A Q&A with Andreas Mundt

Germany’s Federal Cartel Office will likely use its new sector inquiry powers, which allow the agency to impose remedies without having to prove an antitrust infringement, in the fuel and waste management sectors, the president of the agency has said. In a wide-ranging interview with GCR, Andreas Mundt spoke about the agency’s focus on the cloud sector, his support for the US Department of Justice’s Google break-up remedy and why his agency has yet to initiate a labour market antitrust probe.

What do you make of EU jurisdictions adopting call-in powers to review below-threshold deals as a workaround to the European Court of Justice’s Illumina/Grail judgment?

I think call in options can be suitable in certain jurisdictions, but you have to make use of this power in a very careful way. The International Competition Network has 140 members, and global merger filings could become unmanageable if all of these jurisdictions had call-in powers. This is why institutions such as the ICN and OECD aim to ensure legal certainty and predictability in merger control policy. From my point of view, transaction-value thresholds are a good way forward if carefully designed. We may still miss some deals, but we also catch other very important transactions while ensuring legal certainty. Some upcoming court decisions may shed more light on the operability of our current rules. As a result, for the time being we are not really looking for call-in powers, but instead might be seeking slight improvements to the transaction value threshold. In light of all this, let’s wait and see.

Why did the agency not join other enforcers in referring below-threshold deals under the EU’s revised Article 22 policy before Illumina/Grail?

Although we recognized the enforcement gap in innovation cases at EU level, the legal reasoning underlying the revised Article 22 approach never convinced us. Having merger control instruments in Germany, we did not see Article 22 as a tool for referring cases to the Commission that do not meet the thresholds put in place by our national legislator. The ECJ has confirmed this approach in its Illumina/Grail ruling.

On the upcoming amendment to the German Competition Act this year, what will the FCO be pushing for?

There was legislation on the way but that has stalled following the break-down of the German government. The proposal was mainly about raising merger thresholds, but we have just had two very substantial amendments, with the introduction of Section 19A in 2021 to police digital platforms followed by our new competition tool in 2023. So, to be frank, I do not see the need for fundamental changes, which may not be a bad thing, given big changes always bring about a certain amount of uncertainty. We are just focusing on doing our work for now.

Turning to the Microsoft Section 19A probe, will you try to tackle the company’s cloud services conduct, given that it is not covered under the DMA?

We have taken a thorough look at cloud services as part of the designation process. From a personal point of view, cloud matters – it is the infrastructure for AI as it is difficult to imagine successful large language models that do not rely on hyperscalers. At the same time the companies owning the largest cloud providers also possess an enormous amount of data. It is no secret that competition agencies are looking into this, including ourselves.

Are you happy with the speed at which Section 19A investigations are progressing?

That is also a difficult question because my general answer is that you are never happy with the pace of investigations. But with regard to the designation process, we completed our Google probe within seven months, and we have not gone beyond one year and nine months with the others. This is very good because we have to make a qualitative assessment, it’s not only about monthly or daily active users. Also, some of our Section 19A investigations started as abuse of dominance probes, so we had to make some changes. The law helps us as it provides reliable theories of harm and we do not need to define markets again in every case.

I must say, we have excellent cases in the pipeline, and I’m confident it will not take long to make them public.

Is the gap between designation decisions and substantive outcomes too long?

We always want it to be quicker, but on the other hand, I do not think we are too slow. Our teams take the time they need so that in the end, we can defend our decisions in court. The tech world is complex and it is not easy to look into. Even with the DMA, which is meant to be self-enforcing regulation and not competition law, we still have several noncompliance proceedings, which also take their time. Even in the US, some cases pending before the US courts were initiated during the first Trump administration. So, we live in a legal system that has its price, but that price is worth it.

You have previously stressed that new sector inquiry powers, which allow the agency to impose structural and behavioural remedies following a market study, will be used in very limited circumstances. Do you know what type of markets you would like to use these in?

We recently completed an inquiry in the waste management sector, and we also have an ongoing sector inquiry into the fuel market. I think these markets stand for what we are looking to apply the tool – complex sectors with few players where there is the possibility of tacit collusion or maybe a strong company in the market that flies below the radar of merger control.

