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 the abuse of a (single or collective) dominant position, and 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 Treaty on the Functioning of the European Union (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 the case law of the German Federal Cartel Office (FCO) and the German courts, notably the Federal Court of Justice (FCJ). There is no formal general guidance on unilateral conduct available, apart from the FCO's somewhat dated notice on below-cost pricing (which has been under review by the FCO for years now).

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.3

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 of the FCO in the abuse of dominance area over the past couple of years has continued to be quite limited in terms of actual decisions, as the FCO has issued only one single formal prohibition decision so far in 2019 and issued none in 2018. However, despite the limited number of actual decisions, the FCO clearly continues its emphasis on the digital economy and, in particular, the online platforms in multi-sided markets. The FCO's prohibition decision against Facebook marks another milestone in this regard, as the FCO – for the first time – based its analysis on whether the dominant company complied with the EU General Data Protection Regulation (GDPR), and ultimately imposed limitations on Facebook's current practice of collecting and processing user data, and prohibited using the related terms of service.4 The Facebook decision further complements the FCO's previous notable 'online' dominance cases, including its decision against CTS Eventim5 (recently confirmed by the Düsseldorf Court of Appeal),6 Google, and hotel booking platforms Booking.com7 and HRS.8 In addition, the FCO initiated proceedings against Amazon, investigating its terms and conditions and its behaviour with regard to the retailers on its German marketplace platform, amazon.de.9

The FCO also rendered a settlement decision to complete its proceedings against the German Olympic Sports Confederation (DOSB) and the International Olympic Committee (IOC) regarding the advertising restrictions that they imposed on athletes (prohibiting athletes participating in the Olympic Games from using their person, name, picture or performance during the Olympic Games – and some days before and after – for advertising purposes). According to the FCO's preliminary view, these restrictions constituted an abuse of the DOSB's and the IOC's dominant positions (as the athletes – who are performers at the games – do not profit directly from the very high advertising revenues generated by the official Olympic sponsors). After evaluating, and market testing, proposals by the DOSB and the IOC to reduce the scope of the restriction, the FCO and the two sports federations reached a settlement agreement.10 Under the sports federations' new rules, athletes now have more freedom to engage in advertisement activities with their own sponsors during the duration of Olympic Games.

In recent years, the FCO has 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.11

Recently, the FCO has focused on the internet and food retail sector, inter alia, launching a new sector inquiry in 2017 that examined the conduct of price comparison websites in the area of travel, insurance, financial services, telecommunications and energy, and published its final report on 11 April 2019.12 Since May 2011, the FCO has published a total of nine reports on investigations into different sectors,13 of which seven specifically deal with (possible) abuses of market power (district heating, milk, fuel retail, wholesale fuel, food retail, the sub-metering and billing of heating and water consumption, and cement and ready-mixed concrete). The following tables list the significant cases and decisions dealing with abuse of a dominant position adopted by the FCO in 2017, 2018 and 2019, and important ongoing proceedings.14

i 2018/2019 FCO decisions

Sector Company Conduct Fine
Social networks Facebook Abuse by inappropriate collection and processing of Facebook users' personal data in particular from third-party sources. No fine; prohibition decision
Sports federations IOC, DOSB Exploitation of athletes (advertising restrictions) No fine; case settled

In addition to the listed cases, the FCO initiated a preliminary investigation against Lufthansa. After the insolvency of Germany's second biggest airline, Air Berlin, Lufthansa enjoyed a monopoly position for a few months on some German domestic flight routes. The FCO's investigation showed that Lufthansa's ticket prices on these routes had increased by an average of 25–30 per cent after Air Berlin's exit from the market. However, as these increases were only of a temporary nature and prices returned to the previous level only a few months later, after easyJet's entry into the market, the FCO did not open formal proceedings.15

ii 2017 FCO decisions

Sector Company Conduct Fine
Ticketing systems CTS Eventim Exclusivity agreements with ticket offices and event organisers No fine; prohibition decision
Dairy products Deutsche Milchkontor eG Exclusive supply agreements for unpasteurised milk and ex post determination of milk prices No fine, case closed*
Ticket sales Deutscher Fußball-Bund Bundling ticket sales for football matches (World Cup 2018 and, previously, the European football championship 2016) to members of the German Football Association (DFB) fan club No fine; case closed
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

* The FCO did not issue a settlement decision, but dropped its proceedings after
Deutsche Milchkontor eG changed its supply conditions in reaction to the FCO's investigation.
See FCO press release of 9 January 2018, available at www.bundeskartellamt.de.

