Bundeskartellamt – Review of 2020

In 2020, the Bundeskartellamt imposed fines in cartel proceedings totalling approx. 358 million euros, examined around 1,200 corporate mergers, received more than 120 applications for review in public procurement cases and conducted important abuse of dominance proceedings. The authority also handled numerous short-term requests for guidance on cooperation from companies facing the coronavirus crisis. Within the scope of its competencies in the area of consumer protection the Bundeskartellamt uncovered several consumer-unfriendly practices in the areas of smart TVs and online user reviews.

Andreas Mundt, President of the Bundeskartellamt: “This year, we too had to respond to extraordinary circumstances in order to fulfil the task of protecting competition. Due to the crisis, businesses in many sectors of the economy felt the need to temporarily cooperate more closely than under normal circumstances. We provided quick and unbureaucratic guidance to companies and associations and helped to make cooperations possible, for example in order to overcome shortages in production, storage and logistics.”

Cartel prosecution

In 2020, the Bundeskartellamt imposed fines amounting to around 358 million euros on a total of 19 companies and 24 individuals. The sectors concerned included plant protection products, vehicle registration plates and aluminium forging companies. 13 companies informed the Bundeskartellamt about infringements in their sector by making use of the authority's leniency programme; further tip-offs were also received from other sources.

Andreas Mundt: “Times of economic difficulties cannot justify anti-competitive agreements. We concluded some important proceedings this year and also launched new investigations. Cartel prosecution still remains high on our agenda. As the numbers of leniency applications decrease due to a rise in private damages proceedings, we are exploring innovative investigation methods such as market screening. We will also expand the range of possibilities offered by our digital anonymous whistle-blowing system."

Merger control

The Bundeskartellamt examined around 1,200 notified mergers. Seven of these mergers were closely examined in second phase proceedings. In two cases, (XXXLutz / Tessner including Roller; Kaufland / Real) clearance was only granted subject to conditions. Three cases were cleared without conditions following in-depth examinations (Allianz / ControlExpert; Malteser Krankenhaus / Diakonissen Flensburg; Belron, Carglass / A.T.U.). In two cases the second phase proceedings are still ongoing.

The Bundeskartellamt has so far had to deal with the divestiture of the stores of the food retailer Real in three separate proceedings. It has been decided that Globus, a medium-sized retailer, can acquire up to 24 stores whereas Kaufland's acquisition of up to 92 stores is subject to conditions. Edeka's acquisition plans are still being examined.

Andreas Mundt: “The decline in merger notifications caused by the Covid-19 pandemic was largely reversed over the course of the year. We examined a total of around 1,200 planned mergers, which more or less corresponds to the figures of the previous years. Merger control means controlling market structures with a view to the future. Although we are expecting to see difficult mergers next year arising from the coronavirus crisis, we cannot apply any other criteria than those used in the past.”

Digital economy

The digital economy was once again a key area of the authority’s work in 2020.

Andreas Mundt: “The digital economy remains the Bundeskartellamt's top priority. We are currently examining measures by Amazon which possibly restrict the freedom of sellers using its marketplace to set their prices, as well as possible disadvantages suffered by these sellers caused by Amazon’s cooperation with brand manufacturers. In 2021 we hope to be able to conclude the implementation of our 2019 decision of principle regarding Facebook’s practice of combining data from different sources. We initiated a second abuse control proceeding against Facebook concerning the linkage of virtual reality products with the group’s social network. We are working intensively on our in-depth sector inquiry into online advertising. We are also preparing to deal with further cases as we are getting ready to implement the amendment to the German Competition Act (GWB) and the new tools available to us.”

In its abuse of dominance proceeding already conducted in 2019, the Bundeskartellamt had imposed far-reaching restrictions on Facebook regarding the processing of user data. This case is still subject to clarification by the courts.
Apart from proceedings and informal consultations e.g. on cooperation or platform projects, the authority’s general policy work on issues regarding the digital economy is also of crucial importance. The Bundeskartellamt contributes its expertise in national and international discussions of urgent competition policy issues raised by the digital economy. This year, the authority's policy work focused on the 10th amendment to the German Competition Act (GWB) which is in particular intended to further strengthen abuse control with regard to digital giants.

Andreas Mundt: “We have already successfully conducted numerous proceedings regarding the digital economy under the currently applicable statutory provisions. However, it is important to amend competition law to improve the way in which we deal with the mechanisms of the digital economy that distort competition and to be able to regulate these mechanisms under competition law. Hopefully, we will soon see very important amendments to German competition law which will enable us to effectively prevent the abuse of market power by large digital platforms. This legislative process is already well advanced and we are getting ready to apply this new instrument as of next year. I also welcome the initiatives taken by the European Commission regarding the Digital Markets Act (DMA). In keeping with the cases handled by the European Commission, the case practice of the national competition authorities will further specify the rules applicable to the digital economy.”

The 10th amendment to the German Competition Act is intended to enable the Bundeskartellamt to prohibit companies of paramount significance for competition in the digital economy from engaging in certain types of behaviour.
Consumer protection

Within the scope of its competencies in the area of consumer protection the Bundeskartellamt published its final report on the authority’s sector inquiry into smart TVs in July 2020 and the results of its investigation into online user reviews in October 2020. In November the authority launched a new sector inquiry into messenger services under consumer protection law. The sector inquiry into comparison websites was already concluded last year.

Andreas Mundt: “The results of our sector inquiries in the area of consumer protection warn consumers about the pitfalls of using digital services and thus make using the internet a little safer. This year, we provided information on the shortcomings of several market participants in the area of smart TVs and on fake reviews on online platforms. In both cases we found that consumer rights were severely affected. At present, we are examining the interoperability of messenger services and the protection of the private data of consumers using these services. Our sector inquiries always pursue two different objectives: We develop detailed proposals for improvement and provide information for consumers on how best to use the products and services offered online. Unlike in the area of competition law, we unfortunately still do not have the statutory power in the area of consumer protection to effectively terminate illegal practices in this area.”

Public Procurement Tribunals and Competition Register

In 2020, more than 120 applications were filed with the Federal Public Procurement Tribunals for the initiation of review proceedings. Most of the cases concerned the award of contracts for public supplies and services, followed by construction contracts. This year, the focus was on contracts in the areas of IT hardware and software, employment services, and defence and security.

The Bundeskartellamt is pushing ahead with the launch of the Competition Register for Public Procurement which is intended to help fight economic crime and competition law infringements. The register will enable contracting authorities in the future to check in a single electronic search whether a company has committed relevant violations of law.

Andreas Mundt: “Despite the extremely difficult conditions during the COVID-19 pandemic, work on the competition register is well on schedule. Approximately 30,000 external contracting entities as well as customs, public prosecution offices, etc., must be digitally connected. The process of going fully digital poses a great challenge to all parties involved. According to the current schedule, the register will be made available in stages in the first quarter of 2021.”

The gradual launch is planned to take place next spring, starting with the authorities submitting the data and the contracting authorities registering on the online platform.