Introduction
Decision
GWB section 19a
Further proceedings against Google
Further proceedings against other digital groups
Comment
On 5 January 2022, the Federal Cartel Office (FCO) announced that for the first time a company, Google/Alphabet, would be subject to extended abuse control. Further decisions against large digital corporations such as Amazon, Apple and Facebook are expected soon. The extended abuse control is a new instrument that was only included in 2021 in the Competition Act (GWB). The new provision will enable the FCO to act more quickly in the future if competition is threatened by large digital corporations.
The FCO held that Google has paramount significance for competition across markets within the meaning of section 19a(1) of the GWB. Google is in a position of economic power that gives it scope for cross-market conduct which is not sufficiently controlled by competition law.
According to the FCO's findings, Google has a market share of over 80% of the market for general search services in Germany, which constitutes a multisided "platform" market within the meaning of section 18(3a) of the GWB. The activity on a platform market is a prerequisite for the application of section 19a of the GWB. Further, according to the FCO, Google is one of the most important providers of search-based advertising and it is overall a strong market provider of a wide variety of other services, with a high user reach that includes:
- YouTube;
- Google Chrome;
- Android; and
- Google Play Store.
Thus, the FCO has stated that these services have an "infrastructural character", which means that a large number of other services can only be provided by using these services.
Further, when carrying out the overall assessment within the framework of section 19a(1) of the GWB, the FCO considered that Google had "outstanding" access to data through its services. With this data, Google has been able to market targeted advertising, further develop its services in a highly efficient manner and open up cross-market scope for conduct that was not sufficiently controlled, which made it necessary for the FCO to subject Google to the extended abuse control under section 19a of the GWB.
Google has already stated that it accepts the finding that it is deemed to be a company with paramount significance across markets and will not appeal against this decision.
Section 19a of the GWB was included in the 10th amendment to the GWB.(1) The aim of the provision is to enable the FCO to take faster and more effective action against large companies in the digital economy. As soon as the FCO has determined an overriding cross-market significance for competition with regard to a company, it can go one step further and prohibit the companies from certain conduct that could endanger competition. This is intended to ensure that competition also remains active in the digital economy, despite the gatekeeper function of large digital corporations.
Further proceedings against Google
Andreas Mundt, the FCO's president, saw this decision as an important milestone in the fight against the power of digital corporations. According to Mundt, the decision is "a very important step since based on this decision the Federal Cartel Office can now take action against specific anti-competitive practices by Google".
The FCO has already started to assess the processing of personal data by Google and Google News Showcase.
Further proceedings against other digital groups
Further proceedings on the basis of section 19a of the GWB against other important companies in the digital industry (ie, Facebook, Amazon and Apple) have also already been initiated by the FCO.
It is expected that the FCO will also classify the other companies that are under investigation under section 19a(1) of the GWB to have paramount significance across markets and will subsequently prohibit these companies from engaging in certain conduct. Other companies cannot take direct civil action on the basis of a finding of paramount significance across markets and must first rely on the FCO's prohibition of certain conduct. However, the FCO has already received numerous complaints about practices of the above companies that threaten competition.
For further information on this topic please contact Sascha Dethof or Raoul Schätzler at Fieldfisher (Germany) LLP by telephone (+49 211 950 749 0) or email ([email protected] or [email protected]). The Fieldfisher (Germany) LLP website can be accessed at www.fieldfisher.com.
Endnotes
(1) Further information is available here.