Sector inquiries and remedies

What is a sector inquiry?

The Bundeskartellamt carries out sector inquiries to examine and analyse structures and competition conditions in specific economic sectors. Sector inquiries can be initiated if there are indications suggesting that competition in a specific sector may be limited or distorted.

Sector inquiries are not directed against individual companies and do not serve to investigate specific suspected infringements of competition law. However, the insights gained can serve as a basis for recommending legislative measures that would promote competition, for example. If a sector inquiry finds indications that certain companies may have been involved in illegal agreements or prohibited abuses of market power, the Bundeskartellamt can initiate corresponding proceedings as a consequence.

When conducting a sector inquiry, the Bundeskartellamt interviews companies and other parties such as associations and often collects considerable amounts of data. The Bundeskartellamt’s powers of investigation in sector inquiries are similar to its powers in other proceedings. Companies must provide the information requested and the Bundeskartellamt can carry out dawn raids if needed.

A sector inquiry should be concluded after a maximum of 18 months. The Bundeskartellamt will then publish the results in a final report.

Click here for an overview of all sector inquiries conducted by the Bundeskartellamt

Remedies following a sector inquiry

Ordering companies to notify merger projects

Mergers, takeovers and acquisitions of shares below a certain threshold, which is in particular based on the turnover achieved by the companies involved, do not normally have to be notified to the Bundeskartellamt under merger control. The requirements for notification under merger control include that one of the companies involved must have achieved a domestic turnover of more than 50 million euros in the previous year and another one a turnover of more than 17.5 million euros (click here for details on the obligation to notify merger projects).

However, following a sector inquiry, the Bundeskartellamt can deviate from this general obligation to notify a merger and order companies to also notify takeovers of smaller companies with a domestic turnover of only 1 million euros for an initial period of three years. This rule may be particularly important in regional markets characterised by medium-sized companies, when there is the risk of companies developing or expanding their market power by acquiring other small and medium-sized companies. The obligation to notify mergers may be imposed subject to the following conditions:

• A sector inquiry has been carried out and concluded.
• There are reasons to suspect significant impediments to competition as a result of future concentrations in the economic sector examined.
• The acquiring company achieved a turnover of at least 50 million euros in Germany.
• The target company achieved a turnover of at least one million euros in Germany.

Imposing measures to eliminate or reduce impediments to competition

The German Bundestag adopted the 11th amendment to the German Competition Act in 2023, paving the way for a new instrument for intervention to protect competition. Once it has concluded a sector inquiry and determined that competition was malfunctioning, the Bundeskartellamt can order targeted measures to remedy this malfunctioning of competition.

Examples of such measures include the granting of access to data, interfaces or networks, requirements for the business relations between companies, the obligation for companies to establish transparent, non-discriminatory and open standards, the prohibition to disclose certain information and the organisational separation of company parts. In extreme cases and subject to even more, strict rules, an unbundling of the companies in terms of ownership can also be considered as a last resort.

A unique characteristic of this instrument is that, irrespective of the type of remedy, companies do not need to have committed a specific infringement of competition law, such as concluding an anti-competitive agreement or abusing their market power, to be subject to obligations. The Bundeskartellamt is intended to have the possibility to eliminate or reduce the malfunctioning of competition regardless of specific infringements.

Remedies can only be imposed under strict conditions:

1. A sector inquiry has been carried out and concluded.
2. A malfunctioning of competition has been found to exist in relation to certain companies.

• The malfunctioning must be significant and permanent (i.e. it must have existed for at least three years and must be likely to continue for at least another two years).
• The Bundeskartellamt’s other powers appear unlikely to be sufficient to eliminate the malfunctioning of competition effectively and permanently.
• The companies in question must have contributed significantly to the malfunctioning of competition.

3. Specific remedies have to be imposed:

• The measures must be proportionate, that is they must be suitable and necessary to eliminate or reduce the malfunctioning, and they must be appropriate.
• Unbundling can only be ordered subject to additional legal requirements, which allow unbundling only for dominant companies (click here for more details) and large digital companies (norm addressees of Section 19a(1) GWB).

Duration and legal protection:

• Each of these three steps requires extensive investigations and the drafting of a final report (sector inquiry) or a formal decision, while respecting the procedural rights of all companies concerned; as a result, the entire proceeding can be expected to take several years.
• The companies concerned can appeal both the decision determining a malfunctioning of competition and the decision imposing remedies. In both cases, the appeals would be decided by the Düsseldorf Higher Regional Court in the first instance and the Federal Court of Justice in the second instance.
• The appeal against the decision imposing remedies has suspensive effect.