I Introduction

Under German competition law, unilateral conduct by an enterprise with market power is governed by Sections 18, 19 and 20 of the German Act against Restraints of Competition (ARC),2 which prohibit (1) the abuse of a (single or collective) dominant position, and (2) specific types of abusive behaviour by enterprises that have ‘relative' market power in relation to small or medium-sized enterprises (as trading partners or competitors). Germany has, thus, used the possibility provided for under EU Regulation 1/2003 to enact national legislation on unilateral conduct that goes beyond the substance of the prohibition on the abuse of a dominant position laid down in Article 102 of the TFEU. Another distinct characteristic of German antitrust law on dominance is that there are (rebuttable) statutory market share-based presumptions of dominance.

Guidance on the application of the rules can be gathered from case law of the German Federal Cartel Office (FCO) and the German courts, notably the Federal Court. There is no formal general guidance on unilateral conduct available, apart from the FCO's somewhat dated notice on below-cost pricing,3 which is currently being updated.

Guidance on the amount of fines for restrictive unilateral conduct can be gathered from the FCO's guidelines on the setting of fines, which apply to all areas of German antitrust law.4

No special rules apply in Germany to the public sector or state-owned enterprises. Section 130(1) of the ARC stipulates that the ARC will also apply to enterprises that are entirely or partially publicly owned or are managed or operated by public authorities.

Special rules apply to certain regulated industries, such as electricity, gas, telecommunications and post and railway. The Federal Network Agency monitors compliance with certain of these regulations in cooperation with the FCO.

II Year in Review

The enforcement activity by the FCO in the abuse of dominance area over the past couple of years has been quite limited. The FCO carried out several sectoral investigations in industries with arguably oligopolistic structures in which it suspected structural problems. These sector inquiries were often followed by individual investigations against specific companies with respect to specific conduct.5

Recently, the FCO has focused on the energy, fuel, food retail and district heating sectors. Since May 2011, the FCO has published eight reports on investigations into different sectors of which six specifically deal with (possible) abuses of market power (district heating, milk, fuel retail, wholesale fuel, food retail and the submetering and billing of heating and water consumption).6 For instance, the FCO found in its most recent report (published on 4 May 2017) that the German market for submetering and billing of heating and water is not only highly concentrated, but basically dominated by only two major players.7 In 2016, the FCO initiated new sector inquiries into two additional sectors - hospital services (in May 2016)8 and household waste management (in December 2016).9 However, as of now, it is not clear to what extent the FCO will focus on potential abuses of market power in these new sector inquiries.

In the past year, the FCO continued putting particular emphasis on the digital economy and online platforms10 - notably in light of the recent rise in ‘online cases', including a decision concerning Google. In early 2015, the FCO launched a new ‘Task Force for Internet Platforms', which is charged with developing new concepts on how to deal with the digital economy. The FCO is also investigating CTS Eventim's conduct in the online ticket resale area. The FCO has, however, closed its recent proceedings concerning the activities of Amazon's Audible and Apple in the audiobooks sector.11 The FCO prohibited a (modified) best-price clause that hotel platform Booking.com12 had been using, after the Düsseldorf Court of Appeal had already affirmed the FCO's prohibition of its rival HRS's best-price clauses.13 In March 2016, the FCO commenced proceedings against Facebook to investigate whether Facebook engaged in abusive conduct by infringing data protection rules.14 In May 2016, it published together with the French competition authority a study on ‘big data', assessing market power and potential anticompetitive effects in this context.15 Finally, in June 2016, the FCO published a working paper on the market power of platforms and networks.16

The following tables list significant cases and decisions dealing with abuse of a dominant position adopted by the FCO in 2016 and 2017 and important ongoing proceedings.17

2017 FCO decisions

Sector

Company

Conduct

Fine

District heating

innogy

Excessive pricing

No fine; case settled

District heating

Danpower

Excessive pricing

No fine; case settled

Audiobooks

Audible/Amazon/Apple

Exclusive distribution agreement between Apple's iTunes Store and Audible

No fine

2016 FCO decisions

Sector

Company

Conduct

Fine

Ticket resale

Deutsche Bahn

Limitation of competitors' access to Deutsche Bahn's ticket sales channels

No fine; case settled

Lease of mounting surfaces for the installation of FM antennas

Deutsche Funkturm

Discriminating pricing structure

No fine; case closed*

* The FCO did not issue a settlement decision, but dropped its proceedings after Deutsche Funkturm had changed its allegedly problematic pricing and contractual terms. See the FCO's press release of 21 December, 2016, available in German only at: www.bundeskartellamt.de.

Ongoing cases

Sector

Company

Conduct

Case opened*

Online ticket resale

CTS Eventim

Not specified

November 2014

Social networks

Facebook

Potential abuse in social networks by infringing data protection rules

March 2016

Ticket sales

Deutscher Fußball-Bund

Bundling ticket sales for football matches (European football championship 2016) to membership of DFB fan club

March 2016

* ‘Case opened' refers to the date on which the authority opened its investigation (where known) or announced that it had opened an investigation.

In addition to the FCO's enforcement activities, the German legislator has recently passed a ninth amendment to the ARC (the Ninth Amendment), which entered into force on 9 June 2017. The amendment, includes - among other substantive changes of the ARC, in particular regarding the enforcement of cartel damage claims (as required by the EU Damages Directive (2014/104/EU)) - and also some changes and additions regarding the ARC Sections governing unilateral conduct. These largely editorial changes mostly seek to clarify unsettled legal questions. For instance, the Ninth Amendment has introduced new rules regarding the assessment of dominance on multi-sided markets.

