On June 27, 2019, the German Federal Cartel Office (“FCO”) published its Annual Report 2018 as well as its biennial Activity Report 2017/2018. Andreas Mundt, the President of the FCO, pointed out that the FCO has a clear digital agenda with a focus on the digital economy and the protection of consumer rights, which it will continue to pursue this year.
The reports also provides various enforcement statistics which show that—60 years after the German Act against Restraints of Competition (”ARC”) had come into force and the FCO had begun its work—the FCO continues to be a highly active operator in the area of competition law enforcement in Europe.
The FCO emphasized its continued goal to maintain an open market by preventing big tech companies and platforms from abusing dominant positions.
On February 6, 2019, after an investigation of nearly three years, the FCO found that Facebook’s data collection practices amounted to an exploitative abuse of a dominant position. The decision marks the first time that the FCO considered compliance with data protection rules in its abuse of dominance analysis.
In 2018, the FCO also initiated proceedings against Amazon’s German marketplace following numerous complaints by smaller retailers regarding Amazon’s allegedly abusive terms and conditions and its behavior vis-à-vis the retailers. Only recently in July 2019, the FCO has closed its probe as Amazon agreed to change its marketplace terms and conditions for retails using the marketplace platform. At the same time, the European Commission has opened a formal probe into Amazon’s use of data and whether Amazon is abusing its dual role as the largest online marketplace operator and the largest retailer.
In addition, the FCO initiated a—still ongoing— sector inquiry into online advertising, focusing on the technological developments and their impact on the market structure and market opportunities of the various players concerned.
Against the background of the increasing use of algorithms by companies, the FCO, together with the French Competition Authority, is also working on a paper on algorithms and their implications on competition, aiming at analyzing the challenges raised by algorithms and at identifying conceptual approaches to meet them.
As part of the Ninth Amendment of the ARC in 2017, the German legislator granted the FCO the competence to conduct sector inquiries into potential consumer protection issues. This led to the formation of a new consumer protection division at the FCO.
The FCO already concluded a sector inquiry into price comparison websites, finding that several comparison websites infringed consumer rights by providing misleading or incomplete information.
In 2019, the FCO will continue two additional sector inquiries into the use of consumer data by smart TVs (launched in December 2017) and into the authenticity and validity of user reviews on online platforms (launched in May 2019).
Mr. Mundt criticized the fact that while the FCO may now investigate consumer protection infringements, it lacks the competence to enforce consumer protection laws (e.g., by imposing fines or issuing prohibition decisions). To date, the sector inquiries’ results only may facilitate private enforcement by consumers, consumer associations or competitors. The FCO is thus seeking new enforcement powers, in particular with respect to the digital economy.
In 2018, the FCO imposed fines of ca. € 376 million in eight different cases on a total of 22 companies or trade associations as well as 20 individuals, making 2018 a very successful year for the FCO. Only in 2003, 2007, and 2014 (with the exceptionally high amount of € 1,117 billion), the total amount of fines imposed was higher. The largest of the 2018 fines was imposed on a cartel of stainless steel manufacturers for price-fixing and information sharing, totaling € 291.7 million. The FCO also received 25 leniency applications concerning 20 cases, and conducted dawn raids in seven cases, inspecting 51 business premises and five private homes.
Overall, the 2018 enforcement statistics confirm tendencies from earlier years:
The overall number of concluded cartel proceedings decreased from a peak of 17 in 2012 to only four in 2018.
From 2013 to 2018, the number of cases in which the FCO received leniency applications decreased significantly by around 50%.
By contrast, the number of private damage claims has substantially increased. Almost every cartel proceeding is now followed by numerous private damages claims. The FCO’s Activity Report 2017/2018 states that around 350 follow-on damages actions are currently pending before German courts (of which 300 concern the European Truck Cartel alone). The FCO also observes an increasing professionalization in bundling and claiming damages, in particular by specialized law firms and litigation funding specialists, which will further spur private enforcement.
These opposed developments indicate that companies are more and more reluctant to apply for leniency due to the enhanced risk of being exposed to private damages claims.
In 2018, the FCO received 1,383 merger notifications. While this is only ca. 60% of the pre-financial crisis number in 2007, it is the highest number since 2009 (when an additional filing threshold was introduced) and a 6% increase over 2017.
Number of Merger Notifications
As in previous years, the FCO cleared ca. 99% of the notified transactions in Phase I (i.e., within one month). The FCO concluded eight Phase II proceedings after an in-depth review. Of these eight transactions, the FCO cleared three unconditionally and one subject to obligations. While the FCO did not issue a single prohibition decision in 2018, in the other four Phase II proceedings, the parties withdrew their notifications after the FCO had expressed competitive concerns.
