Bundeskartellamt - 2019/2020 Annual Report

Today, the President of the Bundeskartellamt, Andreas Mundt, presented the authority’s brochure “2019 Annual Report”. The publication is aimed at readers interested in economic policy and provides an overview of the Bundeskartellamt’s activities in 2019 and the first few months of the current year.

Focus on the digital economy

The digital economy is still in the focus of the Bundeskartellamt’s work. Last year the authority was successful in obtaining adjustments in Amazon’s business terms for sellers active worldwide on Amazon Marketplace to the benefit of the sellers. As to the proceeding against Facebook, the Federal Court of Justice confirmed the Bundeskartellamt’s decision against Facebook’s unrestricted collection and use of data without the users’ consent in June 2020 in provisional legal protection proceedings.

Andreas Mundt: “Our authority continues to conduct a number of proceedings with the aim to control the economic power of the internet giants. Newcomers must still be able to gain access to the markets in the future. The large platforms must treat competitors, customers and consumers fairly. I hope that additional tools, as described in the Federal Economic Affairs Ministry’s draft for the amendment to the German Competition Act, will be made available to us as soon as possible to enable us to take even faster and more effective action in future."

The Bundeskartellamt concluded a proceeding against Facebook in the spring of 2019 and prohibited the company from continuing to collect and combine user data from different sources. After Facebook successfully appealed in a preliminary proceeding to the Düsseldorf Higher Regional Court, the Federal Court of Justice confirmed the Bundeskartellamt's decision on 23 June 2020. The Higher Regional Court is expected to decide on the merits of the case later this year.

The Bundeskartellamt is still examining the business relationships between Amazon Marketplace and sellers on this platform. The authority’s current focus is on the question of whether and how Amazon has an influence on the pricing policy of its sellers.

In January 2020 the draft bill of the 10th amendment to the German Competition Act was published by the Federal Ministry for Economic Affairs and Energy. The draft includes important elements for the adjustment and modernisation of competition law in respect of how to deal with large digital platforms.

Consumer protection

Digital issues are also in the focus of the sector inquiries which the Bundeskartellamt has conducted so far based on the consumer protection competencies it has held since 2017.

Andreas Mundt: “We examined key sectors in coordination with consumer and data protection institutions and developed specific proposals on how we can obtain substantial improvements for consumers in key areas such as comparison websites, user reviews or smart TVs.”

Merger control

In 2019 the Bundeskartellamt examined around 1,400 notified merger projects. Of these, 14 were closely examined in 2019/20 in second phase proceedings. In four cases (Miba/Zollern, Heidelberger Druckmaschinen/MBO, Remondis/DSD, Loomis/Ziemann) the proceedings ended in prohibition. In six second phase proceedings the parties withdrew their projects, in some cases due to concerns expressed by the Bundeskartellamt. The merger between the two cinema chains CinemaxX and Cinestar was cleared subject to the condition that the parties sell six cinemas at different locations to other operators. After in-depth examination three transactions were ultimately cleared without conditions or obligations.

Andreas Mundt: “One major proceeding involved the very detailed examination of the takeover of Vossloh Locomotives, a manufacturer of shunters, by the Chinese company CRRC. Although we ultimately cleared the merger in April 2019 as there were strong competitors in this market, we have now developed a blueprint for future cases in which state-owned companies are involved. This case shows how merger control proceedings under competition law can take into account the strategic position held by a Chinese state-owned company as well as the cost advantages, participations in other companies, possibilities for the provision of state aid and the risk of dumping prices this involves.”

One of the mergers the Bundeskartellamt is currently examining in second phase proceedings is the planned acquisition by the XXXLutz furniture chain of a participation in its competitor Roller GmbH. The sale of the Real food retail outlets to several different acquirers is also being closely examined. So far Kaufland and Edeka have notified the Bundeskartellamt of specific plans in this respect.

Between January and the end of June 2020, 505 merger projects were notified, 20 percent less than in the same period of the previous year. In May the number of new notifications was more than 50 percent lower than in May 2019.

Andreas Mundt: “We cannot afford to relax merger control during the COVID-19 crisis. Structural deterioration caused by mergers will still have effects after the crisis. Since the lockdown in March/April we have seen significantly fewer merger notifications. However, also due to the crisis, I expect this figure to rise again in the next few months. We already have initial indications suggesting that we will see a large number of takeovers of companies facing economic difficulties."

Cartel prosecution

In 2019, the Bundeskartellamt imposed fines of around 848 million euros on a total of 23 companies or trade associations and 12 natural persons. The sectors concerned included bicycle wholesale, building service providers, magazines, industrial batteries, the purchase of steel for the automotive industry and steel production. In 2020, fines amounting to around 158 million euros were imposed on a total of eight companies and eight natural persons by the month of August. The sectors concerned were the wholesale of plant protection products and the vehicle registration plate industry. Furthermore, several investigation proceedings are still ongoing in 2020 and the authority has so far received seven new leniency applications.

Andreas Mundt: “The prosecution of cartels remains one of the Bundeskartellamt’s key tasks. Even in times of economic difficulties there is no justification for illegal agreements. We always receive indications of possible cartels which we remain determined to prosecute. It is an entirely different situation if companies would like to cooperate with one another because of special circumstances, such as the crisis caused by the COVID-19 pandemic. In such cases we are always open to discussion. In the past few months we have been able to provide support and advice to many companies, e.g. enabling joint reaction to bottlenecks in supply.”

The 2019 Annual Report is available for download from the Bundeskartellamt's website.