Andreas Mundt, President of Bundeskartellamt: "In 2016 the Bundeskartellamt took some important decisions to keep markets open and to guarantee fair competition for the benefit of both companies and consumers. This is not always easy. In these times the principle of competition is sometimes viewed critically. This can be seen in the discussions about weakening the principle of competition in favour of other economic policy objectives or in demands by some trade associations or companies to exclude specific sectors from competition law. Ultimately only a clear legal framework which applies in a non-discriminatory way to all market participants can guarantee an effective and independent competition policy. Where competition functions well in a market, consumers will benefit from a better range of choice, better prices and better product quality."

Digital economy

The key topic for the Bundeskartellamt in 2016 was digitalisation and its effects on competition and competition law. The authority initiated a proceeding against Facebook on the suspicion that with its specific terms of service regarding the use of user data, Facebook is abusing its possibly dominant position in the market for social networks. The Bundeskartellamt also examined the standard online banking conditions of banks active in Germany and declared as invalid rules which in the authority's view significantly impede the use of non-bank and innovative payment systems for purchases in the Internet. At the Bundeskartellamt's instigation the company Lego introduced fair conditions for retailers wishing to sell Lego products online. Other important proceedings are still ongoing, including an abuse proceeding against the ticket retailer CTS Eventim, in which the authority is examining whether certain business practices of the company are admissible under competition law.

Andreas Mundt: "The Bundeskartellamt is very well positioned to deal with the digital economy. We have published key policy papers on the market power of Internet platforms and, together with colleagues at the French competition authority, published a paper on "Big Data". We have already successfully concluded a large number of proceedings in this area in the last few years. For example, we took action against the anti-competitive best price clauses of Amazon and the hotel booking platforms HRS and Booking and examined mergers in the area of real estate platforms and dating platforms. With the upcoming amendment to the German Competition Act (Act against Restraints of Competition, GWB) we will be able to conduct our proceedings more quickly and efficiently once the concept of market power is adapted to the conditions of the Internet age and it is clarified by law that factors like network effects or user data also play a role in assessing such power. And we are thinking even further ahead: Can we further optimise our investigation techniques? How can we better integrate dynamic effects into our analyses, forecasts and tools? When should we intervene and when not?"

Cartel prosecution

Again in 2016 the Bundeskartellamt received many tip-offs about competition law infringements. 59 companies informed the authority about infringements in their sector by making use of the authority's leniency programme (key witness programme). The Bundeskartellamt also obtained valuable knowledge of infringements by other means, e.g. via the anonymous whistle blower system on its website. With the assistance of the criminal investigation departments and public prosecutors, the authority carried out 17 dawn raids at a total of 85 companies and four private homes.

In 2016 it imposed fines totalling around 124.5 million euros in seven cases. The fines were imposed on 24 companies and five individuals. The proceedings concerned various sectors, such as e.g. sanitary wholesale, the toy industry or TV studios as well as vertical price-fixing agreements between food manufacturers and food retailers.

Andreas Mundt: "Cartel prosecution covers all sectors and companies, irrespective of their size. The total amount of fines imposed varies from year to year because it is difficult to plan the exact date of when a proceeding will be concluded. In 2016 the amount was lower than in the previous years. However, this does not mean that the intensity of cartel prosecution has diminished. The number of proceedings initiated, companies involved and leniency applications received show that cartel prosecution remains a key area of focus of our work.”

Merger control

Around 1,200 merger projects were notified to the Bundeskartellamt in 2016. 10 cases were closely examined in second phase proceedings. In four of these the parties to the merger withdrew their notification themselves, usually after the Bundeskartellamt had expressed considerable concern about the planned mergers under merger control law. One case was cleared subject to conditions, 5 cases were cleared without conditions and obligations.

The food retail sector played a significant role in 2016 as well. The Bundeskartellamt cleared REWE's acquisition of the food retailer Coop subject to the condition that outlets be sold to an independent third party. Following the ministerial authorisation granted in the EDEKA/Kaiser's Tengelmann case the Bundeskartellamt also examined the divestment of EDEKA outlets to REWE, which was agreed out of court by the companies to settle their legal dispute about the ministerial authorisation. The authority cleared the divestment because following the final and legally binding ministerial authorisation allowing the transfer of all Kaiser’s Tengelmann outlets to EDEKA, the divestment of EDEKA outlets to REWE leads to a relative improvement in competition.

Prospects

Andreas Mundt: "The food retail sector will continue to occupy the Bundeskartellamt in future. As concentration increases at the retail level, complaints by manufacturers about the large market power of the retailers are unlikely to diminish. An important test case about what in our opinion were unfair demands made by EDEKA of its suppliers following its takeover of the Plus markets, is still pending at the Federal Court of Justice. The control of the abuse of market power in the food retail sector is also to be improved with the current amendment to the GWB and is to step in where the control of market structures under merger control reaches its limits, as witnessed in the case of the ministerial authorisation in the EDEKA/Kaiser's Tengelmann merger case. This will not be an easy task and will influence our future work."

The Bundeskartellamt also hopes that the amendment to the GWB will close all existing loopholes in the law relating to corporate liability in cartel cases, making it no longer possible for companies to avoid paying a fine by restructuring. Endeavours to introduce exemptions from competition law for several sectors, such as for cooperations between press companies, are viewed critically by the authority. A well-functioning competition law framework is already in place which permits diverse merger and cooperation possibilities whilst at the same time ensuring that markets remain open.

Whether the Bundeskartellamt should be given further competences in future for enforcing consumer protection in the digital economy is currently being discussed in political circles.

Andreas Mundt: "The examples of many other countries which have extended the powers of their competition authorities to include comparable competences show that competition authorities are well placed to deal with consumer protection issues. The aim of introducing public enforcement in this area is to take up widespread violations and to focus on fast-moving areas of the digital economy. With its expertise the Bundeskartellamt could surely provide a lean and effective solution as a supplement to the well-established private enforcement of consumer protection."