Some of these legislative changes will be described in the following sections along with further important case law and other developments.

III Market Definition and Market Power

There are two slightly different concepts of market power in German antitrust law. While the assessment of ‘absolute' single or collective dominance typically requires a detailed market analysis (of market definition as well as of market power), the assessment of ‘relative' market power focuses more on a comparison of market power between larger and small and medium-sized companies as trading partners or competitors. Generally, the FCO, and the German courts, continue to place considerable importance on market shares and have only slowly started to adopt the more sophisticated economic analyses used by the EU Commission.

i Market definition

In defining relevant product markets, the FCO primarily analyses the substitutability of goods and services from a demand-side perspective based on intended use, characteristics and price of the relevant products. In some cases, the FCO also referred to the ‘small but significant and non-transitory increase in price' (SSNIP) test as an additional, but not the only or the principal, criterion for market definition.18 The concept of supply-side substitution (i.e., other manufacturers being able and willing to adjust their production within a short time and without significant cost) is also relevant under appropriate circumstances.19

Demand-side substitutability is also the principal basis for defining the relevant geographic market. As under EU law, it comprises the area in which the enterprises concerned compete, in which the conditions of competition are sufficiently homogeneous, and which can be distinguished from neighbouring areas because of appreciably different competitive conditions.20

In practice, ex post behavioural enforcement tends to take a somewhat narrower view on market definition than merger control, given that the perspective of specific customers or competitors potentially harmed by the conduct at issue can sometimes influence the assessment.

The Düsseldorf Court of Appeal held in its HRS decision that (at least in hotel searches) identifying a relevant antitrust market for a service required that it was rendered in return for payment, which was not the case with respect to an online hotel comparison service.21 In its Google decision, the FCO expressed some doubt in this regard, but left the issue open.22 The German legislator now clarified - as part of the Ninth Amendment - that a relevant market may be found even if the relevant services are rendered free of charge.23

ii Dominance

As noted, German antitrust rules on unilateral conduct apply to companies in a position of single or joint dominance, and to companies enjoying ‘relative' market power over small and medium-sized companies. Section 18 of the ARC defines single and collective dominance.

Single dominance

According to Section 18(1) of the ARC, single dominance exists if a company is (1) without competitors, (2) not exposed to significant competition or (3) in a ‘superior market position' as compared with its competitors (which can exist even if there is significant competition in the market). According to the FCO's merger control guidelines (the principles of which can also be applied in the antitrust area), single dominance exists where the market power of an enterprise enables it to act without sufficient constraints from its competitors (i.e., a situation in which an enterprise is able to act to an appreciable extent independently of its competitors, customers, suppliers and, ultimately, the final consumers).24

Section 18(3) of the ARC lists the following criteria that may in particular be taken into account for the assessment of whether a company is in a ‘superior market position':

a the enterprise's market share;

b its financial resources;

c its access to input supplies or downstream markets;

d its affiliations with or links to other enterprises;

e legal or factual barriers to market entry;

f actual or potential competition by domestic or foreign enterprises;

g its ability to shift its supply or demand to other products; and

h the ability of the enterprise's customers or suppliers to switch to other enterprises.

In practice, the FCO and the German courts tend to focus on whether an enterprise has sufficient market power to determine the most important business parameters. A somewhat static appraisal of market shares (both in absolute and relative - compared to competitors - terms) is still the most important factor. The rebuttable market share-based presumption pursuant to Section 18(4) of the ARC provides an important first indication of possible dominance where the market share of a company exceeds 40 per cent.25 While not impossible, it is often difficult in practice to rebut the presumption with economic arguments, especially in the case of high market shares substantially above the presumption threshold. This is notably because German law expressly stipulates that a dominant position can be based on a ‘superior' market position, even if the company concerned faces significant competition from its rivals.

In the context of its focus on digital markets, the FCO published a working paper on the market power of platforms and networks, in which it explained its view on the assessment of dominance in such markets.26

Collective dominance

According to Section 18(5) of the ARC, collective dominance exists where there is no substantial competition between the two or more largest companies in a market and where they jointly are not constrained sufficiently by competition from third parties. Pursuant to the FCO's merger control guidelines, collective dominance is defined as a few companies in an oligopolistic setting engaging in tacit coordination or collusion with the result that they effectively do not compete with each other.27

Section 18(6) of the ARC also provides for market share-based legal presumptions for collective dominance. Thus, three or fewer companies are presumed to be collectively dominant if they have a market share of at least 50 per cent; and five or fewer companies are presumed to be collectively dominant if they have a market share of at least two-thirds. These presumptions are rebuttable and the companies can show that substantial competition exists between them individually, or that they are jointly sufficiently constrained by outsiders or customers.

