A draft amendment to the German competition law has been published – More powers for the Bundeskartellamt

September 30, 2022

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The German Ministry of Economic Affairs and Climate Action has published the draft 11th amendment to the law against restrictions on competition. It will further strengthen the powers of the German competition watchdog to investigate market sectors and impose remedies even in the absence of competition law violations.

On September 26, 2022, the German Ministry for Economic Affairs and Climate Action (“Ministry”) published the first draft of the 11th Amendment to the Law Against Restrictions on Competition (“German Competition Law”) (The law project “). The bill is not an immediate reaction to the current crisis in the energy markets, but a planned longer-term amendment, which has already been reflected in the 2021 coalition agreement between the government parties SPD, Bündnis 90/Die Grünen and FDP. The bill marks another step towards a new era of antitrust enforcement in Germany. This trend continues to shift competition law enforcement from a more traditional approach, where an infringement of competition law (e.g. cartel/abuse of dominant position) is required, to a tool of broader market intended to address perceived distortions of competition that may already be operating below the ‘infringement threshold’. The bill makes particular reference to the experiences of the UK competition authority CMA and the European Commission’s impact assessment for the New Competition Tool (NCT).

The main aspects of the draft law are: (i) a complete revision of the sector inquiry tool of the Federal Cartel Office (“OFC”); (ii) implementation of the DMA within the national framework of public and private enforcement; and (iii) facilitating the restitution of profits:

(i) Sector surveys. The sector inquiries tool allows the FCO to investigate the conditions of competition in markets unrelated to a specific competition law infringement. The tool was initially introduced in 2005 and has been used around 20 times, among others in the sectors of fuels, purchasing power in large-scale food distribution, cement and ready-mixed concrete, waste disposal and hospitals. In 2007, the tool was also extended to the area of ​​consumer protection – particularly in the digital space. The bill identifies and corrects two main weaknesses of the current tool:

• Hourly. Sector inquiries generally take a long time. According to the draft law, this has a negative impact on the usability of the results. The draft law now sets a deadline for sector inquiries of 18 months.

• Remedies. The FCO does not currently have the power to impose corrective measures in response to the results of an industry inquiry. The bill changes this – for a period of (another) 18 months after the publication of the respective sector inquiry report:
  
  • Merger control. The FCO can impose on certain companies the obligation to notify mergers under the German merger control regime, even if they are below the usual notification thresholds. The prerequisite is that there is “objectively verifiable indications that future mergers could significantly impede effective competition in Germany in one or more of the economic sectors” specified in the sector inquiry report. A de minimis The exception applies to transactions in which the buyer generated turnover with customers in Germany in its last closed financial year of less than 50 million euros and/or the target of less than 500 000 euros. This “special notification obligation” expires after three years, but can be renewed.
  • Structural/behavioral remedies. The FCO may impose remedies of a behavioral or structural nature, if there is a “important, [i] continue or [ii] repeated disturbance competition on at least one market or on several markets”. The draft law gives the following examples of potential purposes of such remedies: access to data, rights to use intellectual property, requirements for certain types of contracts or organizational separation of business units.
  • Unbundling. Finally, the FCO will also get the ultimate report power to unbundle businesses, if no other remedy of a structural or behavioral nature would be as effective or if such an alternative remedy would impose an even heavier burden on the business. This ultimate report appeal will be subject to a full proportionality assessment. In addition, the FCO cannot impose an obligation to dispose of assets which have been subject to definitive merger control clearance by the European Commission or by the FCO within the last five years.

(ii) Digital Markets Act. The Digital Markets Act (DMA) of the European Union has just been adopted by the Council of the EU and is expected to be published shortly in the Official Journal of the EU. It will come into force 20 days later, and then fully apply to so-called ‘custodians’ six months after it comes into effect.

• Public app. The European Commission is the only authority empowered to enforce the DMA, but the DMA has left the possibility for EU Member States to empower their national competition authorities to carry out investigations into possible non-compliance with the rules of the DMA by gatekeepers. The bill paves the way for public enforcement of DMA by the FCO in Germany. However, the FCO can only carry out investigations and report the results to the European Commission. It has no specific power to sanction non-compliance with the DMA.

• Private app. The DMA is an EU regulation and therefore directly (e., without the need for transposition) applies in all EU Member States. In addition, various provisions of the DMA condition its private enforceability in national courts. The bill implements the relevant provisions of the DMA in the provisions of German competition law relating to the enforcement of private antitrust laws (injunctions, actions for damages).

(iii) Return of Economic Benefits. The bill also improves the possibilities of the FCO to order the restitution of the economic benefits resulting from the violation of competition law. To do this, the bill removes the obligation for the authority to prove that the violation of competition law was committed intentionally or negligently. In addition, the draft law provides for a legal presumption that an infringement of competition law has generated an economic benefit of at least 1% of the turnover generated in Germany with the products or services related to the infringement. To rebut this presumption, neither the legal entity directly involved in the infringement nor its group (the company) has generated a profit corresponding to the corresponding amount during the relevant period. However, the amount to be paid must not exceed 10% of the company’s total turnover during the financial year preceding the authority’s decision.

Conclusions and prospects. The bill follows the general trend in Europe and overseas to provide competition authorities with more powers beyond the “classic” tools for enforcing competition law. It can be expected that the bill will pass the government cabinet fairly quickly so that the readings in the German parliament can begin. It is currently difficult to predict when (and if) an 11th Amendment will come into effect given various other political priorities and economic challenges.

The ministry is already working on a draft twelfth amendment to the German competition law (!) which will implement the topics mentioned in a white paper on competition law priorities from February this year (Wettbewerbspolitische Agenda of the BMWK bis 2025). Details are still unknown, but the focus could be, among otherson the establishment of greater legal certainty for cooperation on sustainable development between companies as well as on the strengthening of consumer protection.

The following Gibson Dunn attorneys assisted in the preparation of this client update: Georg Weidenbach, Michael Walther, Kai Gesing, Jan Vollkammer, Linda Vögele and Elisa Degner.

Gibson Dunn attorneys are available to answer any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or one of the following officers or members of the firm’s Antitrust and Competition practice group:

Kai Gesing – Munich (+49 89 189 33 180, [email protected])
Michael Walther – Munich (+49 89 189 33 180, [email protected])
Georg Weidenbach – Frankfurt (+49 69 247 411 550, [email protected])
Christian Riis-Madsen – Co-president, Brussels (+32 2 554 72 05, [email protected])
Ali Nikpay – Co-Chair, London (+44 (0)20 7071 4273, [email protected])
Rachel S. Brass – Co-Chair, San Francisco (+1 415-393-8293, [email protected])
Stephen Weissman – Co-Chair, Washington, DC (+1 202-955-8678, [email protected])

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