The next change in German competition law is just around the corner

In Germany, the next amendment of the competition law regime is on its way. This week, the Ministry of Economic Affairs and Climate Action (BMWK) presented a draft bill to tighten competition. In this post, we present the envisaged changes and put them in perspective.

An agenda becomes reality

Back in March, we summarised the ten-point paper setting out the BMWK’s competition policy agenda for the next years. Half a year later, the BMWK has now presented concrete plans for an amendment of German competition law (it would be the eleventh amendment since the introduction of the GWB), and will soon submit a draft bill for discussion within the government.

The BMWK stated that the main objective of the amendment is to strengthen the enforcement of competition law. While the past tenth amendment of the GWB, which mainly concerned the regulation of big tech, was also referred to as the “Digitalization Act”, the eleventh amendment is therefore to be referred to as the “Competition Enforcement Act” (“Wettbewerbsdurchsetzungsgesetz”). The Minister of Economic Affairs, Mr. Robert Habeck, summarizes where the journey is headed: “In view of the rising prices and the enormous profits of individual companies, it is unacceptable that in some areas there are still encrusted markets characterized by power structures to the detriment of consumers”. 

Measures following a sector inquiry

Just like other jurisdictions, German competition law already foresees the instrument of a sector inquiry. At present, however, the Bundeskartellamt – unlike the UK CMA – cannot take any direct measures to stimulate competition on the basis of a sector inquiry. The draft bill provides for the Bundeskartellamt to be given certain powers of intervention following a sector inquiry even absent a breach of competition law, i.e., the Bundeskartellamt may order specific measures to remedy any significant distortion of competition. These measures include having companies committing to:

  • establishing open standards
  • granting access to interfaces
  • establishing an effective complaint management system
  • changing supplier relationships
  • organizationally separating business units

As an ultima ratio, unbundling companies shall even be possible. While the Bundeskartellamt’s new powers would be broad, the regulator will have to stick to relatively tight timelines: Sector inquiries would have to be conducted within 18 months; subsequent measures would then have to be imposed within another 18 months.

It is clear from the BMWK announcement that in particular the powers of the CMA were copied into the German draft bill are serving as a model for amending the German regime. The BMWK cites quite a few examples from the practice of the CMA and, in its press release, also included a link to the website on which the CMA lists cases which led to remedies following a sector inquiry.

It is not entirely clear to what extent the proposed amendments are also driven by the perception that the Bundeskartellamt apparently had no means to act against rising fuel prices earlier this year, despite several requests from politicians (conveniently, the Bundeskartellamt is currently conducting a sector inquiry into the refinery and wholesale markets of fuels). In any case, the Bundeskartellamt’s competences would be considerably extended.

Confiscating economic benefits obtained through antitrust violations

The draft bill would also enable the Bundeskartellamt to more easily confiscate economic benefits obtained through antitrust violations. The bill would introduce a presumption that a company with a proven antitrust violation has obtained an economic benefit (which the Bundeskartellamt could claim “back”) equalling 1% of the domestic sales generated with the product or service related to the antitrust violation.

This change does not come a surprise, as the confiscation of benefits has been discussed a lot lately. There has also been a broad discussion about how profits of companies that arise by chance due to crises can be seized. However, this has nothing in common with the confiscation of benefits under competition law, which requires a clear violation of competition law.

Enforcement of the Digital Markets Act

Furthermore, the draft bill would create the legal basis for the Bundeskartellamt to support the European Commission in enforcing the Digital Markets Act (DMA). It would also introduce the possibility of private enforcement of the DMA in Germany. These amendments were expected to happen and do not come as a surprise

So, everything gets worse for companies?

That is not the way to put it. Companies and consumers could benefit from measures following a sector inquiry, depending on how the Bundeskartellamt would apply its new powers. In any case, it remains to be seen what exactly the final amended law would look like. After all, the draft still has to be agreed with other stakeholders and within the government coalition (which is not always easy). In any case, the amendment follows the trend towards more regulation.

The BMWK seems to be ambitious and has already announced that this amendment will be followed by another amendment (the twelfth). That subsequent amendment is apparently intended to give companies more legal certainty regarding sustainability cooperations and to increase consumer protection. So, it looks like this will certainly not be our last post on legal changes in Germany.

[Photo by Steve Johnson on Unsplash]