The FCO and the German courts generally employ the criteria established by the EU General Court in Airtours v. Commission28 in determining collective dominance (albeit in a somewhat modified form).29 However, until recently, there had not been a case where companies had been considered in a collective dominant position in the context of abuse proceedings.30

In June 2015, the German Federal Court dealt with the first case in which a possible abuse of a collective dominant position was at issue.31 While the lower Stuttgart District Court found that the defendant, a public broadcasting company, did not hold a single dominant position, as it did not - by itself - have a superior market position compared with the private broadcasting companies,32 it found the defendant to have a collective dominant position together with the remaining public broadcasting companies, because there was no competition between the public broadcasters because of their strong commonality of interests, and all public broadcasting companies would - together - hold a superior market position33 compared with the private broadcasting companies. The court found that public broadcasting companies had a ‘must-carry status' as input providers for broadband cable providers as turning to private broadcasters only was not a viable alternative. On appeal, the Stuttgart Court of Appeals left open whether the public broadcasting companies held a collective dominant position because it considered that there had not been an abuse in any event. The Federal Court, upon further appeal, simply referred to the defendant's must-carry status and thus considered it dominant on the market for input for cable television providers without elaborating on the distinction between single and joint dominance.34

‘Relative' dominance

As noted above, going beyond the scope of Article 102 of the TFEU, the ARC prohibits exclusionary (and discriminatory) conduct not only by companies that are dominant in ‘absolute' terms, but also by companies on which ‘small or medium-sized companies depend' as suppliers or purchasers of certain kinds of goods or commercial services,35 and by companies enjoying ‘stronger market power in comparison to their small and medium-sized competitors'.36 The prohibitions aim at protecting small and medium-sized companies against anticompetitive conduct by their larger competitors or trading partners.

The prohibition of discrimination or unreasonable obstruction for ‘relatively' dominant enterprises towards dependent companies is primarily designed to address buyer power in the (food) retail trade. Thus, Section 20(1) 2nd sentence of the ARC establishes a presumption of dependency if a purchaser of goods frequently receives rebates or similar bonuses from its suppliers that go beyond customary rebates. The protection of small and medium-sized competitors against exclusionary conduct of competitors with ‘stronger market power' is also principally targeted at retail markets (food, gas, etc.). An example of prohibited exclusionary conduct is frequent pricing below cost.37 In the food sector, pricing below cost (by food retailers) even in a single instance is prohibited. Note that the ARC does not precisely define the concept of small and medium-sized companies that enjoy protection under these rules. The concept is generally understood to be turnover-related, but there are no specific turnover ‘thresholds', and the amounts can differ from industry to industry.38

IV Abuse

i Overview

Section 19(1) of the ARC contains a general prohibition of the abuse of a dominant position. Sections 19 and 20 of the ARC contain non-exhaustive examples of specific types of abusive conduct. Section 20(2) of the ARC extends the prohibition of exclusionary and discriminatory conduct to companies on which small or medium-sized companies depend, and Section 20(3) of the ARC prohibits exclusionary conduct by companies that enjoy superior market power compared with their small and medium-sized competitors.

The most significant specific types of abuse are discussed below (see Section IV.ii-iv, infra). There are no per se abuses, as all relevant unilateral conduct may, at least in principle, be justified by means of a comprehensive analysis of all relevant circumstances and a balancing of the conflicting interests. As a practical matter, however, once the FCO has concluded that the type of conduct at issue is generally abusive, it will not conduct an in-depth economic effects analysis. Instead, it is - according to Section 20(4) of the ARC - up to the companies concerned to demonstrate an objective justification for their conduct (e.g., cost efficiencies as justification for rebates).

ii Exclusionary abuses

German antitrust law prohibits exclusionary conduct, including predatory pricing, and notably offers below cost. The (somewhat dated) FCO's notice on below-cost pricing provides some guidance on which costs are relevant for the assessment of exclusionary below-cost pricing.39

Another form of exclusionary abuse is exclusive dealing, including strategies such as exclusivity or loyalty rebates. As a general rule, dominant companies may not grant rebates that create an incentive for customers to purchase their entire, or almost entire, demand of products or services at issue from the dominant enterprise.

In November 2015, the FCO initiated proceedings in this regard against Apple and Amazon's subsidiary Audible.com. They had entered into an exclusive long-term agreement regarding Apple's purchase of digital audiobooks from Audible for resale on the iTunes store.40 The FCO has meanwhile closed these proceedings.41

German antitrust law also prohibits leveraging a dominant position, such as through contractual or economic tying and bundling. Case law is scarce here, and the German practice is similar to the EU practice.

An abuse may also occur if a dominant enterprise refuses to grant another enterprise access to its networks or other infrastructure for a reasonable fee if it is impossible for the other enterprise, for legal or practical reasons, to be active on the upstream or downstream market as a competitor of the dominant enterprise (essential facility).42

Upon referral from the Düsseldorf District Court, the ECJ has specified certain perceived discrepancies between German case law and the position that the European Commission took on the conditions under which the holders of standard essential patents may seek an injunction against users of their standard essential patents without committing an abuse (the underlying case is now again pending at the Düsseldorf District Court).43

In May 2016, the FCO closed its investigation into a potential abuse of a dominant position in the provision of train station services by state-owned railroad operator Deutsche Bahn AG (DB),44 after DB had committed, inter alia, to sell competitors' tickets in DB shops and to permit competitors to install ticket machines in train stations.45

iii Discrimination

Section 19(2) No. 1 of the ARC prohibits discrimination (i.e., treating an undertaking, directly or indirectly, differently from other similar undertakings, without any objective justification).

