Cartel office can take more severe action against digital corporations | 01/14/21


In future, the antitrust authorities in Germany can take more stringent action against possible competition violations by large digital companies such as Amazon, Google and Facebook.

On Thursday, in its third reading, the Bundestag approved the reform of the Act against Restraints of Competition (GWB), which has been under discussion for months. According to this, the Federal Cartel Office will be able to take action against distortions of competition more easily in the future if market-dominant digital companies exploit their position.

The reform was adopted with the votes of the ruling coalition and the Greens. The opposition parties AfD, FDP and Left abstained from voting. The amendment mainly consists of a new paragraph 19a. This allows the Cartel Office for the first time to determine the “outstanding cross-market importance” of digital platforms and then to prohibit them from certain practices.

For example, it should be ensured that the Internet giants do not offer their own products on their platforms in preference to products from competitors. Antitrust proceedings are to be accelerated so that the authorities can ensure fair competition more quickly.

The amendment also provides for a revision of the merger controls so that the Federal Cartel Office should concentrate on relevant mergers. Mergers of medium-sized companies should only be subject to control if all companies involved in Germany have at least an annual turnover of ten million euros instead of the previous five million.

The digital update for competition law should actually have been adopted in 2020. However, the Union and the SPD could not initially agree whether the legal process should also be shortened in order to avoid years of legal disputes between the digital companies and the Federal Cartel Office. Ultimately, the Union prevailed with its view that complaints no longer end up first at the Düsseldorf Higher Regional Court, but are dealt with directly before the Federal Court of Justice (BGH) as the highest instance. Previously, the law professor Hermann-Josef Bunte, former judge at the Hanseatic Higher Regional Court, and the Federal Court of Justice itself had cleared the legal concerns out of the way in brief reports.

Speakers from the governing parties emphasized that the amendment does not want to slow down the digital economy by only targeting companies because of their sheer size. “We only want to take their responsibility where they abuse their market position to the detriment of competitors, consumers and companies,” said CDU MP Matthias Heider. His party colleague Hansjörg Durz said: “We are celebrating nothing less than the birth of the social digital economy.”

The Greens approved the amendment, but criticized the “slow pace” with which the reform was implemented. Instead of changing antitrust law, the AfD advocated a voluntary code of conduct that should be negotiated between business associations and consumer associations. The left, on the other hand, called for a preventive smashing of the large Internet companies, as is currently being discussed in the USA.

The President of the Federal Cartel Office, Andreas Mundt, welcomed the parliamentary decision. “The German legislator is an international pioneer here.” Similar instruments are also being discussed at European level, but the legislative process is still at the very beginning. “In the future, we will be able to prohibit certain behaviors by big-tech companies earlier, so before the child has fallen into the well.”



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