Bundeskartellamt - Review of 2017
In 2017 the Bundeskartellamt examined around 1,300 merger notifications, imposed fines in cartel proceedings totalling approx. 60 million euros, decided on 150 applications for review in public procurement cases and conducted numerous abuse of dominance proceedings. The authority also gained new competences in the area of consumer protection. In addition, it started with the establishment of a national competition register for public procurement.
In 2017 the Bundeskartellamt imposed fines amounting to around 60 million euros on 16 companies and 11 individuals. It concluded its investigations against manufacturers of industrial batteries, harbour towage service providers and automotive part manufacturers. The authority received 37 leniency applications and a large number of further tip-offs about possible competition law infringements. It carried out eleven dawn raids at a total of 60 companies.
Andreas Mundt, President of the Bundeskartellamt: "
In the middle of 2017 the liability loophole in German competition law was finally closed. This had made it possible for a large number of companies to avoid fines by carrying out restructuring measures. We have therefore had to considerably rein in our cartel prosecution activities which is reflected in the number of fines. However, the number of new tip-offs and dawn raids over the course of the year shows very clearly that we are, as ever, very active in this area."
A special focus of our cartel prosecution activities remains the widespread practice of manufacturers influencing the way in which retailers set the prices of their products. In response to this the Bundeskartellamt has published much noted guidelines to make both food manufacturers and food retailers aware of which measures are allowed in negotiations and which are not. Fines for infringements of the prohibition of vertical price fixing were imposed both on furniture manufacturers and companies from the textile sector.
Andreas Mundt: "
We also receive numerous complaints from retailers about online trading. Manufacturers often try to restrict the freedom of action of their retailers. We think it's important to create more clarity in this area. We must prevent turnover in the Internet from being shifted exclusively to manufacturers' own shops and large players and platforms. It must be possible for customers to find small retailers in the Internet so that these have a chance to compete with large retailers. Only in this way can we keep a range of choice for consumers."
In 2017 the Bundeskartellamt examined approx. 1,300 notified projects. Of these, ten were closely examined in the so-called second phase. The merger between CTS Eventim and Four Artists was prohibited. In four second phase proceedings the parties withdrew the projects themselves. Two cases were cleared without conditions, three cases are still ongoing.
Andreas Mundt: "
The number of prohibitions is not an indicator of the importance of our work in this area. The important effect of the early stage of our work in merger control practice is not statistically reflected. Many merger projects are not notified once the companies receive initial assessments from us and their lawyers."
The digital economy is becoming increasingly important for the Bundeskartellamt's work. For example, the authority is conducting a proceeding against Facebook on the suspicion that it is abusing its dominant position.
Andreas Mundt: "
Facebook is a very important case because for the first time we are exploring in depth the connection between free services in the Internet, personal data and market power. The digital economy has long become a cross-cutting issue for all the divisions of the Bundeskartellamt. An expert on the building materials trade must be able to analyse the importance of Internet platforms in the same way as someone who has special knowledge of the media sector. We were able to gain expertise of the issues raised by the digital economy early on from actual cases. We then carried out general policy work and exchanged experience on the international level. The Competition Act has undergone important amendments. Cases relating to the Internet and platforms continue to raise new issues. But they have also become part of the everyday life of competition authorities."
In mid 2017 the 9th amendment to the German Competition Act (Gesetz gegen Wettbewerbsbeschränkungen, GWB) came into force. This introduced internet-specific criteria for assessing market power in the digital economy, such as network effects or access to data. The Bundeskartellamt can now also examine acquisitions of companies which only achieve marginal turnover but for which a relatively high purchase price was paid. This is often the case with start-ups. In such acquisitions, the high purchase price is often indicative of an innovative business idea with a high competitive potential.
With the 9th amendment to the GWB the Bundeskartellamt has also gained new competences in the area of consumer protection. The authority is now authorised to conduct sector inquiries if it suspects certain infringements of consumer law, which are likely to harm a large number of consumers.
Andreas Mundt: "
We immediately set up an effective division dedicated to this new task and have already started two sector inquiries. We want to know how objectively and transparently price comparison websites operate and are examining what data are collected and processed by smart TVs. These are two examples of areas in which the traditional, private enforcement of consumer protection could reach its limits. Given our powers to investigate, I think that public enforcement is a very important complementary means of enforcement."
On 29 July 2017 the Act on the Establishment of a Competition Register for Public Procurement at the Bundeskartellamt also entered into force. Companies which commit serious economic offences should not benefit from public contracts and concessions. The Competition Register will enable contracting authorities to check in a single nationwide electronic search whether a company has committed relevant violations of law. The Bundeskartellamt has already launched an establishment team to set up the new division. The Act provides for the electronic register to be operational in 2020.