After the German legislator had introduced an ancillary copyright for news publishers in 2013, the collecting society VG Media (representing several German news publishers) adopted a new tariff for the use of news publishers' online content and raised monetary claims against Google for the display by Google of small text excerpts (‘snippets') from their websites. Google refused to pay and announced it would discontinue the display of snippets from VG Media members, unless they agreed to the display of their snippets without payment. VG Media filed a complaint with the FCO, arguing that Google abused its allegedly dominant position by refusing to pay for the display of snippets. The FCO informally rejected the complaint in August 2014,46 and issued a formal rejection decision in September 201547 holding that Google did not engage in discriminatory conduct. In particular, the FCO considered Google's conduct justified by its interest to preserve its business model and to reduce the risk of liability for damages. These interests would outweigh those of VG Media.

iv Exploitative abuses

Section 19(2) No. 2 of the ARC prohibits exploitative abuses, notably ‘imposing prices or other trading conditions that differ from those likely to exist on a market with effective competition'. To determine whether prices are excessive, the FCO and the German courts follow the EU law approach of comparing the dominant company's prices with prices charged on comparable markets with functioning competition, with its competitors' prices, and with the dominant company's costs. The FCO followed this approach, for instance, in its recently concluded proceedings against suppliers of district heating, where it compared the average revenues that several suppliers of district heating had generated throughout a certain period of time in different regions and found that the revenues of certain suppliers were significantly higher than those of suppliers in comparable markets. Based on this comparison, the FCO concluded, at least preliminarily,48 that these suppliers had engaged in excessive pricing. These proceedings were initiated based on the FCO's earlier sector inquiry into the district heating sector in which the FCO had identified significant differences in revenues of district heating.49

In another recent abuse case concerning the food retailer EDEKA, the Düsseldorf Court of Appeal annulled the FCO's decision, in which it had found that EDEKA had abused its dominant position by urging its suppliers to grant EDEKA certain commercial benefits (sometimes called ‘wedding rebates') after its acquisition of retailer PLUS.50 In contrast to the FCO, the Düsseldorf Court of Appeal considered these rebates to have resulted from negotiations between parties with approximately equal negotiation power.51

V Remedies and Sanctions

i Sanctions

Persons or entities that participated in an infringement of antitrust law or violated an FCO decision can be fined within the framework of an administrative offence procedure. German antitrust law is different from EU law in this respect, insofar as the FCO in principle needs to identify one or more individuals (who will likely also be fined, albeit more moderate amounts) who have committed the infringement and then attribute their behaviour to the legal entity they represented to impose a fine also on that entity.

Parental liability

As a consequence, it was difficult for the FCO to fine a parent company for infringements committed by employees of its subsidiaries, as it needed to find either that employees of the parent company were involved in the misconduct or that parent company employees neglected their supervisory duties. However, Section 81 paragraphs 3a-3e that were introduced by the German legislator as part of the Ninth Amendment to the ARC, now establish a principle of parental liability that is - eventually - similar to EU competition law, as it introduces a strict liability for controlling group companies. Accordingly, the FCO may now hold a parent company (jointly and severally) liable for fines that were imposed because of a subsidiary's infringement, even if the parent company did not participate in the infringement or violate any supervisory duties with respect to the subsidiary.52

Legal successor liability

According to Section 30(2a) of the Administrative Offences Act, legal successor entities (i.e., entities resulting from corporate transformations) are liable for their predecessor's fines. This regulation was introduced in 2013 to close an important enforcement gap under the previous rules.53 In addition, the German legislator now introduced a provision regarding legal successor liability (outside of the universal succession addressed by the Administrative Offences Act) also in the ARC in order to close the ‘sausage gap'.54 According to the newly introduced Section 81a (covering the singular succession), cartel fines may be imposed on an enterprise taking over the business of an enterprise that committed an infringement (provided that the infringing enterprise has ceased to exist (legally or economically) and the

purchaser continued the business).

Maximum fine

The maximum fines amount to €1 million for an individual and 10 per cent of the consolidated group turnover for a legal entity.55

In June 2013, the FCO published its current fining guidelines. Contrary to the previous guidelines, which were fairly similar to the European Commission's 2006 guidelines,56 the new guidelines deviate significantly from the Commission's guidelines.57

According to the current guidelines, the 10 per cent maximum for a fine on a company should not be considered a cap limiting a fine calculated independently of the relevant company's turnover that could otherwise be higher (as is the case under EU law), but rather the upper limit of the fining scale, which should, thus, be applied only in cases of the most extreme hard-core infringements.

Pursuant to the its fining guidelines, the FCO first determines a basic amount of the fine, which is 10 per cent of the group's relevant turnover achieved with the products or services related to the infringement for the period during which the infringement was ongoing. In a second step, this initial amount is multiplied depending on the size of the group by a factor between two and six, or even higher in cases where the group's turnover exceeds €100 billion. The resulting basic amount may then be adjusted in a third step for mitigating or aggravating circumstances.

To date, the FCO imposed fines applying the new guidelines in several cartel proceedings58 as well as concerning vertical proceedings against mattress manufacturers.59 In addition, the FCO also based a (relatively small) fine in a dominance case concerning a producer of carbon dioxide cartridges for soda water preparation on the new guidelines.60 The FCO stated that the new guidelines would also apply to infringements that took place prior to the adoption of the new guidelines.61

Collecting benefits of infringement

German administrative offence law allows the FCO also to collect proceeds derived from an infringement, either in separate administrative proceedings or by determining a fine that reflects such proceeds (in which case the total fine may exceed the 10 per cent maximum).

ii Behavioural remedies

Sections 32 to 34 of the ARC allow for behavioural remedies. Thus, the FCO may impose all measures necessary to bring an infringement effectively to an end and that are proportionate to the infringement. This includes the right to impose measures that require action by the infringer. Section 32a of the ARC allows the FCO to impose interim measures in cases of urgency if there is a risk of serious and irreparable damage to competition. Such measures should, however, not last longer than one year.

