The Bundeskartellamt is an independent competition authority whose task is to protect competition in Germany. The protection of competition is a key regulatory policy objective in a market economy.
- Advantages of competition as an organising principle
- German Act against Restraints of Competition (German Competition Act, GWB)
- Tasks of the Bundeskartellamt
The Bundeskartellamt is an independent higher federal authority which is assigned to the Federal Ministry for Economic Affairs and Energy In 1999 its official seat was transferred from Berlin to Bonn as part of the relocation programme of the government. The Bundeskartellamt has approx. 330 employees.
Advantages of competition as an organising principle
In a free market economy the interplay between supply and demand determines which goods and services are exchanged and at what price and quality. Competition means that several companies compete with one another for the favour of customers. In a competitive environment customers or suppliers can switch to another company. Consequently, companies endeavour to offer their goods or services at the lowest possible price and to improve their quality. Competition therefore encourages companies to be innovative.
Effective competition also prevents the creation or strengthening of power positions which are too influential in society and politics. Consumers, in particular, benefit from a competitively organized market because they can choose from a wide range of offer of those goods and services which best match their expectations (e.g. good quality, appropriate price-performance ratio, good service, etc.).
Companies which, in comparison to others, offer their customers good services at reasonable prices, can achieve higher turnover and profits in a competitively organized market. Poor service or excessive prices, on the other hand, are “punished” by losses or even elimination from the market. In his book “The Wealth of Nations” Adam Smith, the founder of classical economics, coined the term “invisible hand” for this process. Each company aiming to maximize its profits has to respond to the wishes and preferences of the opposite side of the market. Competition can therefore rightly be described as the driving force of the market economy.
German Act against Restraints of Competition (German Competition Act, GWB)
Competition leads to considerable benefits for the economy as a whole. At the same time the individual entrepreneur may also find competing with rivals troublesome and inconvenient. As a result, companies often try to impede or eliminate competition. This can take the form of agreements with competitors, abusive practices or also the acquisition of other companies. A legal framework and competition control by the state is necessary to prevent such restraints of competition and maintain competitive structures. The German Act against Restraints of Competition (German Competition Act, GWB) which came into force in 1958, provides this legal framework. Because of its key importance, the GWB is also referred to as the “Basic Law of the Market Economy”.
Tasks of the Bundeskartellamt
The main task of the Bundeskartellamt is to apply and enforce the GWB, with a view to protecting competition in Germany. Its tasks include:
- implementing the ban on cartels
- merger control
- control of abusive practices of dominant or powerful companies
- review of procedures for the award of public contracts by the Federation (since 1999)
In addition, since 2005 the Bundeskartellamt can conduct so-called sector inquiries in order to examine more closely the competition situation in individual sectors, irrespective of concrete individual proceedings.
The Bundeskartellamt bases its decisions solely on competitive criteria. It is independent in its decision-making, i.e. in its handling of cases and its decisions it is not bound by external instructions.
This independence ensures that the Bundeskartellamt can focus on competition criteria in its decision-making. It is undisputed that there are other important economic and socio-political goals than ensuring competition. However, it is not the Bundeskartellamt’s responsibility to realise these.