The new transaction value-based threshold, introduced in 2017, has not led to a significant number of additional notifications or cases that raises competitive concerns. According to the FCO, only 18 notifications in 2017 and 2018 were filed because of the new threshold. Seven of these notifications were withdrawn because there was no filing obligation. The remaining notifications were cleared in Phase I. In 2018, the FCO, together with the Austrian competition authority, also published a guidance paper on the application of the transaction value thresholds.
In light of the fact that the FCO reviews a much larger number of merger cases than other competition authorities and that the FCO clears 99% of the notified transactions within Phase I, Mr. Mundt considered a reduction of the number of cases within the framework of the upcoming amendment to the ARC helpful to be able to focus on the cases that really matter to consumers and on Phase II cases which require an enormous amount of time and effort.
The German legislator is drafting the Tenth Amendment to the ARC with the aim to publish a first draft later this year. A number of changes are planned, and it remains to be seen how this will affect the FCO’s competences and workload:
The FCO’s focus on digital economy will also be reflected in the Tenth Amendment as new rules on abuse control, in particular for digital platforms, will be implemented.
The Tenth Amendment, however, will most likely not grant the FCO enforcement powers when investigating consumer infringements.
Cartel prosecution will be improved by the implementation of the ECN+-Directive into national law, which will grant the competition authorities additional competencies to ensure uniform enforcement of the European competition law.
Merger control will be enhanced by increasing the second domestic turnover threshold from € 5 million to € 10 million to reduce the number of notifications and focus on the macro- economically important transactions.
The Tenth Amendment will also include procedural improvements to accelerate procedures, e.g., by issuing interim orders.
 The Annual Report 2018 is only available in German here. The Activity Report 2017/2018 is only available in German here. The press release is available in English here.
 See German Competition Law Newsletter January – February 2019, p. 1 et seq., available here.
 A detailed report will be published in the German Competition Law Newsletter July – August 2019.
 FCO Press Release, July 17, 2019, available in English here.
 FCO Press Release, February 1, 2018, available in English here; FCO Background Paper, February 2018, is available in English here.
 For example, for matching and ranking purposes as well as dynamic price setting.
 FCO Press Release, June 19, 2018, available in English here.
 See German Competition Law Newsletter March – April 2019, p. 1 et seq., available here.
 FCO Press Release, December 13, 2017, available in English here; FCO Background Paper, October 2018, is available in English here.
 FCO Press Release, May 23, 2019, available in English here.
 Trucks (Case AT.39824), Commission decision of September 27, 2017.
 The so-called “second domestic turnover threshold” states that a transaction is notifiable if (in addition to a combined worldwide turnover of all parties exceeding € 500 million and one party’s turnover in Germany exceeding € 25 million) at least one other party had a turnover in Germany exceeding € 5 million.
 Aurubis/Deutsche Gießdraht (B5-62/18), FCO decision of July 13, 2018, a press release is available in English here; Cargotec Oyj/GB Marine Cargo Handling Solutions (B5-99/18), FCO decision of November 5, 2018, a press release is available in English here; Remondis/Helene Müntefering-Gockeln Wertstoffrecycling (B4-77/18), FCO decision of December 13, 2018, a press release is available in English here.
 VTG Rail Assets/CIT Rail Holdings (B9-124/17), FCO decision of March 21, 2018, a press release is available in English here. The acquisition concerning the lessors of railway freight wagons has been cleared under the condition that the target’s business in Germany and Luxembourg will be divested.
 Raiffeisen Waren-Zentrale Rhein-Main/Landgard Blumen & Pflanzen (JV) (B2-62/17), FCO Press Release, February 23, 2018, available in English here; Horizon Global Corporation/Brink International (B9-25/18), FCO Press Release, June 18, 2018, available in English here; Reinplus Van-Woerden Bunker/ NWB Nord- und Westdeutsche Bunker (B8-34/18), FCO Press Release, June 20, 2018, available in English here; Cellitinnen Nord/Cellitinnen Süd (B3-122/18); FCO Press Release, April 4, 2019, available in English here; see also German Competition Law Newsletter March – April 2019, p. 5 et seq., available in English here.
 Catching transactions with a transaction value exceeding € 400 million, in particular in the digital economy.
 Their 2018 “Guidance on Transaction Value Thresholds for Mandatory Pre-merger Notification” is available in English here. For more information on the transaction value threshold see the Cleary Gottlieb Alert Memorandum available here.
 Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market, OJ L 11, 14.1.2019, p. 3.