For instance, the FCO has ordered hotel online booking platforms HRS62 and Booking.com63 to delete best-price clauses from their contracts with hotel partners.64

iii Structural remedies

Section 32(2) of the ARC provides for the possibility of structural remedies, including divestitures (unbundling) of companies; however, structural remedies are subject to a strict proportionality test and may only be applied where behavioural remedies would be insufficient to remedy the infringement. To date, the FCO has not imposed any structural remedies in abuse cases.

VI Procedure

In the administrative proceedings, the FCO carries out investigations in order to decide whether to issue a prohibition decision and, if appropriate, a fine. Such decisions can be taken simultaneously or consecutively, and both are subject to judicial review of the facts and the law by the Düsseldorf Court of Appeal. The Court's decisions can be further appealed - on points of law only - to the Federal Court. In practice, the courts indeed carry out an independent review of the cases brought before them. While they often side with the FCO, it is by no means rare that FCO decisions are overturned based on factual or legal errors of the FCO.

i Commencement of investigations and investigative powers

The FCO may commence investigations ex officio or, in practice more frequently, following complaints of third parties (e.g., competitors, customers or suppliers).65 The FCO may carry out informal discussions or send informal questionnaires. It can, however, also take formal measures such as information requests or, subject to a prior court order, surprise inspections (dawn raids) in the course of which it can seize documents and electronic files.

ii Right to be heard

During all stages of an investigation, the enterprises investigated have the right to be heard. The FCO will usually serve a statement of objections before it issues a decision to which the company concerned may respond. The party concerned also has the right of access to the file, including digitally stored data and media.

iii Guidance

There is no formal procedure for obtaining guidance on individual cases, but the FCO is open to informal contacts and may provide informal guidance in this context.

iv Settlements

The FCO often ends proceedings by adopting commitment decisions, that is, by declaring remedies offered by the party concerned as binding.66 In light of the increasing importance of such settlements in German antitrust proceedings over the past few years, the FCO published a guidance paper on its settlement practice on 23 December 2013.67 Settlements have frequently been reached in hard-core cartel and vertical restraints cases (resale price maintenance, online impediments). In its guidance paper, the FCO notes that there is no regulatory framework for settlements, but that its power to conclude settlements derives from its discretion to pursue cases. A party to an investigation has no right to a settlement but can of course suggest it to the FCO. A settlement does not require parties to commit not to appeal any fining decision included in the settlement; however, there are no cases where an enterprise would have actually appealed an administrative fine on which it had previously settled.

v Cooperation with other authorities

Cooperation between the FCO, the other national competition authorities and the European Commission takes place via the European Competition Network (ECN). This cooperation may involve exchanging information about cases and decisions, exchanging evidence, and mutually assisting each other with investigations. For example, the FCO and ECN jointly published a monitoring report on developments in the German electricity and gas markets in 2015. The FCO has set up an internal coordination unit to represent the authority within the ECN. The FCO is also an active member of the International Competition Network (ICN). FCO President, Andreas Mundt, has chaired the ICN's Steering Group since 2013.

VII Private Enforcement

Section 33 of the ARC provides an express legal basis for damage claims based on infringements of antitrust law. Following a significant increase in cartel-related follow-on damage litigation over recent years, damage actions or other types of litigation (e.g., requesting the termination of discriminatory conduct, access to a network or infrastructure, etc.) based on alleged restrictive unilateral conduct have also become fairly frequent. Unlike cartel damage cases, these actions often do not follow an investigation and decision by the FCO (or other competition authorities), but are brought on a stand-alone basis.

German law currently does not provide for class actions seeking damages.68 A practical way to consolidate damages claims of various victims of anticompetitive behaviour is to assign the claims to one party or institution, which then brings the lawsuit. In a case in which claims had been assigned to the company Cartel Damages Claims (CDC), the Düsseldorf District Court dismissed CDC's collective damage claims against various German cement manufacturers, holding that the assignments of the claims to CDC for the purpose of enforcing them in court were null and void in violation of public policy.69 Under German procedural rules, the defeated party in a court case has to pay the court fees and must reimburse the winning side for its costs. As CDC's special purpose vehicle for the enforcement of the claims was only minimally funded, it would not have been able to cover such costs had it lost the case. The fact that CDC did not bear any of the risks of losing the case was considered a violation of public policy. The Düsseldorf Court of Appeals affirmed the judgment.70 However, if properly funded, a company to which damage claims were assigned should be able to bring consolidated lawsuits. Of course, the decision means that entities bringing such claims must assume considerable financial risk (or have the assignors of the claims share such risk), which reduces the attractiveness of the scheme. In order to limit this financial risk, the Ninth Amendment provides for a capped value of the claims resulting in limited fees (see new Section 89a(3)).71

In addition, consumer associations may bring actions on behalf of consumers, but only for injunctions, not for damages. Where a company has derived benefits from abusive or predatory conduct, the FCO and, if the FCO has not done so, consumer associations may in principle seek to collect such benefits on behalf of the German state (private damage claims and fines imposed by the FCO already reducing such benefits are taken into account). In practice, however, such actions are very rare.

