Antitrust and the Political System – Part I: Germany

Part I of our series looking at who is responsible for making decisions within certain antitrust authorities and the extent to which there might be political oversight.

The extent of (potential) political influence on the decision-making process and enforcement priorities of antitrust authorities is closely linked to structural questions. First and foremost, it is decisive how the relevant authorities are embedded in the respective political system and who is responsible for adopting decisions. Similarly important is the hierarchy within the authority. While there are huge differences across jurisdictions, these questions can be answered by having a closer look at the relevant provisions of law. What is harder to assess is how the decision-making process works in practice and if and how political players try to influence the process, nonetheless. This post on Germany’s Bundeskartellamt is the first part of a series having a closer look at these issues.

The Bundeskartellamt, independent?

Starting with formalities, the Bundeskartellamt, Germany’s only key authority for applying and enforcing the German competition law is “an independent higher federal authority” formally assigned to the Federal Ministry for Economic Affairs. After being based in Berlin for 40 years, it was relocated to Bonn in 1999 – at a time when the trend was certainly moving the other way around. Now, this can already be seen as a sign of political independence and indeed the physical distance to the government and its bodies was one of the leading motives for the move.

The Bundeskartellamt generally emphasises that its decisions are solely based on competitive criteria without external influence, which, having a quick read of the relevant provisions, can come as quite a surprise. According to the law namely, the Federal Ministry of Economic Affairs even has the right to issue instructions to the Bundeskartellamt. While there is an academic dispute regarding the scope of the relevant provisions (general instructions vs. instructions in individual cases?), it is, however, fair to say that this tool has played a negligible role in practice. In fact, the last general instruction to the Bundeskartellamt was issued in 1984 and there have been no (publicly known) individual instructions .

Further, there is the Monopolkommission, which advises the German government and legislature in the areas of competition policy-making and competition law. It publishes reports every two years in which it assesses the current status and the expected developments of company concentration in Germany, but also reviews the application of antitrust rules. Whilst these reports have by no means an instructive character, they highlight certain parts of the Bundeskartellamt’s work for a broader public.

The president as the ultimate decision maker?

When going through the Bundeskartellamt’s press releases, one could get the impression that Andreas Mundt, always in the eye of the public and taking responsibility for the authority’s decision, is the “ultimate decision maker” indeed taking every major decision adopted by his authority. Luckily for him, that is not the case.  

Within the Bundeskartellamt, the so-called Decision Divisions are responsible for taking the decisions, namely in cartel, merger control and abuse of dominance cases. The Decision Divisions are largely assigned to certain industry sectors, e.g., building materials, infrastructure, e-commerce, and the like, while three Decision Divisions were exclusively set up to make the prosecution of cartels more effective. The competences and composition of the Decision Divisions are determined by the president and must be confirmed by the Federal Ministry of Economic Affairs. Cases are decided, with simple majority, by a decision board consisting of the chairman of the respective Decision Division and two associate members. Similar to the judicial independence, the chairman has no right to give instructions to the other members of the Decision Division so that he/she can, at least in theory, be outvoted. All members of a Decision Division must be civil servants appointed for life and must be qualified to serve as judges or senior civil servant.

When it comes to those decisions, it is generally recognised that the Decision Divisions are protected from internal and external influences. On the one hand this means that neither the president nor any other member of the Bundeskartellamt legally have an actual say in the decision process. On the other hand, no other governmental body is to be involved in the process by law. These general principles do not rule out informal discussions between (or with) the president or other Decision Division of the Bundeskartellamt or the Ministry for Economic Affairs on the one hand and the competent Decision Division on the other hand, as long as no actual influence is exercised.

So, no politics at all?

It always gets  political when the so-called ministerial approval comes into play: If a merger is prohibited by the Bundeskartellamt, the merging parties may not only appeal to the relevant courts, but also apply to the Federal Ministry for Economics for said approval. Whereas the courts would review the Bundeskartellamt’s decision, the Ministry is bound by the facts found by the Bundeskartellamt and only assesses whether the restraints of competition caused by a particular transaction are outweighed by advantages to the economy as a whole or justified by an overriding public interest.

Since its introduction in 1973, the ministerial approval has – from a merely quantitative perspective – not played a massive role in practice: Out of only 23 applications, 10 mergers got the green-light from the Ministry of Economics. In the latest approval case, Minister Altmaier allowed the creation of a joint venture between Miba and Zollern and inter alia highlighted that the merger was significant for achieving the energy transition and, associated with this, for achieving environmental policy goals. The decision further stressed that the merger could have a major impact on sustainability– arguments which sound like a mixtape of antitrust’s current best of.

What about the Bundeskartellamt’s own influence?

Whilst somewhat protected from external political influence, the Bundeskartellamt has indeed been a proactive player on big policy debates both nationally and internationally. By way of example, the Bundeskartellamt has early on been at the forefront of taking a view on digitalisation issues and regulating the GAFAs. So, it did not come as a surprise when, not even two weeks after the 10^th amendment of German competition law entered into force, the Bundeskartellamt made immediately use of its shiny new toolbox by extending the scope of its ongoing proceedings against Facebook, inter alia examining if Facebook was subject to the new rules applying to undertakings of paramount significance for competition across markets. Within just a few months, the Bundeskartellamt also initiated proceeding against the rest of the GAFAs, namely Amazon, Apple, and Google, clearly demonstrating that it is not shying away from proceedings associated with big political debates.

Finally, the Bundeskartellamt is well-known, and some might say feared, for raising its voice in international policy debates. Together with the French and Dutch Competition Authority, it issued a statement on the DMA, inter alia requesting a strengthened role of the Member States. This week it also got involved in the legislative process regarding the revision of the Vertical Block Exemption Regulation and the Vertical Guidelines –hand in hand with its technically higher-ranking authority, the Federal Ministry for Economics.