Biennial Report XXIII of the Monopolies Commission under § 44(1) ARC, 29 July 2020

The Corona crisis (Covid-19 crisis) will change the German economy profoundly. In order to avoid permanent damage to market structures and to mitigate the consequences of the crisis for the labour markets, the German Federal Government, the federal states and the municipalities are have been intervening massively in the economy through financial aid, guarantees and equity investments in companies. Moreover, the companies have shown a need for partly strengthened cooperation and coordination during the lockdown and reactivation phase. All of this will have an impact on competition. It is to be expected that there will be a rise in concentrations overall and in individual sectors of the economy, resulting in a decline in competition. The market power of the large digital companies will increase and direct State influence on the companies will grow. In Germany and the European Union, this will create pressure for action in order to secure competitive structures.

With regard to cooperation between companies that aims to avoid shortages of supply, the European Competition Network has promptly provided guidance. Legal certainty was increased by rapid decisions of the competition authorities. However, it was also important in this context to ascertain that cooperation must not go beyond what is necessary to ensure supply. Agreements on prices, conditions and the allocation of customers or territories must remain prohibited even in times of crisis. Consumers must also be protected against abusively excessive prices of medical products or other goods that are essential but scarce during the crisis.

It can be assumed that the push on digitalisation caused by the Corona crisis will lead to a further increase in the market power of the large digital companies. Against this background, the Monopolies Commission recommends that the German government should use its presidency of the Council of the European Union to introduce a platform regulation for dominant online platforms.

During the Corona crisis, merger control rules should not be applied more generously than they have been so far. The applicable law enables the competition authorities to react appropriately even in times of crisis, for example with the concept of the failing company defence. The extension of the review periods for merger control, applicable from March to May 2020, should be prolonged until the end of 2020, as a renewed increase in the number of merger control notifications is expected in case of continued application of the Corona protective measures.

During the Corona crisis, too, the control of State measures to support companies is indispensable in view of their potentially adverse effects on competition in the European single market. Measures that selectively support companies are particularly problematic. The Monopolies Commission agrees with the European Commission that the conditions and requirements in the case of State equity participations must be stricter than in the case of pure financial aid. In particular, a State participation should be accompanied by pro-competitive measures, insofar as it concerns companies with a dominant position in one or more markets. In addition, the Monopolies Commission recommends that a committee of independent experts be set up to advise the German Federal Government on the development of exit strategies from crisis-related State participations.