In the context of follow-on suits, German courts are legally bound by any (final) decision of the European Commission, the FCO, or any other national competition authority in an EU Member State finding an infringement of EU antitrust law.72 The binding effect is, however, limited to the determination of the antitrust infringement, so that causation and amount of damages need to be established subject to the normal rules on burden of proof in German court proceedings.73

VIII Future Developments

The FCO can be expected to further expand its activities with respect to the internet economy and in the e-commerce sector, as FCO president, Andreas Mundt, stated that the FCO intended to continue taking a leading role in this area among other competition authorities. With respect to possible dominance issues, he explained that the internet economy would be of primary interest for the FCO, as ‘big data' was quickly becoming a source of market power. According to Mundt, it is essential for safeguarding competition that markets are kept assailable. The FCO is, thus, currently investigating whether Facebook's terms of use infringe data privacy laws and whether such an infringement would be abusive under antitrust law.

In addition, the FCO recently announced its intention to develop a guidance paper on the control of abusive practices with respect to electricity generation (in cooperation with the Federal Network Agency). The FCO is, thus, consulting the producers of electricity in Germany. According to Mr. Mundt, the FCO wants to provide these electricity producers with a higher level of legal certainty.74

The Monopolies Commission recently repeated that it sees competitive deficits in the fields of railway transportation, postal services and in the energy sector. While the Monopoly Commission does not have enforcement or legislative powers, the FCO and the legislator take its view into account in their enforcement and legislative strategy and practice.


1 Stephan Barthelmess is a partner and Tilman Kuhn is a counsel at Cleary Gottlieb Steen & Hamilton LLP. The authors express their gratitude to their colleague Tobias Rump and Stagiaire Laura Arnolds for their assistance with the update of this chapter.

2 An English version of the ARC is available at www.gesetze-im-internet.de/englisch_gwb/index.html.

3 The old version of the notice is available in German at www.bundeskartellamt.de/SharedDocs/Publikation/DE/Bekanntmachungen/Bekanntmachung%20-%20Angebot%20unter%20Einstandspreis.pdf?__blob=publicationFile&v=2.

4 An English version of the guidelines is available at www.bundeskartellamt.de/SharedDocs/Publikation/EN/Leitlinien/Guidelines%20for%20the%20setting%20of%20fines.pdf?__blob=publicationFile&v=3.

5 Arguably, this process limits the defence rights of companies subject to the subsequent antitrust proceedings, as they are obliged to respond to the sector inquiry without knowing the specific allegations that will be brought against them later on.

6 English summaries of some of the FCO's sector inquiry reports are available at www.bundeskartellamt.de/EN/AboutUs/Publications/Sectorinquiries/sectorinquiries_node.html.

7 According to the FCO's report, it found considerable evidence of an oligopoly with no internal competition consisting of, at least, the two market leaders in Germany, but probably also five other large suppliers, see the FCO's report of 5 May 2017, available in German only at: www.bundeskartellamt.de/SharedDocs/Publikation/DE/Sektoruntersuchungen/Sektoruntersuchung%20Submetering.pdf?__blob=publicationFile&v=3; and the FCO's press release of the same day, available in English at: www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2017/04_05_2017_Sektoruntersuchung%20Submetering.html?nn=3591568.

8 FCO press release of 31 May 2016, available in English at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2016/31_05_2016_Sektoruntersuchung_Krankenhaeuser.html?nn=3591568.

9 FCO press release of 20 December 2016, available in English at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2016/20_12_2016_SU_Haushaltsabfaelle.html?nn=3591568.

10 See FCO's annual review of 2015, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2015/21_12_2015_Jahresr%C3%BCckblick.html?nn=3591286.

11 FCO press release of 19 January 2017, available in English at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2017/19_01_2017_audible.html?nn=3591568.

12 FCO press release of 23 December 2015, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2015/23_12_2015_Booking.com.html?nn=3591286.

13 Most online cases were dealt with under Article 101 of the TFEU and its German equivalent Section 1 of the ARC (prohibiting anticompetitive agreements). However, in the HRS hotel portal case, the FCO held that a best-price clause requested by HRS from hotels listed on its platform also violated Sections 19 and 20 of the ARC (abuse of dominance). Given the violation of Article 101 of the TFEU and Section 1 of the ARC, the Düsseldorf Court of Appeal ultimately left open whether the best-price clause also infringed Sections 19 and 20 ARC (judgment of 9 January 2015, case VI - Kart 1/14 (V)).

14 FCO press release of 2 March 2016, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2016/02_03_2016_Facebook.html?nn=3591286.

15 The study is available at: www.bundeskartellamt.de/SharedDocs/Publikation/DE/Berichte/Big%20Data%20Papier.html?nn=3591286.

16 The working paper is available in German at www.bundeskartellamt.de/SharedDocs/Publikation/DE/Berichte/Think-Tank-Bericht.pdf?__blob=publicationFile&v=2.

17 A comprehensive list of the FCO's past dominance cases is available on the FCO's website in German only at: www.bundeskartellamt.de/SiteGlobals/Forms/Suche/Entscheidungssuche_Formular.html?nn=3589936&cl2Categories_Format=Entscheidungen&gtp=3598628_list%253D2&cl2Categories_Arbeitsbereich=Missbrauchsaufsicht&docId=3590026.

