With the outbreak of the Russia-Ukraine war and the considerable price increases for fuels in Germany, an intense public discussion began on how the Federal Government can legally record 'silent' coordination of behaviour between companies (especially in transparent, oligopolistically structured markets). Against this background, the Federal Ministry of Economics and Climate (BMWK) presented a first draft on 26 September 2022 to tighten competition law and strengthen the Federal Cartel Office ("Competition Enforcement Act"). The explanatory memorandum to the draft states:
"Where the market structure stands in the way of competition, for example because there are only a few suppliers in the market and parallel price developments are regularly observed to the detriment of consumers, the intervention instruments of antitrust law are to be strengthened."
Accordingly, the Federal Cartel Office (FCO) is to be given powers equivalent to those of a regulator to intervene in market and corporate structures even even with regard to companies which have neither committed a cartel infringement nor are planning a merger and have not behaved in an abusive manner - a paradigm shift in antitrust law, where the cost-by-cause principle previously applied.
According to the draft bill the FCO is to be strengthened in 3 areas:
- in conducting sector inquiries and imposition of measures thereafter,
- in the enforcement of the Digital Market Act and
- in the disgorgement of advantages.
The first hearings on the draft are going to take place as early as October so that a speedy legislative process and adoption before the end of this year can be expected. The fact that the next, 12th amendment to the Act against Restraint of Competition (ARC) has already been announced by the BMWK for next year also speaks in favour of a quick adoption. Thus, almost 1.5 years after the 10th ARC amendment came into force, two further amendments are already in the pipeline of the Ministry.
Details of the proposed 11th ARC amendment:
I. Follow-up and streamlining measures to the sector inquiry
With the instrument of sector inquiries the FCO investigates and analyses the structures and conditions of competition in specific sectors of the economy. These market studies are not based on the suspicion of a cartel infringement and are not directed against individual companies. Rather, it is a procedure for gaining knowledge with the possibility of subsequently carrying out cartel proceedings against specific companies on the basis of possible antitrust infringements. The FCO is, for example, currently conducting such investigation in the fuel markets.
The draft bill provides for a strengthening of these inquiries. In the future the FCO will be able to order measures and remedies following a sector inquiry (which may now only take a maximum of 18 months) without having established a specific infringement of the law by a market participant. The only prerequisite for ordering remedies is that the FCO has identified a significant, lasting or repeated disturbance of competition on at least one market or across markets. The remedies that follow can be behavioural and structural, with non-abuse unbundling (widely called for on both sides of the Atlantic) provided for as an ultima ratio. The draft provides, inter alia, for measures relating to:
- granting access to data, interfaces, networks or other facilities,
- supplying other companies, including the granting of rights to use intellectual property,
- official or comparable approvals or permits,
- the supply relationships between undertakings on the markets concerned and at different market levels,
- common norms and standards,
- the organisational separation of company or business divisions.
It shall also be possible for the FCO to impose requirements on certain types of contracts or contractual arrangements including contractual provisions on the disclosure of information. This catalogue is not exhaustive, so that all measures necessary for restoring effective competition are in principle to be available to the FCO. With the exception of unbundling , the measures are not ranked in a specific order so that considerable legal uncertainty for companies which comply with (cartel) law can be expected. This applies all the more as the draft does not specify against whom the measures are to be directed. The only criterion so far is the necessity of the specific measure for the elimination or reduction of the distortion of competition - an indeterminate legal concept that requires considerable further clarification of both, courts and authorities.
II. Extension of the FCO's powers to enforce the Digital Market Act and Private Enforcement
Originally, a similar and equally far-reaching regulatory instrument was envisaged for the European Commission at a European level ("New Competition Tool"). This proposal ultimately gave way to the Digital Markets Act ("DMA").
The DMA, which will come into force on 1 November 2022, is a European regulation designed to ensure that digital markets where gatekeepers (i.e. companies that control market access for others due to their market power and network effects) are and remain contestable, i.e. that other market players can exert competitive pressure on these gatekeepers, and to ensure fairness and a level playing field for players in digital markets in the EU.
The draft bill on the 11th amendment to the ARC provides that in the future the FCO may investigate possible infringements of the DMA and for this purpose also make use of the investigative powers available to it in the event of suspected infringements of antitrust law. This will enable the FCO on the one hand to support the European Commission in enforcing the DMA and on the other hand to generate synergies for the enforcement of national supervision of gatekeepers, which is regulated in section 19a ARC.
Since the DMA is to be enforced not only by public authorities but also by private parties (by means of actions for injunctive relief and damages) (private enforcement), according to the draft bill, the simplifications that have so far applied to antitrust damages actions will in the future also apply to claims for the enforcement of rights and obligations under the DMA - undoubtedly an advantage for Germany as a place of jurisdiction and a new danger for companies that are addressees of the DMA.
III. Reduction of the requirements for the levy of benefits
Courts and authorities have so far hardly ever ordered disgorgement due to the high standard of proof required. To change this, the draft bill provides that in the future the requirement of fault will be deleted altogether. In addition, the period during which disgorgement may be orderedf will be extended to 10 years after the infringement has ended.
Particularly interesting is the introduction of (rebuttable) statutory presumptions, whereby it is presumed that
- the cartel infringement resulted in an advantage for the undertaking concerned
- this advantage amounts to at least 1% of the worldwide group turnover of the goods and services concerned.
IV. Initial Evaluation
As a first step in implementing its competition policy agenda published in February, the BMWK wishes to strengthen the FCO's powers of intervention and lower the requirements for various instruments and claims. The skimming off of advantages in particular is likely to be used increasingly by the FCO in the coming years and to have a deterrent effect on companies. Since some anti-competitive phenomena of the 21st century - especially in digital markets, which are particularly susceptible to concentrations of power due to strong network and scale effects - cannot (or can no longer) be controlled with the existing antitrust toolbox, the BMWK deliberately breaks with the existing antitrust doctrine and gives the FCO quasi-regulatory powers.
It remains to be hoped, however, that in the course of the legislative process the decisive issues of the preconditions and the legal consequences will be clarified in such a way that legal uncertainty will be reduced. To this end, more specific requirements can be introduced for both definitions of individual characteristics or preconditions (e.g. for the term "significant, persistent or repeated distortion of competition") and the legal consequences (e.g. who can be affected by a measure after a sector inquiry has been carried out).