Ahead of the curve, Germany introduced its Section 19a of the Act against Restraints of Competition in early 2021. Under this provision, companies with “paramount significance for competition across markets” are subject to special supervisory rules. While this does not specifically apply to digital markets, the legislative intention was in fact to tackle anti-competitive practices by large digital players. You will find below all you need to know about this cutting-edge provision and its application so far.
Scope
The FCO will designate companies of paramount significance for competition across markets. Assessments will notably be based on the undertaking’s:
- dominant position on one or several market(s),
- vertical integration and activities on otherwise related markets,
- financial strength or access to other resources,
- access to data relevant for competition or
- relevance for third party access to supply and sales markets and influence on third party business activities.
The designation lasts five years but can be challenged by the affected company before the German Federal Court of Justice.
Duties
Companies designated to be of paramount significance will in particular be prohibited from the following conduct:
- self-preferencing (e.g. by exclusively pre-installing a company’s own offers on devices),
- exclusionary conduct (e.g. by preventing other undertakings from advertising their own offers or reaching their purchasers through other channels in addition to those provided or mediated by the undertaking),
- misuse of data (e.g. by making the use of services conditional on the user agreeing to the processing of data from other services of the undertaking or a third-party provider without giving the user sufficient choice),
- making interoperability of services or portability of data more difficult,
- providing insufficient information about services (i.e. about the scope, quality or success of the service rendered or commissioned) and
- demanding benefits for the treatment of another company’s offers (e.g. by demanding the transfer of data or rights that are not absolutely necessary for the purpose of presenting these offers).
Enforcement
German rules are enforced in two-step proceedings:
- Step 1 is the designation of a company with paramount significance,
- Step 2 is to make sure that this company complies with its duties.
However, the FCO can initiate and run both investigations in parallel.
Once the FCO challenges the conduct of a designated company, it is for the company to prove that the conduct is objectively justified and, therefore, does not harm competition.
The FCO will not be able to impose fines initially but can issue declaratory orders and impose interim measures as well as commitments. The Federal Court of Justice will decide on appeals against these FCO decisions.
Case law: Overview on proceedings
So far, the FCO investigations have been targeted at large digital players. A detailed tracker of the past and current cases is available here.
Interplay with the DMA
Pursuant to the DMA, national authorities can still apply their national rules if they wish to take measures going beyond the DMA or take action against companies that are not “gatekeepers” within the meaning of the DMA. In several aspects, Section 19 a ARC is wider than the DMA. German rules do not link the “gatekeeper” status to quantitative thresholds but focus on companies’ activities on multi-sided markets and networks. The German list of abusive practices is shorter but non-exhaustive. It relies on broader terms and can cover practices outside the scope of the DMA.
However, these differences will likely not impact the first years of DMA enforcement as the FCO is currently focusing on large digital players which are also targeted by the DMA.
In addition, both the FCO and the European Commission will co-ordinate and collaborate within the ECN network and it may be that the scope of the German rules will become more independent in the longer term.
Legislation and Papers
A translation of Section 19 (a) ACR is available here.
The FCO and the German Ministry for Economic Affairs and Climate Chance also participated in the following publications:
- FCO (Working Group on Competition Law): Digital Markets Act: Perspectives in (Inter)National Competition Law, 7 October 2021
- Joint Paper of the Heads of the National Competition Authorities of the European Union: How National Competition Agencies can strengthen the DMA, 23 June 2021
- Federal Ministry for Economic Affairs and Energy et al., Strengthening the Digital Markets Act and Its Enforcement, 27 May 2021
More content on the DMA Hub
Digital Markets Act Hub
The EU’s Digital Markets Act creates multiple digital rights (and obligations). Who is or will be affected by this next frontier of digital platform regulation in Europe? You will find all you need to know on our one-stop-shop dedicated to the DMA.
Scope: Designation of a gatekeeper
The DMA’s criteria for designating “gatekeepers” stipulate which companies and “core platform services” must comply with the DMA’s obligations. There are, however, a number of key questions concerning the DMA’s jurisdiction. Read further to see the breakdown of the DMA’s key criteria for gatekeeper designation.
Duties: Obligations under DMA
The DMA sets out a host of obligations for designated gatekeepers. These can be categorised according to the aims of the DMA, including to ensure fair conditions of use; to prevent self-preferencing / leveraging; and to protect digital rights and improve access to data, among others.
Enforcement: The European Commission
As with the EU’s competition rules, the DMA provides for private enforcement as well as public enforcement by the Commission. The Commission ensures that gatekeepers comply with their obligations under the DMA.
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DMA Hub
DMA Hub
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Designation of a gatekeeper
Designation of a gatekeeper
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Obligations under DMA
Obligations under DMA
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Enforcement by the European Commission
Enforcement by the European Commission
