imposed a historically low amount of fines, while the courts continued to develop antitrust damages rules by rendering interesting and sometimes contradictory decisions.
I. 11th Amendment to the ARC
On 7 November 2023, the controversial 11th Amendment to the Act against Restraints of Competition (ARC) came into force. The most important changes include new, far-reaching powers of intervention for the Federal Cartel Office (FCO), simplifications in skimming off benefits from antitrust violations and new investigative powers in the context of the Digital Markets Act.
1. Powers of Intervention Following Sector Inquiries
The 11th Amendment to the ARC enables the FCO to order remedial measures of a behavioral or even structural nature without requiring a violation of the ARC. These new measures can limit considerably the addressee’s competitive freedom of action. In order to use these new tools, the FCO first needs to determine particular competition deficits in certain sectors following sector inquiries.
If one of the FCO’s future sector inquiries identifies a significant and continuing malfunctioning of competition, the authority can order the remedial measures specified in Section 32f (3) and (4) ARC. These range from behavioral measures, such as granting access to data, interfaces, or networks or requirements for business relationships between companies in the markets under investigation, to structural remedies. In the latter case (unbundling orders), the FCO can order the sale of company assets or entire parts of the company as a last resort.
Compared to the draft version of 2022 (see Newsletter 2/2022), the legislator has raised the threshold for intervention by the FCO. The draft considered a “significant, persistent or repeated disruption of competition” sufficient. With the requirement of a significant and continuing malfunctioning of competition the legislator reacted to the justified criticism concerning the broad and vage wording of the draft version. In addition, it added a clarification as to when a malfunctioning of competition has to be regarded as continuing. Nonetheless, it is to be expected that the application of the new rules will be the subject of further controversy (before the courts).
2. Skimming Off of Improper Gains
Section 34 ARC allows the FCO to skim off economical advantages obtained through infringements of antitrust law. However, this instrument has not been used to date, not least due to the high standards of proof required to determine the improper gains (see Newsletter 2/2022). A number of simplifications are now intended to make skimming off improper gains more relevant in practice.
The simplifications come in the form of two newly introduced (rebuttable) presumptions, which are likely to be difficult to rebut in practice. In the future, it will be presumed that any infringement of antitrust law led to an economic advantage for the infringing company. In addition, there will be a presumption that this advantage amounts to 1% of domestic sales of the product or service in question. These two presumptions can only be rebutted by proving that no profits of this amount were made in the relevant period. This rebuttal is likely to succeed only in exceptional cases.
3. Digital Markets Act
By March 2024, 22 companies previously designated by the Commission as so-called “gatekeepers” must implement the requirements and prohibitions of the Digital Markets Act (DMA). Designated gatekeepers are companies such as Microsoft, Apple and Alphabet, which can use their market power to control market access of others. While the enforcement of the DMA is the responsibility of the Commission, it allows the national competition authorities to investigate compliance with certain of its rules in the respective member states. To implement this possibility at national level, the 11th Amendment to the ARC gives the FCO the power to support the Commission by conducting investigations in Germany.
With regard to private enforcement, the 11th Amendment to the ARC provides affected parties a claim for removal or injunctive relief in the event of violations of Articles 5, 6 and 7 of the DMA.
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This client information contains only a non-binding overview of recent developments in German competition law and is not meant to replace legal advice. In case of comments or questions, please contact:
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