The FCO investigated the DFB for abusing its dominant position regarding the allocation of the German ticket quota for the 2018 World Cup (and previously for the European football championship 2016) because the DFB intended to sell tickets only to its own members who had to pay an annual membership fee of €40. While the FCO considered that this behaviour could be justified, at least in part, by security considerations (effectively preventing ticket sales to known hooligans), the DFB nonetheless committed to introduce a short-time membership at a reduced fee. Against this background, the FCO dropped its investigation.

In addition to the listed cases, where the FCO initiated proceedings, it further intervened against furniture retailer XXXLutz for requesting unjustified 'wedding' (post-merger) rebates, albeit without launching a formal investigation. The FCO dropped its proceedings after XXXLutz committed to stop demanding such rebates.16

iii Ongoing cases

Sector Company Conduct Case opened
Online sales platforms Amazon Potentially abusive conduct towards retailers using Amazon's market place. 29 November 2018

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 the intended use, characteristics and price of the relevant products. In some cases, the FCO also refers to the 'small but significant and non-transitory increase in price' test as an additional, but not the only or the principal, criterion for market definition.17 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.18

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 that can be distinguished from neighbouring areas because of appreciably different competitive conditions.19

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 German legislator has also clarified that a relevant market may be found even if the relevant services are rendered free of charge.20

ii Dominance

As previously 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 without competitors, not exposed to significant competition or 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).21

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':

  1. the enterprise's market share;
  2. its financial resources;
  3. its access to input supplies or downstream markets;
  4. its affiliations with or links to other enterprises;
  5. legal or factual barriers to market entry;
  6. actual or potential competition by domestic or foreign enterprises;
  7. its ability to shift its supply or demand to other products; and
  8. 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 with 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.22 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 line with the FCO's recent focus on digital markets, the German legislator has introduced additional criteria for the assessment of market power in multi-sided markets and networks. According to Section 18(3a) of the ARC, in particular, the following criteria must be taken into account when assessing a company's market position on multi-sided and network markets:

  1. direct and indirect network effects;
  2. the parallel use of more than one service and the difficulties faced by users in switching services;
  3. economies of scale in connection with network effects;
  4. the company's access to data relevant for competition; and
  5. competitive pressure driven by innovation.

The FCO applied these additional criteria in its decisions against German ticketing system operator, CTS Eventim, and Facebook. In CTS Eventim, the FCO found that the ticket platform enjoyed a dominant position with regard to event organisers and ticket offices in the two-sided platform market for ticketing services in Germany. In Facebook, the FCO based its dominance analysis on the German market for social media networks; in particular, on three factors:

  1. direct network effects resulting from Facebook's large number of users (creating a 'lock-in effect' for its users, as they would lose all their existing contacts if they switched to another social network – creating high entry barriers);
  2. indirect network effects that Facebook enjoys in relation to its advertisement customers (given the large number of Facebook users, advertisers cannot easily switch to another social network to reach as many users); and
  3. Facebook's access to users' personal data.

The new criteria will further play an important role in the FCO's ongoing proceedings against Amazon. The investigation focuses on Amazon's terms and conditions and its behaviour regarding the retailers on its German marketplace platform amazon.de. Reportedly, the FCO will pay particular attention to the indirect networking effects created by the role of Amazon's marketplace as an intermediary between resellers and consumers (the marketplace's benefit for retailers correlates directly with the number of customers using the platform and vice versa).

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.23

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. Commission 24 in determining collective dominance (albeit in a somewhat modified form).25 However, until a few years ago, there had not been a case where companies had been considered to be in a collective dominant position in the context of abuse proceedings.26

In June 2015, the FCJ dealt with the first case in which a possible abuse of a collective dominant position was at issue.27 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,28 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 position29 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 FCJ, 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.30

'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,31 and by companies enjoying 'stronger market power in comparison to their small and medium-sized competitors'.32 The prohibitions aim at protecting small and medium-sized companies against anticompetitive conduct by their larger competitors or trading partners.33

The prohibition on 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) Second 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, petrol, etc.). An example of prohibited exclusionary conduct is frequent pricing below cost.34 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.

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 in subsections IV.ii to IV.iv.35 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. Section 20(3) of the ARC lays out how to calculate cost. The (somewhat dated) FCO notice on below-cost pricing provides further guidance.

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 for the 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.36 The FCO has meanwhile closed these proceedings.37

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).38

Upon referral from the Düsseldorf District Court, the European Court of Justice 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.

