ECN Brief

Germany | Bundeskartellamt - Review of 2018

Germany | Bundeskartellamt - Review of 2018

Bonn, 20 December 2018: In 2018 the Bundeskartellamt imposed fines in cartel proceedings totalling approx. 376 million euros, examined around 1,300 merger notifications, decided on more than 110 applications for review in public procurement cases and conducted numerous abuse of dominance proceedings. With its new competencies in the area of consumer protection the authority uncovered shortcomings e.g. in the area of online comparison websites.

Andreas Mundt, President of the Bundeskartellamt: “In 2018 the Bundeskartellamt celebrated its 60th anniversary. The ideas which prompted Ludwig Erhard to introduce the German Competition Act (Act against Restraints of Competition, GWB) and to establish the Bundeskartellamt in 1958, are more relevant today than ever. According to Erhard, it is not the state nor cartels but the consumer alone who should decide who shall succeed in the market. Erhard described the GWB as the "basic law of the social market economy".

Cartel prosecution

In 2018 the Bundeskartellamt imposed fines of around 376 million euros on 22 companies or trade associations and 20 individuals. The sectors concerned included special steel manufacturers, potato producers, newspaper publishers and producers of rolled asphalt. The authority received 21 so-called applications for leniency and numerous other indications of possible infringements of competition law. It carried out seven dawn raids at a total of 51 companies.

Andreas Mundt: “The amount of fines and number of cartel proceedings change from one year to the next. However, this year’s increase is mainly due to the fact that in the middle of 2017 the so-called “sausage gap” was finally closed. Before this, companies could escape liability for their competition law violations with clever restructuring measures. After the law was amended we took up a number of new important cases, some of which we have already concluded.”

Merger control

The Bundeskartellamt examined approx. 1,300 notified mergers. Of these, 13 were closely examined in the so-called second phase. In three second phase proceedings the parties withdrew their projects. One case was cleared subject to conditions, three without conditions, and in six cases the proceedings are still ongoing.

Andreas Mundt: “We carry out our proceedings as efficiently and unbureaucratically as possible, also in the interest of the companies concerned. Companies often approach us first, in particular in cases which might be critical. Some of these projects will then not even be notified. After taking preliminary soundings in the extensive Karstadt/Kaufhof case we were able to send out formal requests for information to around 100 companies on the actual day of notification. This ultimately meant that the merger could be examined very quickly and at the same time very thoroughly.”

Digital economy

The digital economy still remains a key area of the Bundeskartellamt's work. In 2018 the authority initiated a proceeding against Amazon to examine its terms of business and practices towards sellers, launched a sector inquiry into online advertising and, together with the French competition authority, started a joint project on algorithms and their effects on competition. The Bundeskartellamt is also about to conclude a proceeding against Facebook to clarify whether the company is acting abusively in the collection and use of its users’ data.

Andreas Mundt: “The internet offers great opportunities for more competition to the benefit of the consumer. However, we are also witnessing a whole range of new problems. These can affect both customers who often have to unconditionally agree to the terms of use imposed by the internet giants without having any alternatives, as well as sellers and manufacturers which depend on the reach of powerful platforms. We need to make sure that the power of individual economic players is limited or at least not abused to the detriment of their customers and other companies.”

Consumer protection

In the middle of 2017 the Bundeskartellamt gained new competences in the area of consumer protection. In December 2018 it presented the first results of its sector inquiry into comparison websites. Many of the websites provide reliable information. However, the inquiry also uncovered a number of possible law violations. Consumers are often not informed about the details of the ranking criteria for their search results and the comparison websites’ recommendations.

Andreas Mundt: “In the digital economy in particular, consumer rights violations can occur which taken together are very harmful and affect a large number of consumers. The usual protection of an individual's rights through the civil courts under consumer protection law reaches its limits here. I think it would make sense if our authority were not only able to uncover but also to remedy deficiencies in this area.”

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