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On 05.04.2023, the Federal Cabinet adopted the 11th GWB amendment. Colloquially known as the Competition Enforcement Act, the amendment provides for a far-reaching expansion of the powers of the Federal Cartel Office (Bundeskartellamt, BKartA). The centrepiece is the new powers of intervention in connection with sector enquiries modelled on the British Competition and Markets Authority (CMA). The government draft will now be forwarded to the Bundestag and Bundesrat. The two-part article provides an overview of the planned innovations and assesses the impact on practice.

Part 1 of the article (below) first deals with the new sector enquiry. Part 2 of the article deals with the new possibilities of skimming off profits obtained in breach of cartel law and the enforcement possibilities in connection with the Digital Markets Act.

A. The new sector inquiry

The sector enquiry already exists in cartel law (Section 32e GWB). It is an investigation of certain sectors of the economy in which there are indications of restricted competition because rigid prices or comparable circumstances point to this. However, the current sector enquiry is a blunt sword. At best, it ends with the publication of a report (Section 35e (3) GWB). If the BKartA wants to take action, it must be able to prove a cartel violation quite normally according to the current legal situation.

The government draft provides for the sector enquiry to become a strong control instrument of the BKartA by granting the BKartA powers of intervention based on sector enquiries. In addition, the investigation is to be considerably accelerated by a minimum duration of 18 months in Section 32e (3) n.F.. As a result, the BKartA will no longer be able to take action against individual companies only on the basis of concrete cartel violations, but will already be allowed to take action in the case of an abstract threat to competition in a sector of the economy.

Section 32f (5) n.F. specifies what an abstract threat to competition looks like. According to this, typical indications are unilateral supply or demand power, a restriction of market entry or exit, a restriction of the possibility of companies to switch to another supplier or buyer, uniform or coordinated behaviour or foreclosure through vertical relationships.

The interference must also be continuous, i.e. it must last for at least three years or occur repeatedly and, at the time of the order, must not be likely to disappear within two years.

B. The new powers in detail

I. Obligation to notify mergers in the market under review (Section 32f (2) n.F.)

If future mergers may further endanger competition on the market under review, the BKartA is to be able to oblige undertakings by order to notify mergers where the acquirer had a turnover in Germany of at least EUR 50 million and the undertaking to be acquired has a turnover of at least EUR 500,000.

II. Powers of a Behavioural or Structural Nature in the Event of Disturbance of Competition on at Least a Nationwide Market or Several Individual Markets or Cross-Market Disturbances (Section 32 (3) Nos. 1-6 n.F.)

The remedies of para 3 mainly provide for intervention powers of a behavioural nature: For example, the BKartA is to be able to demand inspection of the companies‘ data, impose requirements on business relations on the relevant market, oblige the companies to establish standards and norms, and impose requirements on the drafting of contracts, forms of contracts and contractual regulations on the disclosure of information. In addition, the BKartA will be empowered to prohibit unilateral disclosures of information altogether and to order the separation of company and business divisions. The enumerated powers of the BKartA are not exhaustive. § Section 32f (3) n.F. is an intervention general clause for the BKartA. The powers of Section 32f (3) n.F. form the core of the new sector enquiry, they have a comparatively low threshold for intervention and will therefore probably occur most frequently in practice.

The measures may only be taken against companies that contribute significantly to the disruption of competition through their conduct. This precisely does not require the BKartA to prove a practice that is contrary to cartel law. This is to ensure that a practice is demonstrably noticeable on the market and that a practice is not only remotely related to the disruption of competition. Thus, the BKartA is not required to make an antitrust assessment at all, but only an actual one.

III Unbundling of undertakings with a dominant position and an overriding importance for competition across markets (Section 32f (4) n.F.)

Unbundling is an obligation to dispose of company shares or assets. As an intervention in the ownership of companies, unbundling is the most intensive of the newly created powers of the BKartA and may only be ordered if it is to be expected that the measure will eliminate or substantially reduce a significant and continuing disturbance of competition. Due to their intensity, the measures under para 4 are only applicable if measures under para 3 are not possible or not promising (para 4 is thus ultima ratio).

The affected companies are also to be protected by the fact that the shares do not have to be forcibly sold far below value. The company only has to sell without support if the expected proceeds exceed 50% of the value of the company shares or assets. The value is determined by an auditor commissioned by the BKartA. If a shortfall is determined, the company receives half of the difference between the sales price and the determined value from the BKartA.