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 objective justification).

After the German legislator 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 2014,39 and issued a formal rejection decision in September 201540 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, its competitors' prices and the dominant company's costs. The FCO followed this approach, for instance, in its 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,41 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.42

Another typical exploitative abuse scenario concerns the request by powerful buyers that their suppliers grant 'wedding rebates' following the merger of the buyer with other retailers. For example, the FCO intervened against furniture retailer XXXLutz for requesting unjustified wedding rebates (XXXLutz asked suppliers to retroactively grant discounts to purchases that Möbel Buhl had made before it had been acquired by XXXLutz) from its suppliers. The FCO did not launch a formal investigation, but closed the file after XXXLutz committed to stop demanding such rebates.43

An exploitative abuse may not only concern pricing, but also the use of certain contractual terms and conditions by a dominant company can be exploitative under Section 19(1) or 19(2) No. 2 of the ARC.44 In its recent Facebook decision, the FCO relied on this theory of harm. Specifically, the FCO found Facebook's terms and conditions exploitative because they violated European and German data protection rules.45 In the FCO's view, a key objective of European data protection law is to protect the fundamental right of informational self-determination and, hence, users' control over how and for what purposes private networks, such as Facebook, use their personal data. The FCO found that Facebook's terms and conditions provided it with access to vast amounts of personal user data, as users were practically unable to reject Facebook's data collection if they wanted to join and access its network (under Facebook's terms of service, users could only join the social network if they also agreed to Facebook collecting and matching user data obtained from sources other than their core platform, including not only other Facebook-owned platforms, but also third-party websites). In addition, users lacked viable alternatives to Facebook's private network because of Facebook's dominant market position. In the FCO's view, users' consent to Facebook's data collection could not be considered as freely given – which is the key requirement for the consent's validity under the GDPR. The FCO therefore imposed limitations on Facebook's current practice of collecting and processing user data, and prohibited the use of the relevant terms of service.

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 in order to also impose a fine on that entity.

Parental liability

As a consequence, it has been 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–e, introduced by the German legislator as part of the most recent ARC amendment, now establishes a principle of parental liability that is – in effect – similar to EU competition law, as it introduces 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.46

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.47 In addition, the German legislator more recently also introduced a provision to the ARC regarding legal successors in order to close the remaining 'sausage gap'.48 According to Section 81a of the ARC, cartel fines may now 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 and the purchaser continues 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.49

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,50 the new guidelines deviate significantly from the Commission's guidelines.51

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

Pursuant to the fining guidelines, the FCO first determines the 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 of 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 has imposed fines applying the new guidelines in several cartel proceedings as well as in proceedings concerning vertical infringements. 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.52 The FCO has stated that the new guidelines would also apply to infringements that took place prior to the adoption of the new guidelines.53

Collecting benefits of infringement

German administrative offence law allows the FCO to also 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 maximum of 10 per cent of a company's turnover).

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 HRS54 and Booking.com55 to delete best-price clauses from their contracts with hotel partners.

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 administrative proceedings, the FCO carries out investigations 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 FCJ. 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, and in practice more frequently, following complaints of third parties (e.g., competitors, customers or suppliers).56 The FCO may carry out informal discussions or send informal questionnaires. It can also take formal measures, such as making information requests or, subject to a prior court order, conducting 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.57 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 in 2013.58 Settlements have frequently been reached in hardcore 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. 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), and the FCO's president 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) 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.59 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 damages 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.60 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 legal 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.61 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. To limit this financial risk, the ARC provides for a capped value of the claims resulting in limited fees (see Section 89a(3) of the ARC).62

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 may, in principle, seek to collect such benefits on behalf of the state, or, if the FCO has not sought such benefits, consumer associations may do so (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.63 The binding effect is, however, limited to the determination of the antitrust infringement, so causation and the amount of damages need to be established subject to the normal rules on the burden of proof in German court proceedings.64

VIII Future Developments

As in recent years, both the FCO and the German legislator continue to focus on digital markets. This trend is set to continue.

