Dr. Markus Schöner Kathrin Schürnbrand December 13 2012 Introduction of SIEC test and changes for the press industry CMS Germany | Competition & Antitrust - Germany Dr. Markus Schöner, Kathrin Schürnbrand Competition & Antitrust On October 18 2012 the Federal Parliament passed the Eighth Amendment to the Act against Restraints of Competition. The aim of the amendment is to further modernise and optimise the conditions for competition, in particular with respect to merger control, control of abusive practices and the procedures in the event of competition law infringements. Additionally, the new law provides for special provisions for agreements concluded between associations of publishers and associations of press wholesalers.First, the revision introduces a new test for the assessment of mergers, the significant impediment to effective competition (SIEC) test. Previously, under German law, a merger had to be prohibited if it could be expected that it would establish or strengthen a dominant position. Until 2004, this dominance test was also the decisive criterion under European law for prohibition of a merger. However, according to European law, dominance is now merely one example of a significant impediment to effective competition. German merger control law has thus been adapted so that mergers on the German and European level are subject to the same test. The SIEC test enables more flexible review of cases which are potentially critical under competition law. It also allows for prohibition of a merger in situations where the requirements for market dominance have not been fulfilled, but where a restriction of competition is nevertheless threatened, such as certain oligopoly situations or cases of unilateral, uncoordinated behaviour of individual companies. However, ultimately the amendment will affect a few special cases only.With respect to the test for market dominance, the amendment brings a further change. The legal assumption thus far has been that a company has a dominant market position if it has a market share of at least one third. In the future, this threshold will be raised to 40%. This aims to bring the Act against Restraints of Competition into line with the latest economic research and take into account developments in the practice of the Federal Cartel Office. According to the act, in the experience of cartel authorities, it is seldom the case today that a company has a dominant position with a market share of only one third.There are also changes in merger control for companies in the press industry. Due to an increase in turnover-related thresholds, fewer press-related mergers will have to be notified to the Federal Cartel Office in the future. Restructuring mergers will also be easier. On the one hand, this should increase the ability of publishers to merge with other media; publishers will thus have more leeway to stabilise their financial basis through mergers. On the other hand, the changes should enable effective merger control which takes the particularities of the press industry into account.A provision which was included in the legislation procedure only recently concerns the protection of the established German press distribution system. There were civil law proceedings in which the Federal Association of Press Wholesalers was prohibited under competition law to negotiate uniform wholesaler conditions for wholesalers in relation to publishing houses and national distributors. This case law threatened to endanger the established press distribution system in Germany. The legislature reacted because this press distribution system contributes to the availability of publications everywhere and should also allow publications of smaller publishers with smaller print runs access to readers. In the future, agreements between associations of publishers and press wholesalers will not be caught by the prohibition of restrictive agreements if such agreements regulate comprehensive and non-discriminatory distribution of magazines and newspapers by press wholesalers.In the future, consumer associations will also be able to demand that behaviour in breach of competition law is stopped and could skim off illegal gains. However, they will still be unable to claim compensation for damages.The amendment also clarifies that competitive behaviour of health insurers is subject to competition law. This has been ambiguous thus far, since it was disputed whether health insurers have the characteristics of a company. With the current amendment, the competition law shall, in principle, also apply to the relationships of health insurers and their associations both between themselves and in relation to insured parties. However, the amendment provides only for the corresponding application of competition law provisions; with respect to their application, the public healthcare mandate of statutory health insurers must also be taken into account. Competition law does not apply to agreements which health insurers or their associations are required to conclude under statute.Another important change involves the Administrative Offences Act. The range of fines against legal entities and groups of persons will increase for intentional criminal acts from €1 million to €10 million, and for negligent criminal acts from €500,000 to €5 million. The maximum fine for certain offences has also increased tenfold. The increases are based on a recommendation of the Organisation for Economic Cooperation and Development.An express legal basis for assessing a fine against a collective legal successor has further been established. To date, no such provision has existed. According to case law of the Federal Court of Justice, a fine can be imposed on a collective legal successor of an organisation whose body has committed the offence only if very strict conditions are fulfilled. In the court's view, a fine against a legal successor in excess of those conditions would be in violation of the prohibition to apply the law by analogy. This case law created the possibility for companies affected by administrative fines to avoid a fine through transformation. The amendment now expressly stipulates, and therefore facilitates, the possibility to impose a fine against the legal successor(s) in the event of universal succession.öThe amendments are expected to enter into force on January 1 2013. However, last-minute changes were proposed at the end of November 2012 regarding the special treatment of some public institutions, which could delay their entry into force.For further information on this topic please contact Markus Schöner or Kathrin Schürnbrand at CMS Hasche Sigle by telephone (+49 40 37 63 00), fax (+49 40 37 63 040 600) or email ([email protected] or [email protected]).