With the New Year only a few days old, we want to present a short outlook what to expect from European antitrust enforcement in 2018, with a particular focus on Germany. One theme that is likely to feature even more than last year is the impact of antitrust law on digital markets. Antitrust law has become a force for disruption in the world of tech. Multi-billion fines for online platforms which are considered not to be sufficiently neutral. Dawn raids for denied access to data. Transactions blocked or unwound if a unicorn is acquired by the wrong player.
On 6 October, the German Federal Cartel Office (“FCO”) launched its new series of papers on “Competition and Consumer Protection in the Digital Economy”. The first paper deals with “Big Data and Competition”. The same day, a “real-life example” of competition enforcement in Big Data became public. The EU Commission confirmed unannounced inspections in “a few
“Friends forever? Joint and several liability for cartel damages”
“Good friends can never be separated; good friends are never alone; for there’s one thing in life they know how to do, be there for one another…” This timeless classic was sung by Franz Beckenbauer on the occasion of the 1966 FIFA World Cup in England. And he is right: friends show consideration for each other and they are sincere to one another. As delightful as these virtues are for interpersonal relationships; as troublesome they are for intercorporate ones. If companies are too friendly with one another, they may breach antitrust law. Yet, what about friendship, when the cartel is over and third parties are eager to claim their cartel damages?
Provisions on consumer protection account for only a small part of the 9th amendment of the German Act Against Restraints of Competition (ARC), which recently came into force. However, the introduction of the reform has led to a highly controversial debate in the press and literature.
Consumer protection in Germany
Traditionally, private enforcement is the main means of protecting consumer rights in Germany. This involves consumers or, more probably, recognised consumer protection associations bringing private law actions to ensure that consumer protection provisions are applied. Unfair competition law plays a central role here. For example, consumer organisations issue cease and desist letters in response to breaches of general terms and conditions of business. If unsuccessful, they then take legal action.
Unlike previously, the debate about the 9th amendment of the ARC focused on strengthening public enforcement. Not that public enforcement of consumer protection law is completely unknown in Germany: the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) and the German Federal Network Agency (Bundesnetzagentur – BNetzA) already have powers to enforce consumer rights. BaFin is responsible for the protection of all consumers in the area of financial services, while the BNetzA monitors the misuse of phone numbers. As a result of the 9th amendment of the ARC, the German Federal Cartel Office (FCO) now also has powers to protect consumers.
Current legislative changes in the German Competition Act and the Federal Forest Act bring a set of new antitrust exemptions. We briefly present them in our blog:
1. Cooperation between press companies
2. Mergers within cooperative or savings bank associations
3. Cooperation in the timber industry
Bye bye trade secrets?
In the new ARC, confidential information and trade secrets still enjoy special protection. The reason is clear: as soon as secret information is revealed, it becomes obvious and, as such, is no longer protected as confidential. The defendant that is sued for disclosure of information may therefore reply with a confidentiality objection against the request. But it does not stop short at objecting with confidentiality: the claimant may still apply for judicial review according to para 89b(6) ARC. In the course of this review – which will probably be modeled in camera similar to para 99(2) of the Rules of the Administrative Courts (“Verwaltungsgerichtsordnung”, VWGO) – the court decides, after having heard the parties, whether the information is indeed confidential. If this is the case, the court may still disclose the confidential information on a case-by-case basis and only if the interest in the disclosure of the information outweighs the interest in keeping the information secret. Whether these documents will be handed over to the claimant directly, whether the court may impose an obligation of secrecy on the lawyers vis-à-vis their clients – all of this is not explicitly spelled out in the new Act.
The 9th amendment of the ARC aims at increasing the effectiveness of private antitrust enforcement. This aim does not stop short of obtaining information. In order to strengthen the injured party’s position, the information asymmetry between the injured party and the infringer is to be remedied. Almost reflexively, the new rights to obtain information have been labeled “German Discovery” or “Discovery Light”. So what about these new rights? Are they improving the enforcement of cartel damage claims? Are they going to transfer an Anglo-American legal status into German law?
One of the primary aspects covered by the 9th reform of the German Competition Act that has just entered into effect is the transposition of the EU Cartel Damages Directive into German law. The preparatory works in the draft bill as well as the government draft thereby come to a conclusion.
Despite their long tradition and intended relevance, the rules on cartel damages claims in the Competition Act have been rather dormant for quite some time. However, in recent years, the topic gained in importance considerably. Now, the legislator stays abreast of this trend. The competition law reform significantly supplements the rules dedicated to private cartel damages claims, providing a legal basis upon which both claimants and defendants can rely upon in cartel damage proceedings. By further improving the legislative base, the reform will contribute to the reputation of Germany as a preferred venue for cartel damages litigation.
The 9th reform of the German Competition Act is due to take effect on 9 June 2017. It primarily transposes the EU Cartel Damages Directive into German law. On top, it brings a number of other amendments. Here is a summary of the reform’s highlights. 5:00 New rules for enforcing cartel damage claims It is the reform’s
Will Germany establish a “Digital Agency” to monitor compliance with competition law rules in digital markets? Will a German “Digital Antitrust Enforcer” become a role model for a European protectionist approach against American and Asian platform providers?
The German Federal Ministry for Economic Affairs and Energy seems to see a pressing need for regulation in digital markets. The White Paper “Digital Platforms”, published on the 20 March 2017, provides an outlook on possible forms of digital regulatory policy in Germany and potentially also in Europe. Of particular interest from a competition law perspective is the proposal to establish a new “Digital Agency”.
Many digital platforms attract consumers and businesses on a global basis. It is a challenge for national regulators to enforce competition law and other regulatory provisions against such international players. Germany´s Federal Minister of Justice, Heiko Maas, argued in a similar way in an interview with the German newspaper Handelsblatt on 5 October 2016.
After the implementation of the new EU Directive on antitrust damages actions into German law it will be much easier for cartel victims to pursue their claims. The position of indirect customers of cartelized products or services will be strengthened, the limitation period will be extended and most of all the German legal system will see the implementation of a German version of disclosure.
Back in October 2015, as part of its Single Market Strategy, the European Commission declared that it would develop an agenda to encourage consumers, businesses and public authorities to engage confidently in the sharing economy (also known as the “collaborative economy”), where private individuals provide on-demand services to other people, without intermediaries. This peer-to-peer model
Should privacy issues be part of merger review and competition investigations? That was the question addressed in a recent workshop convened by the European Data Protection Supervisor (the “EDPS”). A report issued after the workshop concludes that the world of “Big Data” likely will require consideration of privacy in competition matters. What was the workshop?