According to FCO president, Andreas Mundt, the FCO intends to preserve a leading role among competition authorities with respect to the internet economy and e-commerce sector. Having identified 'big data' as an important source of market power, the FCO's recent proceedings against Google, Facebook and Amazon will likely not be the end of this trend. As also evidenced by the sector inquiry on the conduct of price comparison websites, the FCO is particularly intrigued by the market power of (online) platforms in multi-sided markets. As the FCO is taking great interest in the combination of (direct or indirect) network effects, large amounts of personal data, and the gatekeeper function of online platforms for evolving markets, several additional dominance proceedings can be expected in the future. Another indicator of the FCO's continued interest in this regard is the project on algorithms and their implications for competition, including interdependencies between algorithms and market power, that the FCO launched in June 2018 in cooperation with the French Competition Authority.65

Given that the German legislator recently expanded the FCO's competences in the area of consumer protection, the FCO may also be expected to conduct sector inquiries if there is evidence of sustained, significant and repeated violations against consumer protection law in an industry.66 On that basis, the FCO launched its first sector inquiry in December 2017, focusing on the conduct of price comparison websites in the area of travel, insurance, financial services, telecommunications and energy, and published its final report in April 2019. In addition, the FCO can now act as amicus curiae in court proceedings that concern such violations.67

In addition, the FCO and the Federal Network Agency published a draft guidance paper on the control of abusive practices with respect to electricity generation in March 2019. According to Mundt, the FCO aims to explain its basic approach to the assessment of abusive practices by electricity producers with a mind to provide them with a higher level of legal certainty.68 The two authorities requested comments on their draft by 20 May 2019, but have not stated when they expect to issue the final guidelines. The FCO can also be expected to take another stab at updating its notice on below-cost pricing to reflect the most recent amendment of the ARC in this regard.

The German government and legislator continue to review the ARC; in particular, assessing whether it still allows effective enforcement against abuse of market power in light of the increasing digitalisation and importance of globally active digital players. Thus, in September 2018, the German Federal Ministry for Economic Affairs and Energy (FME) issued an expert report that outlined several potential amendments to the ARC's rules on the abuse of dominance.69

The experts' report, inter alia, recommends the facilitation of intervention by the FCO or courts in digital markets with strong positive network effects. Under the proposal, an intervention would be possible prior to a company achieving an undue degree of market power in order to prevent a 'tipping' of the market into a monopoly that would be difficult to reverse thereafter. For this purpose, the experts propose the introduction of a new rule prohibiting unilateral conduct by platform providers in close oligopolies that could induce tipping and is not justified on grounds of competition on the merits (e.g., by obstructing multi-homing or switching for users). In light of online platforms' increasing importance as information intermediaries and central players in the digital economy, the experts further recommend the introduction of the concept of intermediation (platform) power as an independent, third form of market power in the ARC. The experts also recommend the expansion of the application of the rules on the protection against exclusionary conduct for companies with superior market power over small and medium-sized enterprises.70 As relevant dependencies in the digital economy can also arise for large firms, protection should be granted beyond small and medium-sized companies.

The FME is currently assessing the expert report's results and recommendations. In September 2018, it also appointed an expert commission (the Competition Law 4.0 Commission) with the task of providing practical recommendations for the revision of German and European competition law.71 While the expert commission plans to provide its results in autumn 2019, actual legislative changes are not expected before 2020.


Footnotes

1 Stephan Barthelmess is a senior counsel and Tobias Rump is an associate at Cleary Gottlieb Steen & Hamilton LLP.

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

4 See FCO decision of 7 February 2019; the case report and press release are available on the FCO's website.

5 CTS Eventim – the operator of Germany's largest ticketing system (acting as the intermediary between event organisers and ticket offices) – had required organisers of live events to distribute the tickets for their events exclusively via CTS Eventim's ticketing system, while at the same time requiring ticket offices to source tickets only from the same system. In its decision, the FCO took account of CTS Eventim's significant market share, but also applied the newly introduced criteria for the assessment of a company's dominance on multi-sided platform markets under Section 18(3a) of the ARC (see FCO decision of 4 December 2017, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2017/04_12_2017_CTS_Exklusivit%C3%A4t.html?nn=3591568).

6 Düsseldorf Court of Appeal decision of 5 December 2018, Case VI-Kart 3/18 (V).

8 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 of the ARC (judgment of 9 January 2015, Case VI-Kart 1/14 (V)).

10 See FCO press release of 27 February 2019, available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2019/27_02_2019_DOSB_IOC.html?nn=3591568.

11 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.

12 FCO report, 'Sector inquiry into comparison websites', 11 April 2019, only available in German at www.bundeskartellamt.de/SharedDocs/Publikation/DE/Sektoruntersuchungen/Sektoruntersuchung_Vergleichsportale_Bericht.pdf?__blob=publicationFile&v=7. A short background paper is available in English at www.bundeskartellamt.de/SharedDocs/Publikation/EN/Diskussions_Hintergrundpapiere/2018/SU_comparison_websites.pdf?__blob=publicationFile&v=4. The FCO's article, 'Consumer rights and comparison websites: Need for action', 4 February 2019, gives a preliminary summary, available at www.bundeskartellamt.de/SharedDocs/Publikation/EN/Schriftenreihe_Digitales_V.pdf?__blob=publicationFile&v=2.

