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Consumer Protection

With the 9th amendment to the German Competition Act (Gesetz gegen Wettbewerbsbeschränkungen, GWB) which came into force in early June 2017, the Bundeskartellamt was for the first time granted competences in the area of economic consumer protection which includes in particular the Act against Unfair Competition and the General Terms and Conditions of Business.

Public consumer protection is to be intensified in order to address possible deficits in the enforcement of consumer rights, especially in the digital economy.
The Bundeskartellamt can now conduct sector inquiries into consumer law issues and act as an amicus curiae - i.e. as a “friend of the court” in civil consumer protection actions.
Press release

However, the authority has as yet not been granted powers to intervene in such matters e.g. by cease and desist orders or reimbursement orders. The primary focus of the legislator was on analysing and advisory functions.

Sector inquiries

The Bundeskartellamt can launch a sector inquiry where there is a reasonable suspicion that consumer law provisions such as the Act Against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb (UWG) have been severely violated. Such an inquiry can be launched to protect consumers if the authority suspects that substantial, permanent or repeated infringements of consumer protection law provisions will harm a large number of consumers. The Bundeskartellamt has already conducted sector inquiries in the antitrust area in recent years. Sector inquiries are not proceedings against specific companies but take a look at a sector as a whole. The focus of the Bundeskartellamt’s sector inquiries into consumer protection issues is on developments which affect the digital everyday life of the consumer. With these new competences the Bundeskartellamt can identify problems and provide recommendations for action.

Sector inquiry into comparison websites

In October 2017 a sector inquiry was launched into online comparison websites. A large number of website operators are being questioned on topics such as rankings, financing, corporate links, reviews and market coverage, in order to uncover and specify possible violations of consumer law provisions.
Press release
Further information on the ongoing sector inquiry

Sector inquiry into smart TVs

In December 2017 a sector inquiry into smart TVs was launched. The aim of the inquiry is to examine how the smart TV manufacturers handle user data from the stage of collection up to its commercial use.
Press release
Further information on the ongoing sector inquiry

Amicus curiae briefs

With the 9th amendment to the GWB the Bundeskartellamt was also granted the right, as in competition law proceedings, to act as an “amicus curiae” in the courts: The authority will now be able to inspect the files of a court in certain consumer protection proceedings and offer its objective comments. This role will make it easier for the authority to gain an overview of which legal issues are raised in the courts and in which areas there are enforcement deficits.

Background

In Germany economic consumer protection is traditionally mainly enforced in civil actions. In such actions qualified institutions, associations and chambers of industry and commerce can object to any law violations by the companies and, if necessary, in a second stage file appeals at the courts. Organisations which have taken such action are e.g. the Federation of German Consumer Organisations (Verbraucherzentrale Bundesverband), the consumer organisations of the Länder and the Centre for Protection against Unfair Competition (Wettbewerbszentrale). There is no general public enforcement of economic consumer protection in Germany. However, certain federal authorities have been granted specific powers of intervention at national level, e.g. the Federal Network Agency, Federal Financial Supervisory Authority, Federal Railway Authority and Federal Aviation Office. Beyond the regulatory competences granted to the authorities, the Federal Ministry of Justice and Consumer Protection has powers of intervention only in cases of cross-border consumer protection violations which are the subject of an international law enforcement request.

German law thus follows a special path because jurisdictions in many other countries have a general consumer protection authority. Often competence for consumer protection and the protection of competition lie in the hands of the same authority (e.g. in the Netherlands, France, United Kingdom and Australia). In actual fact the protection of competition and consumer protection generally move along the same lines. Consumers benefit from open markets and vice-versa it is in the interest of law-abiding businesses to comply with consumer protection law.

What academics and practitioners have identified as deficiencies of private consumer law enforcement in Germany (which could, in fact, be remedied by way of intervention by public authorities) are above all difficulties in providing proof in the absence of investigative powers and the low impact of court decisions in individual cases. These deficiencies are manifested in everyday digital life in which a single breach of law can harm a very large number of consumers.

Furthermore, the German system of primarily private consumer protection enforcement prevents measures and competences provided by the European network of consumer protection authorities from being used to the full in Germany.

Perspectives

In order to extend the Bundeskartellamt’s existing competences in consumer protection, the conferment of additional decision-making competences and powers to impose punitive measures is being discussed with the aim to enhance the public enforcement of consumer protection law.

See also a study (in German) by Prof. Dr Rupprecht Podszun, Prof. Dr Christoph Busch and Prof. Dr Frauke Henning Bodewig, which was commissioned and published by the Federal Ministry for Economic Affairs and Energy.