C. Evaluation

With the new sector enquiry, the traffic light coalition is reacting to the diffuse restrictions of competition in markets in which there are no monopolies, but which are dominated by a few powerful market players (so-called oligopolies). In these markets, companies are sometimes so attentive to their competitors and, in view of the small number of competitors, are able to monitor how they act so closely that a significant distortion of competition occurs entirely without any conduct in violation of antitrust law. The recent past in particular has shown that in international events in oligopolistic markets, market participants react in unison to the detriment of consumers. Finally, the decisive factor for the extended powers were the price increases on the energy and fuel market as a result of the Russian war of aggression against Ukraine. In food retailing, too, the phenomenon is discussed under the term profit inflation, where prices are increased in synchronisation above the required level without any agreement at all, because all market participants can be sure that their few competitors act in the same way. Leaving this uncontrolled should indeed not be a requirement of competition law.

It is to be welcomed that the government’s draft with the innovations has been significantly oriented towards the market investigation procedure of the British CMA. Due to the legislative orientation, it is to be expected that the BKartA will also follow the practice of the authorities. In this way, the new powers of the BKartA can be dealt with in a much more predictable manner. In general, the government draft is concerned with transparency in the new sector inquiry procedure, which is expressed above all in strict publication obligations and deadlines (see: § 32e para. 4 n.F., § 32f para. 7 n.F.).

Compared to the draft bill from the Federal Ministry of Economics, the government draft strikes a more cautious note. In particular, the situations that justify an intervention have been restricted. For example, the draft bill still provided for intervention in the event of any significant, persistent or repeated disruption of competition on at least one market. Now this is only possible in the case of a disturbance on a nationwide market, several individual markets or across markets; in the case of para. 4, the dominant position or the overriding importance across markets must also be established.

It is debatable how convincing these restrictions are. Anyone who is a friend of strong antitrust law will find little to like about the restrictions, especially because they lead to difficult questions of delimitation, which in turn will limit the effectiveness of enforcement. On the other hand, the broad paragraph 4 from the draft bill would not have been entirely unobjectionable from a constitutional point of view, especially because it did not yet provide for compensation in the event of a sale below value. Moreover, the restrictions make the new sector enquiry less threatening for small and medium-sized enterprises. It is precisely the restriction to individual nationwide markets that enables at least individual companies to practically exclude the danger of a sector enquiry.

Ultimately, the GWB amendment boils down to a question of method: How much state involvement will one tolerate in the economy? It is undisputed that the new powers, which are permissible irrespective of whether the addressees are in breach of cartel law, give the FCO the power to intervene in the markets in the general interest. This transforms the FCO from a cartel police force, which is only allowed to prosecute cartel violations, to a competition fire brigade, which is allowed to intervene in a general and protective manner in the event of disturbances of competition. Whether one believes that these fires must necessarily be extinguished is a question of economic policy position. In any case, the amendment gives the BKartA the tools to take action.

D. Practical advice

The new sector enquiry will undoubtedly make considerable waves. This is especially true for medium-sized and large companies, while small companies should be largely safe from intensive measures. If the government draft is adopted by the Bundestag and Bundesrat, companies will have to prepare for initial uncertainties. Orientation could be provided during this time by the authority practice of the CMA.

For companies, the unpleasant situation arises that, despite extensive examination of the conformity of their business practices with cartel law, they have no one hundred percent certainty that they will not be the addressee of cartel law measures. It remains to be seen how significant any chilling effects will be and how quickly the FCO will be able to create certainty through its own practice with the authorities.

Apart from the usual initial uncertainties, however, it is unlikely that the sector enquiry will become an instrument that leads to uncertainty in average business dealings in the long run. Due to the restrictions on the powers of intervention, it will quickly become clear which markets are affected at all. The BKartA will also be cautious in applying their new instrument. The existing sector enquiry has been used 2-4 times a year in politically highly explosive areas (big tech, hospitals, fuel and oil, for example). This is unlikely to change in the future.

E. Further information and important documents

The government draft:

The draft bill:

CMA: Guidelines for market investigations:

BKartA: Interim report on the sector enquiry into refineries and fuel wholesalers:

BMWK: Official press release on the government draft: