Biennial Report XXII of the Monopolies Commission under § 44(1) ARC, 3 July 2018

In Chapter III (formerly Chapter IV) of the Biennial Report, the Monopolies Commission develops recommendations on actions for legislators and competition authorities on the basis of the German and EU competition decision-making practice for the reporting years 2016/2017.

With the increasing importance of Internet-based business models, the question of the correct definition of multi-sided platform markets has become more relevant in decision-making practice as well. The Monopolies Commission welcomes the clarifications provided in the context of the 9th amendment of the German Act against Restraints of Competition (ARC), but currently sees no need for further provisions in this area.

On the basis of current case-law and decision-making, the Monopolies Commission investigates new developments in competition theories of harm. In this context, topics such as the relationship between data protection and abuse control, competition in innovation, network effects and “sneaky takeovers” are being dealt with. Among other things, a cautious application of the prohibition of abuse of a dominant position with regard to the handling of data is recommended, as well as a revision of the European Commission’s horizontal merger guidelines on the basis of the findings on competition in innovation.

Out-of-court settlements which result in the withdrawal of appeals against competition cases may restrict competition. Such settlements should at least be closely examined by the competition authorities if they concern serious restrictions of competition, if high compensation is paid for the withdrawal of an appeal or if the parties to the settlement expect high chances of success for the appeal.

In its Coty judgment, the European Court of Justice clarified various issues concerning contracts on selective distribution agreements. In particular, the judgment contains explanations on the relevance under competition law of maintaining a certain product or brand image as well as on the assessment of third-party platform prohibitions. The Monopolies Commission welcomes the clarification of these issues by the European Court of Justice. Among other things, it recommends recognising the image of brand products beyond the luxury segment under EU competition law.

The central marketing of the broadcasting rights for the UEFA Champions League for the seasons as of 2018/19 seems critical from a competitive point of view – also in comparison with the earlier marketing of football competitions. The Monopolies Commission recommends that the Bundeskartellamt (Federal Cartel Office) should supervise the marketing of the Champions League in the future. In particular, the Bundeskartellamt should work towards ensuring that the marketing models have sufficient competitive elements and securing a fair share for consumers in the resulting benefit.

In recent case-law, the defence raised by cartelists in civil law proceedings that damages have been passed on was rejected in some instances. This rejection was based on arguments which were not very convincing in the individual cases. However, the admission of the so-called “passing-on” defence in these cases could lead to an unfair relief for cartelists. In the opinion of the Monopolies Commission, this risk can be countered by strengthening private enforcement of competition law for consumers through the introduction of a general class action.

With regard to the amendments to the ministerial authorisation procedure on the occasion of the 9th amendment to the ARC, the introduction of a comparatively short deadline for the mandatory opinion of the Monopolies Commission is problematic. In addition, the restriction of the legal remedies for third parties against ministerial authorisations sends the wrong signal. The Monopolies Commission therefore recommends that the relevant provisions be removed in the course of the next amendment to the ARC.

The necessity of a general public enforcement of consumer protection in Germany is controversial. If a consumer protection authority is created at federal level, there are reasons for and against transferring enforcement powers in consumer protection to the Bundeskartellamt. Should the Bundeskartellamt’s tasks be extended, then the authority should provide for an organisational separation between the application of consumer protection and competition law.

Download this chapter of the Biennial Report XXII (in German language only)