Bundeskartellamt - Review of 2014

Andreas Mundt, President of the Bundeskartellamt: "There is currently great public interest in the application of competition law. This is partly due to the fact that we concluded several major cartel proceedings this year and imposed substantial fines. Another area of focus is the internet economy which raises new competition law issues."

Cartel prosecution

In 2014 the Bundeskartellamt imposed fines in nine cases totalling around 1,010,000,000 euros, a level that had never been achieved before. The fines were imposed on a total of 67 companies and 80 individuals. In comparison to this, the fines imposed by the Bundeskartellamt in 2013 amounted to around 240 million euros. The highest total amount of fines achieved so far was just over 700 million euros in 2003.

Andreas Mundt: "2014 has been an exceptional year in terms of fines imposed. With our proceedings against sugar manufacturers, beer breweries and sausage manufacturers we concluded three major and lengthy investigations. Proceedings were also concluded in the wallpaper, mining and concrete paving stone sectors as well as in a case involving heat exchangers used in power plants. We believe that our fines will achieve a sufficiently strong deterrent effect. The companies' awareness of competiton law issues has risen strongly. In our view, tightening competition law, for example by introducing prison sentences for managers as has been called for occasionally, would not be a particularly useful step, also because this would make the proceedings much more complex."
In 2014 the Bundeskartellamt again received new indications of cartel cases and followed these up in 15 dawn raids at a total of 84 companies with the help of the criminal investigation departments and public prosecutors.

Merger control

Around 1,200 merger projects were notified to the Bundeskartellamt in 2014. 22 cases were closely examined in second phase proceedings. One project was prohibited and a further seven projects were withdrawn by the companies themselves. One case was cleared subject to conditions and obligations, eight cases without conditions. Five cases are still under investigation.

The prohibition concerned the planned merger between the Esslingen district clinics (Kreiskliniken Esslingen) and Esslingen clinical centre (Klinikum Esslingen). With the help of elaborate data analysis the Bundeskartellamt is examining the alternatives of the hospital patients, as competition in this sector in particular is an important factor in ensuring quality health care. Many other mergers in the hospital sector, such as those between the clinics in Friedrichshafen and Tettnang or between the clinics in Worms, could be cleared.

Apart from hospitals there were cases in the media sector which had to be closely examined. The takeover of several TV programme magazines from Axel Springer SE by Funke Mediengruppe could be cleared subject to conditions and obligations. In a further case the regional daily Westfälische Nachrichten could take over Münstersche Zeitung. In the case of the planned merger between the daily newspapers WAZ/Westfälische Rundschau and Ruhr-Nachrichten in the Dortmund area, the notification was withdrawn after the Bundeskartellamt had announced that it would prohibit the acquisition.

Andreas Mundt: "We analyse each individual case very thoroughly. The merger between Westfälische Nachrichten and Münstersche Zeitung fulfilled the requirements for a so-called failing company defence. According to this principle a merger has to be cleared as an exceptional case in spite of the creation of a monopoly. In the case of WAZ/Westfälische Rundschau and Ruhr-Nachrichten, however, we did not consider the requirements to be fulfilled."

Sector inquiry

In its sector inquiry into the food retail sector the Bundeskartellamt conducted an in-depth analysis of the competitive conditions between the food retail companies and their suppliers. The survey shows that there is a highly concentrated market structure in the food retail sector. Edeka, Rewe, Aldi and the Schwarz Group with its Lidl and Kaufland outlets make up approx. 85% of the market. By means of a complex econometric analysis of the results of negotiations between retailers and manufacturers the Bundeskartellamt was able to show how the large retail companies make use of their structural advantages.

Andreas Mundt: "Sector inquiries have become an important tool used by the Bundeskartellamt. This survey has also provided us with a large number of empirically reliable results. It serves as an important basis for our case work in merger control and the control of abusive practices, for example in the current Edeka/Tengelmann proceedings.”

Internet economy

E-commerce and internet companies are playing an ever increasing role in the Bundeskartellamt's case work. The authority was able to close a proceeding against adidas this year after the company had amended its conditions for online sales to bring them in line with competition law. A further case against ASICS is still pending.

Andreas Mundt: "With our test cases against adidas and ASICS on account of restrictions of online sales we aim to clarify what requirements a manufacturer can and cannot impose on its retailers. Customers are buying more and more products on the internet instead of in brick-and-mortar stores. Consequently many small and medium-sized retailers also want to offer their products on internet platforms. It should generally be possible for customers and retailers to make use of these new sales channels."

The market power of internet companies like Google is increasingly becoming a theme of political debate. As there were already complaints against Google several years ago in a large number of European countries, the national competition authorities have referred the matter to the EU Commission.
Andreas Mundt: "The EU Commission is quite rightly examining this case very carefully because it raises many new issues. The Bundeskartellamt will also have to address the question of whether the collection of data creates a new kind of market power and to what extent this can be dealt with by the classical tool of competition law."