The German Ministry of Economic Affairs and Climate Action published the draft of the 11th amendment to the Act against Restraints on Competition. It will further strengthen the German competition watchdog’s powers to investigate market sectors and to impose remedies even in the absence of an infringement of competition law.
On 26 September 2022, the German Ministry of Economic Affairs and Climate Action (“Ministry”) published the first draft of the 11th amendment of the Act against Restraints on Competition (“German Competition Act”) (the “draft bill”). The draft bill is not an immediate reaction to the current crisis on the energy markets but is a longer planned amendment, which has already been reflected in the 2021 coalition agreement between the government parties SPD, Bündnis 90/Die Grünen and FDP. The draft bill marks another step in the direction of a new era of antitrust law enforcement in Germany. This trend continues to shift competition law enforcement from a more traditional approach, where an infringement of competition law (e.g., a cartel/abuse of dominance) is required, to a more extensive market protection tool intended to address perceived distortions to competition that can already operate below the “infringement threshold”. The draft bill in particular refers to experiences of the UK competition authority CMA and to the European Commission’s Impact Assessment for the New Competition Tool (NCT).
The main aspects of the draft bill are: (i) a complete revision of the sector inquiry tool of the Federal Cartel Office (“FCO”); (ii) the implementation of the DMA in the national framework of public and private enforcement; and (iii) the facilitation of benefits disgorgements:
(i) Sector inquiries. The sector inquiries tool enables the FCO to investigate the competitive conditions on markets unrelated to a specific competition law infringement. The tool was initially introduced in 2005 and has been used around twenty times, inter alia in the sectors fuels, buyer power in food retailing, cement and ready-mix concrete, waste disposal and hospitals. In 2007 the tool was also extended into the area of consumer protection – in particular in the digital space. The draft bill identifies and addresses two main weaknesses of the current tool:
(ii) Digital Markets Act. The Digital Markets Act (DMA) of the European Union has just been adopted by the EU Council and is expected to be published in the EU Official Journal soon. It will come into force 20 days later and then fully applies to so-called “gatekeepers” six months after it entered into force.
(iii) Disgorgement of economic benefit. The draft bill also improves the FCO’s possibilities to order the disgorgement of economic benefits resulting from the violation of competition law. In order to do that, the draft bill removes the requirement for the authority to prove that the violation of competition law has been carried out intentionally or negligently. Furthermore, the draft bill provides for a statutory presumption that a competition law infringement caused an economic benefit of at least 1% of the turnover generated in Germany with the products or services connected to the infringement. A rebuttal of this presumption requires that neither the legal entity directly involved in the infringement nor its group (the undertaking) generated a profit in the respective amount in the relevant period. However, the amount to be paid must not exceed 10% of the total turnover of the undertaking in the fiscal year preceding the decision of the authority.
Conclusions and outlook. The draft bill follows the overall trend in Europe and overseas to equip competition authorities with more powers beyond the “classic” competition law enforcement tools. It can be expected that the draft bill will be passed by the government’s cabinet rather soon so that the readings in the German parliament can begin. When (and whether) an 11th amendment will eventually come into force is currently hard to predict given various other political priorities and economic challenges.
The Ministry is already working on a draft for a 12th amendment of the German Competition Act (!) which shall implement topics mentioned in a White Paper on competition law priorities from February this year (Wettbewerbspolitische Agenda des BMWK bis 2025). Details are yet unknown but the focus could be, inter alia, on establishing more legal certainty for sustainability cooperation between companies as well as stronger consumer protection.
The following Gibson Dunn lawyers assisted in preparing this client update: Georg Weidenbach, Michael Walther, Kai Gesing, Jan Vollkammer, Linda Vögele, and Elisa Degner.
Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, the authors, or any of the following leaders or members of the firm’s Antitrust and Competition practice group:
Kai Gesing – Munich (+49 89 189 33 180, kgesing@gibsondunn.com) Michael Walther – Munich (+49 89 189 33 180, mwalther@gibsondunn.com) Georg Weidenbach – Frankfurt (+49 69 247 411 550, gweidenbach@gibsondunn.com) Christian Riis-Madsen – Co-Chair, Brussels (+32 2 554 72 05, criis@gibsondunn.com) Ali Nikpay – Co-Chair, London (+44 (0) 20 7071 4273, anikpay@gibsondunn.com) Rachel S. Brass – Co-Chair, San Francisco (+1 415-393-8293, rbrass@gibsondunn.com) Stephen Weissman – Co-Chair, Washington, D.C. (+1 202-955-8678, sweissman@gibsondunn.com)
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