18 For example, FCO, decision of 12 December 2003, case B9-60211-Fa-91/03 - ÖPNV-Hannover; decision of 2 July 2008, case B2-359/07 - Loose/Poelmeyer; Federal Court, decision of 4 March 2008, case KVR 21/07 - Soda-Club II.

19 For example, Federal Court, decision of 16 January 2007, case KVR 12/06 - National Geographic II. Specifically with respect to retail markets, the usual product range of a retailer may constitute a single market (‘portfolio market' or Sortimentsmarkt).

20 Federal Court, decision of 5 October 2004, case KVR 14/03 - Melitta/Schultink.

21 Düsseldorf Court of Appeal, decision of 9 January 2015, case VI Kart 1/14 (V), para. 43 - HRS.

22 FCO, decision of 8 September 2015, case B6-126/14, para. 129 - Google.

23 See newly introduced Section 18(2a) ARC.

24 FCO, Guidance on Substantive Merger Control of 29 March 2012, para. 9. In its guidelines, the FCO refers to Federal Court, decision of 12 December 1978, case KVR 6/77 - Erdgas Schwaben, and ECJ, decision of 14 February 1978, case 27/76 - United Brands. An English version of the guidelines is available at www.bundeskartellamt.de/SharedDocs/Publikation/EN/Leitlinien/Guidance%20-%20Substantive%20Merger%20Control.pdf?__blob=publicationFile&v=6.

25 Dominance may also (exceptionally) be found to exist if the market share remains below the presumption threshold.

26 According to Section 18(3a) that has been introduced as part of the Ninth Amendment, the following conditions must be taken into account when assessing a company's market position on multi-sided and network markets: direct and indirect network effects; the parallel use of more than one service and the difficulties faced by users in switching services; economies of scale in connection with network effects; the company's access to data relevant for competition; and competitive pressure driven by innovation.

27 FCO, Guidance on Substantive Merger Control of 29 March 2012, para. 81.

28 Case T-342/99, 6 June 2002, [2002] ECR II-2585.

29 For example, Federal Court, decision of 11 November 2008, case KVR 60/07 - E.ON/Stadtwerke Eschwege; decision of 20 April 2010, case KVR 1/09 - Phonak/GN Store.

30 In contrast, collective dominant positions were held to exist in several merger control cases.

31 Stuttgart Court of Appeals, judgment of 21 November 2013, case 2 U 46/13.

32 Stuttgart District Court, judgment of 20 March 2013, case 11 O 215/12.

33 The term ‘superior market position' is part of the legal definition of dominance pursuant to Section 18 of the ARC and must not be confused with the term ‘stronger market power' pursuant to Section 20 of the ARC (see below).

34 Federal Court, judgment of 16 June 2015, case KZR 83/13, para. 46; see also judgment of 16 June 2015, case KZR 3/14, para. 45.

35 Section 20(1) of the ARC.

36 Section 20(3) of the ARC.

37 Section 20(3) of the ARC.

38 In 2014, the Frankfurt District Court (judgment of 18 June 2014, case 2-03 O 158/13) found that Deuter, a German manufacturer of outdoor backpacks, had a ‘powerful market position' and therefore held a position of relative dominance pursuant Section 20(2) of the ARC, because Deuter had apparently claimed to be the ‘European leader in functional backpacks' and had not contested the allegation of being dominant during the court proceedings. The judgment does not contain any further discussion of why Deuter was found to be dominant. Upon appeal, the Frankfurt Court of Appeals merely found that the fact that Deuter was ‘relatively dominant' had not been disputed in the proceedings (judgment of 22 December 2015, case 11 U 84/14 (Kart).

39 See footnote 3.

40 FCO press release of 16 November 2015, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2015/16_11_2015_Audible.html?nn=3591568.

41 FCO press release of 19 January 2017, available in English at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2017/19_01_2017_audible.html?nn=3591568.

42 See, in particular, Federal Court, decision of 11 December 2012, case KVR 7/12 - Puttgarten/German ferry terminal for further details. The case was referred back and remains pending before the Düsseldorf Court of Appeal.

43 ECJ, judgment of 16 July 2015, case C-170/13 - Huawei/ZTE.

44 The FCO in particular examined whether DB had abusively charged higher commissions to competitors than to its own subsidiaries for selling tickets.

45 FCO press release of 24 May 2016, available at: www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2016/24_05_2016_DB_Fahrkarten.html?nn=3591286.

46 FCO press release of 22 August 2014, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2014/22_08_2014_VG_Media.html?nn=3591568.

47 FCO, decision of 9 September 2015, case B6-126/14. A press release in English is available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2015/09_09_2015_VG_Media_Google.html?nn=3591568.

48 In most cases, the FCO adopted commitment decisions (and in some cases, the FCO closed the proceedings without a decision, as it did not find its initial suspicions confirmed by the results of its investigations). As there were therefore no final non-commitment decisions in this case, the FCO was able to leave several legal questions ultimately open.

49 The FCO in particular found that this conduct did not only have negative effects on the suppliers, but also on smaller competing retailers from whom the suppliers might try to recover the rebates (‘waterbed effect'). See FCO, decision of 13 February 2017, case B8-30/13, paragraphs 28 et seq. - innogy; decision of 13 February 2017, case B8-31/13, paragraphs 33 et seq. - Danpower. A press release concerning both cases is available in English at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2017/14_02_2017_Fernw%C3%A4rme.html?nn=3591568.

