09.09.2020

eco on the Amendment to the German Act against Restraints of Competition (GWB): “Harmonised EU Approach Instead of National Go-it-Alone Efforts”

The German Federal Ministry for Economic Affairs and Energy (BMWi) today introduced a draft to the cabinet, leading to the now 10th amendment of the German Act against Restraints of Competition (GWB) being passed. A statement from the eco Association issued in February of this year (in the German language) had already levelled criticism against parts of the planned amendment, and eco is now also taking a critical stance on the planned changes in competition law.

“In the current draft, there’s a move away in some areas from tried-and-tested, functioning and legally secure practices in competition and antitrust law – essentially a paradigm shift,” says eco Managing Director Alexander Rabe. “This will not only have serious repercussions for the large digital corporations which are threatened with greater control by the Federal Cartel Office (Bundeskartellamt) in the future, but also creates numerous other legal uncertainties for all other companies.”

When it comes to the large digital corporations, Rabe is critical of the fact that the Federal Cartel Office will be able to use the planned Paragraph 19a to determine by decree whether a company is of “major cross-market significance for competition”. In addition to a dominant position in one or more markets, this will be determined on the basis of its financial strength, access to competition-relevant data, the significance of its activities for third-party access to procurement and sales markets, and its associated influence on the business activities of third parties. “The German federal government is thus creating a special provision for the control of a very clear number of market players,” Rabe goes on to say. “Instead of national go-it-alone efforts, we need a harmonised approach at EU level – the GWB cabinet decision thus comes at an extremely inopportune time.”

Moreover, the planned regulatory approach to avoid “tipping” – i.e. the upheaval of markets – runs counter to the recommendations of the “Competition Law 4.0” commission appointed by the BMWi. In their final report, the commission members recommend that the empirical basis for the structural and temporal emergence of tipping markets be established before regulatory approaches for these are defined. Rabe: “In this respect, all of the companies concerned are threatened by further legal uncertainties.”

On a positive note, eco’s Managing Director singles out the fact that with the 10th GWB amendment, company mergers are to be strengthened in the future. “As a result of advancing digitalisation, collaborations not only within, but also across, industries will gain in importance in the coming years,” Rabe continues. “The legislature now recognises this and is creating a legally secure basis for mergers, which will also mean a lighter bureaucratic burden – in particular, start-ups and small and medium-sized enterprises could stand to benefit from this.”

eco on the Amendment to the German Act against Restraints of Competition (GWB): “Harmonised EU Approach Instead of National Go-it-Alone Efforts”