We also know that these new provisions are extremely resource-intensive, as companies have two opportunities to challenge our findings before a decision becomes final.

The agency has previously touted the idea of breaking up Google’s online advertising business – is that something you still believe is needed today?

Yes, I said some Google divestments might be helpful, but I also said the Bundeskartellamt will not be the agency that is breaking the company up. But I still believe some structural remedies for Google could be helpful as it is extremely powerful and you cannot navigate the internet without using its tools. We know how difficult it is to tackle Google, which is why I personally very much welcome the idea from the US Department of Justice requiring it to divest Chrome. Chrome as a browser is like the spider in the web – it is needed for many processes and Google can steer users to its other products through it.

From a European perspective, I think the divestment of a company as strong as Google is very hard to achieve and it needs to be backed by a huge agency like the European Commission with the support of member states.

On dawn raids, the FCO assisted the EU in raiding Delivery Hero over labour market concerns – is this an area the agency would like to look at itself? Do you have any ongoing probes?

It is a bit of a miracle to me as many jurisdictions are currently looking into such cases, but until today we do not have a single case in Germany. I assume this is because we have quite strong unions and workers are very well organised. Generally the area of labor in Germany is highly regulated with much jurisprudence. I’m sure they could fall under competition law and we would like to look at these cases because these agreements limit the freedom of employees.

How has the uptake been on companies seeking informal guidance from the FCO on sustainability initiatives? 

I think we are one of the main agencies that receives these requests and we have many cases, which we publish on our website. However, we still do not have enough cases to issue guidelines yet so it is still a case-by-case analysis. We have a request currently that we will publish in due course. However, we do not see too many issues for companies in this area.

 Why is there a lack of EU engagement in this area?

I do not think that many of these arrangements have a transnational impact and I think the SMEs involved feel more comfortable coming forward to national competition authorities. Another factor is maybe we have built up a reputation for dealing with these requests and we are known to be flexible. Our decisions are usually very quick and unbureaucratic.

Are you still looking for ways to reduce the number of merger filings the agency receives? If so, how could you do that?

We always get very worried when we receive more than 1000 filings in a year, but we can deal with 800 to 900 notifications quite well. We have very qualified and experienced people in our divisions who can deal with filings quickly and are aware of the stakes. You have to remember that we have a very efficient procedure for merger control in Germany without the need for a prenotification and with very limited requirements for the application. This is only possible because our decision divisions know the markets well, and their market knowledge is, to some extent, based on the large number of cases we see. So, for the time being, we are making no political attempts to reduce the number of mergers. We will take a close look at the numbers for 2024 and decide if we need to do something, but I don’t think this will be the case.

Earlier this year, the agency blocked a hospital merger, but the parties have said they will seek a ministerial override of the decision. What does the agency make of that power and is it something the FCO considers in its prohibition decisions?

Generally speaking, we don’t consider such developments in our analysis, not least because it is impossible to predict if it will happen. Even if parties ask for a ministerial override, it is not clear they will get it. Of course, in the hospital case involving two large university hospitals in Germany with far more than 1000 beds each, we were aware of the intention to ask for it.

But I have never seen a good override from the ministry. The tool keeps us free from political influence but I doubt if it has ever done some good in markets.

We will not be involved in the override proceedings, but the Monopolies Commission will.

In the meantime, the German legislator has gone even further in the hospital sector. Parties can now seek to obtain permission from the state government to merge, with no requirement for notification to the FCO under merger control. As a result, last year’s prohibition of the hospital merger will have no effect. 

Can you sense a paradigm shift in EU competition policy when it comes to facilitating industrial strategy?

The headline of the new commission is competitiveness. I can only welcome this – antitrust rules with a well-aligned industrial policy will achieve this. Personally, I am not objecting to industrial policy. For example, I would support an initiative to set up a European cloud system that could compete with the US hyperscalers. I think that would be an excellent piece of industrial policy, but to think we need bigger companies, so we need less merger control and less competition is completely short-sighted.

Additionally, the Draghi report does not advocate for this approach. Policymakers are trying to read it into the report but there’s nothing about weakening merger control.

By Janith Aranze

Quelle: GCR, 3 January 2025