50 FCO press release of 3 July 2014, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2014/03_07_2014_edeka.html?nn=3591568 and FCO, decision of 3 July 2014, case B2-58/09.

51 Düsseldorf Court of Appeal, decision of 18 November 2015, case VI-Kart 6/14 (V).

52 Several German commentators have severely criticised this new rule. They argue that the new rule violates the constitutional principle of fault, as a legal entity may be held liable without any culpable behaviour of its own or its bodies. Therefore, litigation on this issue may be expected over the following years.

53 Under the old rules, liability for fines was - in principle - limited to the specific legal entity that had committed the infringement and did not extend to new legal entities resulting from corporate transformations, such as corporate mergers. This gap had been used by several companies to avoid fines through corporate restructurings. However, according to the Federal Court's case law, a legal successor can also be held liable under the old rules (which remain applicable to conduct that occurred prior to the change in law) if - from an economic perspective - the legal successor's assets were (nearly) identical with those of the legal entity that committed the infringement. In this context, the Düsseldorf Court of Appeal recently confirmed a fine imposed by the FCO on a German coffee roaster (judgment of 10 February 2014, case V-4 Kart 5/11 (OWi).

54 German sausage producer Tönnies had effectively used remaining legal loopholes to avoid fines for its participation in the sausage cartel by conducting internal restructuring measures.

55 Section 81(4) of the ARC.

56 According to the previous guidelines, the FCO first determined a basic amount of the fine, taking into account the gravity as well as the duration of the infringement and then adjusted the basic amount by a deterrence factor, reflecting aggravating and mitigating circumstances.

57 This was in particular because of a decision of the Federal Court of Justice (judgment of 26 February 2013, case KRB 20/12 - Zementkartell). The current FCO fining guidelines are available at www.bundeskartellamt.de/SharedDocs/Publikation/EN/Leitlinien/Guidelines%20for%20the%20setting%20of%20fines.pdf?__blob=publicationFile&v=3.

58 The proceedings concerned rail manufacturers, breweries, sausage manufacturers, manufacturers of concrete paving stones, providers of specialist mining services, automotive parts producers, providers of container transport services, manufacturers of prefabricated garages, and in a customer allocation proceeding concerning certain services provided in power plants.

59 FCO press release of 22 August 2014, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2014/22_08_2014_Matratzen.html?nn=3591568 and FCO press release of 6 February 2015, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2015/06_02_2015_Matratze.html?nn=3591568.

60 FCO press release of 22 January 2015, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2015/22_01_2015_SodaStream.html?nn=3591286; see also FCO, decision of 22 January 2015, case B3-164/14 (Commitments SodaStream).

61 FCO press release of 31 July 2013, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2013/31_07_2013_Wala.html - Wala Heilmittel.

62 FCO, decision of 20 December 2013, case B9-66/10. A press release is available in English at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2013/20_12_2013_HRS.html?nn=3591568.

63 FCO, press release of 23 December 2015, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2015/23_12_2015_Booking.com.html?nn=3591568.

64 The FCO's proceedings against Expedia are still ongoing.

65 There is no formal complaint procedure though, which means notably that complainants do not have a legal remedy against a rejection of their complaint.

66 See, for instance the FCO's recent commitment decisions regarding several operators of district heating networks that were alleged to have abused a dominant market position by charging excessive prices: decision of 13 February, 2017, case B8-30/13 - innogy; decision of 13 February, 2017, case B8-31/13 - Danpower; and decision of 15 October 2015, case B8-34/13 - Stadtwerke Leipzig. The FCO's press releases regarding these cases are available in English at: www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2017/14_02_2017_Fernw%C3%A4rme.html?nn=3591568; and www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2015/16_10_2015_Stadtwerke_Leipzig.html?nn=3591568.

67 The guidance paper is available in German at www.bundeskartellamt.de/SharedDocs/Publikation/DE/Merkbl%C3%A4tter/Merkblatt-Settlement.pdf?__blob=publicationFile&v=2. In contrast to the EU settlement programme, under German law settlements can also be concluded in cases other than those involving cartels, including dominance cases.

68 In December 2014, the EU Directive on Antitrust Damages Actions (2014/104/EU) came into effect. The Member States have to implement the Directive in their national law by the end of 2016. In Germany, this directive is being implemented by the Ninth Amendment.

69 Düsseldorf District Court, judgment of 17 December 2013, case 37 O 200/09 - CDC.

70 Düsseldorf Court of Appeals, judgment of 18 February 2015, case VI U 3/14; CDC has not further appealed this decision.

71 In Germany, the court and legal fees in civil proceedings are determined based on the value of the claim.

72 Section 33b of the ARC (formerly, Section 33(4) of the ARC, changed by the Ninth Amendment).

73 Munich Court of Appeals, judgment of 21 February 2013, case U 5006/11 Kart; Berlin District Court, judgment of 6 August 2013, case 16 O 193/11 Kart.

74 See the FCO's press release of 1 April, 2016, available in German only at: www.bundeskartellamt.de/SharedDocs/Meldung/DE/Pressemitteilungen/2016/01_04_2016_Fragebogen_Leitfaden_Stromerzeugung.html?nn=3590016.