Amendment to the German Competition Act (Gesetz gegen Wettbewerbsbeschränkungen – GWB; 11th amendment to the GWB)

After yesterday’s promulgation in the Federal Law Gazette, the modifications to the German Competition Act (GWB) provided for by the 11th amendment to the GWB have entered into force today.

Remedies following sector inquiries

As a key element of the amendment the Bundeskartellamt’s competences will be expanded to enable the authority to order remedies following a sector inquiry.

Andreas Mundt, President of the Bundeskartellamt: “The 11th amendment to the German Competition Act enables the Bundeskartellamt to address cases of significant and continuing malfunctioning of competition without first having to demonstrate a violation of the law. The amendment thus expands our competition law toolbox. There are, however, strict requirements for imposing the individual measures provided for in the Act. The proceedings will be complex. This applies in particular in the case of divestment, which is stipulated in the Act as a measure of last resort. We very much hope that the Bundeskartellamt will receive the resources provided for in the 11th amendment, also in view of the increased responsibilities the authority has been given in other areas.”

Before the authority can use its new powers a sector inquiry must be carried out, which is to be completed within a period of 18 months. The sector inquiry ends with a final report. The publication of the report is followed by a further period of 18 months within which potential follow-up measures can be carried out.

After a sector inquiry the Bundeskartellamt can in a second step determine a malfunctioning of competition. This can be determined with regard to specific addressees, which are the potential addressees of remedial measures, and can be appealed by them. The malfunctioning of competition must be significant and continuing which means it must have existed for three years and be expected to continue for at least two more years. In addition, a prima-facie assessment must show that the authority’s previous powers are not sufficient to eliminate the malfunctioning effectively and permanently. The addressees’ conduct and their relevance for the market structure must have significantly contributed to the malfunctioning of competition.

In a third step the Bundeskartellamt can order the addressees of its declaratory decision to take remedial measures that are suitable to eliminate or reduce the malfunctioning. Further requirements are applicable in cases where the remedial measures concern the divestment of assets. Appeals against any remedial measures will have suspensive effect.

Investigation of violations of the Digital Markets Act

The newly introduced Section 32g is to strengthen the enforcement of the Digital Markets Act. As a core element of the provision the Bundeskartellamt has been granted the power to investigate possible violations of Articles 5, 6 and 7 DMA by companies that have already been designated as gatekeepers. The DMA’s rules apply immediately and are directly applicable, and it is the authorities’ task to monitor compliance with the rules. The European Commission is the sole authority empowered to enforce the DMA; in this task it can be usefully supported by national competition authorities and their investigation powers. Apart from assisting the European Commission, it is the intent and purpose of the investigation powers to enable the Bundeskartellamt to start an investigation based on which it can determine whether proceedings should be conducted under the DMA or under national and European competition law.

Further modifications to the Competition Act specify that the Bundeskartellamt is the competent competition authority to cooperate in proceedings conducted by the European Commission under the DMA. Furthermore, modifications to Sections 33 ff. strengthen private enforcement of the obligations resulting from the DMA.

Modifications to the requirements for the disgorgement of benefits

The amendment lowers the requirements for the disgorgement of benefits in order to improve practical enforcement.  Section 34(4) introduces a presumption according to which a competition law violation has resulted in an economic benefit which amounts to at least 1 per cent of the domestic turnover generated from the products or services related to the violation. The presumption can only be rebutted if the company proves that no profits were made in the corresponding amount in the relevant period.