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

17 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; FCJ decision of 4 March 2008, Case KVR 21/07, Soda-Club II.

18 For example, FCJ 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).

19 FCJ decision of 5 October 2004, Case KVR 14/03, Melitta/Schultink.

20 See recently introduced Section 18(2a) of the ARC.

21 FCO, Guidance on Substantive Merger Control of 29 March 2012, Paragraph 9. In its guidelines, the FCO refers to FCJ 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.

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

23 FCO, Guidance on Substantive Merger Control of 29 March 2012, Paragraph 81.

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

25 For example, FCJ 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.

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

27 Stuttgart Court of Appeals judgment of 21 November 2013, Case 2 U 46/13.

28 Stuttgart District Court judgment of 20 March 2013, Case 11 O 215/12.

29 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 'Relative dominance' subsection).

30 FCJ judgment of 16 June 2015, Case KZR 83/13, Paragraph 46; see also judgment of 16 June 2015, Case KZR 3/14, Paragraph 45.

31 Section 20(1) of the ARC.

32 Section 20(3) of the ARC.

33 The FCJ recently passed an interesting judgment regarding the characterisation of retailers as small or medium-sized companies in relation to suitcase manufacturer Rimowa; see FCJ judgment of 12 December 2017, Case KZR 50/15.

34 Section 20(3) of the ARC.

35 In addition to the specific types of abuses listed below, other forms of abuse are possible. The FCJ, for instance, found that a public pension fund's terms of service – which violated provisions on general terms and conditions under the German Civil Code – constituted an abuse of a dominant position (judgment in VBL Gegenwert II, 24 January 2017).

38 See, in particular, FCJ 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.

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

41 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) in which the FCO was able to leave several legal questions ultimately open.

42 The FCO found, in particular, that this conduct not only had 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, Paragraph 28 et seq., innogy; and decision of 13 February 2017, Case B8-31/13, Paragraph 33 et seq., Danpower. A press release concerning both cases is available at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2017/14_02_2017_Fernw%C3%A4rme.html?nn=3591568.

44 The FCJ considered it abusive under Section 19(1) of the ARC if a dominant enterprise invoked terms and conditions that are invalid under civil law. Such conduct is, in particular, abusive if the clause in question had only been accepted because of the company's dominance; see FCJ judgment of 24 January 2017, Case KZR 47/14, VBL Gegenwert II, Paragraph 35.

45 See FCO decision of 6 February 2019; a non-confidential version is available in German only at www.bundeskartellamt.de/SharedDocs/Entscheidung/DE/Entscheidungen/Missbrauchsaufsicht/2019/B6-22-16.html. The case report and press release are available on the FCO's website at www.bundeskartellamt.de/SharedDocs/Meldung/EN/Pressemitteilungen/2019/07_02_2019_Facebook.html?nn=3591286.

46 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 of its bodies.

47 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 FCJ'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 to those of the legal entity that committed the infringement. In this context, the Düsseldorf Court of Appeal confirmed a fine imposed by the FCO on a German coffee roaster (judgment of 10 February 2014, Case V-4 Kart 5/11 (OWi)).

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

49 Section 81(4) of the ARC.

50 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.

51 This was, in particular, because of a decision of the FCJ (judgment of 26 February 2013, Case KRB 20/12, Zementkartell). See footnote 3 regarding the current FCO fining guidelines.

52 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 (SodaStream Commitments).

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

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

57 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 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.

58 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.

59 In December 2014, the EU Directive on Antitrust Damages Actions (2014/104/EU) came into effect. Member States had to implement the Directive in their national law by the end of 2016. In Germany, the Directive was implemented by the most recent amendment to the ARC.

60 Düsseldorf District Court judgment of 17 December 2013, Case 37 O 200/09, CDC.

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

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

63 Section 33b of the ARC (formerly, Section 33(4) of the ARC, changed by the recent amendment to the ARC).

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

65 See FCO press release of 19 June 2018.

66 Section 32e(5) of the ARC.

67 Section 90(6) of the ARC.

70 Section 20(3) of the ARC.

71 See FME press release of 20 September 2018.