In its decision of 8 April 2021 (case 16 O 73/21 Kart), the Regional Court of Berlin prohibited the market leader Immoscout from using the system of list-first discounts in interim proceedings. A list-first discount is a discount real estate agents receive if they offer their properties exclusively on Immoscout's website within a specified period of time. This was the first time that a court applied Section 20(3)(1) of the Competition Act (GWB) (the "tipping paragraph"), which was introduced as part of the 10th GWB amendment and came into force at the beginning of 2021.
In principle, so-called "tipping", ie, the tipping of a market towards a highly concentrated market, is not against competition law. However, an abusive restraint of competitors is given if companies use non-competitive means to achieve this outcome. In digital markets with strong positive network effects in particular, ie, when the number of platform users determines the attractiveness of the platform, the tipping of a market can be triggered quickly and is then difficult to reverse.
To prevent this, the legislator considered it necessary for the cartel authorities to be able to intervene swiftly. Therefore, the legislator introduced Section 20(3)(1) of the GWB: if an internet platform hinders its competitors from achieving independent network effects, this can now be prohibited before the market tips. The clause sets out an absolute offence that enables the authorities to intervene even before actual damage has been caused. In this regard, the serious risk of a restriction of competition is sufficient for a prohibition.
In the interim proceedings before the Berlin Regional Court, the online platform Immowelt as claimant faced the online platform Immoscout as respondent. Two discount systems for real estate agents introduced by Immoscout were challenged:
- the list-all discount, where the real estate agent receives a discount if at least 95% of the total number of properties listed online appear on Immoscout; and
- the list-first-discount, where the real estate agent receives a discount if 95% of the properties listed online are offered exclusively on Immoscout or on its own website in the first seven days.
While the judges considered the list-all discounts to be in compliance with competition law, they determined the list-first discounts as a serious threat to competition within the meaning of Section 20(3)(1) of the GWB. The court based its decision on the fact that the period of seven days of exclusively offering properties on the Immoscout website led to de facto exclusivity and a resulting market foreclosure for the competitor Immowelt.
This conclusion is based on two main points:
- On the one hand, Immowelt had convincingly shown that 56% of all contacts were made in the first week and that 30% of the listings, especially in highly competitive markets in metropolitan areas such as Berlin, were no longer online after just one week.
- On the other hand, within the first three months after its introduction, Immoscout had seen a sharp increase in listings, while the listings of Immowelt had declined.
This decision marks the start of the application of the "tipping paragraph". It is to be expected that competitors will use the new legal basis to attack strong platforms in the future. The Federal Cartel Office had already identified tipping risks in several decisions.(1) Attacks are not only to be expected against dominant companies, as such a position is not required under the new rule; the demonstration of superior market power is sufficient.
For further information on this topic please contact Sascha Dethof at Fieldfisher (Germany) LLP by telephone (+49 211 950 749 0) or email ([email protected]). The Fieldfisher (Germany) LLP website can be accessed at www.fieldfisher.com.
(1) 25 June 2015, B6 - 39/15: Immowelt/Immonet; 6 February 2019, B6 - 22/16: Facebook, 4 December 2017; B6 - 132/14-2: CTS Eventim.