Three points from the Monopolies Commission 2022 Biennial Report

Earlier this month, the German Monopolies Commission published its new Biennial Report: “Competition 2022”. The report is a 325 pages “beast” with six chapters. There is lots of interesting stuff for the antitrust connoisseur in there, but too much ground to cover in a post with a length of our liking. So, this post will highlight three particularly noteworthy points.

In its own words, the German Monopolies Commission is a “permanent, independent expert committee which advises the German government and legislature in the areas of competition policy-making, competition law, and regulation.” It is a renowned institution whose existence and role are enshrined in German competition law.

As is clear from their name, Biennial Reports are published every other year, and this year is one of those years. In essence, the reports are meant to assess and review where antitrust and competition policy in Germany stand. Topics this year include, inter alia, common ownership (yes, this is a still a thing), the relevance of sustainability in antitrust, and supplementing the EU’s Digital Markets Act with rules for private enforcement.

There is lots to pick from and there are no clear three highlights. But for this post, I will nevertheless focus on three noteworthy points and the Monopolies Commission’s position on them:

  • Merger Control: The European Commission should not review transactions that did not have to be filed for merger control at least at Member State level. At the same time, national transaction value thresholds should be applied more broadly.
  • Follow-on damages litigation: Immunity recipients should generally be protected from damages claims, and should only be subordinately liable to cartel victims.
  • Abuse of dominance: Absent of an infringement of antitrust law, companies should (only) be broken up as a last resort. The rules regarding sector inquiries should be advanced, modelled after the rules in the UK.

Merger Control: Forget about Illumina/Grail already?

You might have read our post on the landmark Illumina/Grail ruling: The EU’s General Court has confirmed that the European Commission may review transactions that do not meet the merger control thresholds anywhere in Europe. The way to achieve this is for EU Member States to refer transactions to the European Commission.

The Monopolies Commission criticizes this new referral practice and advises the European Commission not to accept such referrals (not going to happen). Instead, according to the Monopolies Commission, the transaction value threshold in German (and Austrian) law should be amended to apply more broadly, including to cases where the target has no local activities.

Given the uncertainty the introduction of the transaction value threshold in Germany (and Austria) brought, one can see how amending the law for the threshold to apply more broadly would be heavily criticized. The same applies to introducing transaction value thresholds at EU level and across EU Member States, which the Monopolies Commission also recommends.

Follow-on litigation: More cartels

The Monopolies Commission addresses a recurring topic in discussions between antitrust practitioners and regulators: Antitrust regulators are generally receiving fewer and fewer leniency applications and as a result, there are fewer and fewer cartel cases in the pipeline. This has led to a discussion on whether leniency recipients should be protected from follow-on damages claims, based on the argument that the huge risk of such claims is what keeps companies from applying for leniency these days.

While one could get a different impression from all the dawn raids across Europe this spring and summer (remember this year’s dawn raid champion?), the Monopolies Commission confirms that leniency applications and case numbers are declining. At the same time, the Monopolies Commission acknowledges that a declining number of leniency applications cannot necessarily be taken as an indication that the leniency rules do not work (maybe the declining numbers are simply a result of antitrust compliance).

Still, on balance, the Monopolies Commission advises for leniency applicants to at least receive some protection from follow-on damages: To make sure that cartel victims will ultimately be compensated, leniency recipients should only be subordinately liable to cartel victims. This means that a leniency recipient would only have to pay damages when those damages cannot be recovered from the other cartel members.

Abuse of dominance: The UK example

The latest reform of German competition law is only about 1.5 years old, and the next reform is already in the making (not yet as clearly laid out as some would like). In this regard, the Monopolies Commission takes the position that breaking up companies is advisable as a last resort even absent a competition law infringement.

Separately, the Monopolies Commission advises that the rules on sector inquiries by the German Bundeskartellamt should be reformed, and that the process of sector inquiries should be structured and limited by deadlines. If that sounds familiar, it might be because it is: The Monopolies Commission would base new sector inquiry rules on how things work in the UK, including giving the Bundeskartellamt the power to impose measures as a direct result of a sector inquiry, even absent of finding a competition law infringement – an approach many even in the UK are struggling with.

All just scholars and independent experts at the drawing board?

Neither the German regulator nor the German legislator are bound by the Monopolies Commission’s Biennial Reports. Some of these reports receive more attention, some of them less. But: They are usually a good means to spot certain trends in lines of thinking, and provide a good (if lengthy) overview of where competition policy might be going.

In particular in rather interventionist and politicised times like these, this should not be taken lightly. The Monopolies Commission does not seem to be alone with its suggestions – so, one should not be surprised if most of the suggestions summarised in this post will become actual law/practice in the not too distant future.

[Photo by Polina Zimmerman]