On September 2, 2020, the German Federal Cartel Office (“FCO”) published its Annual Report 2019/2020 (“Annual Report”) which includes an update on the FCO’s activities in the first half of 2020.[1]
The Annual Report details the FCO’s activities in cartel enforcement, merger control, the digital economy, consumer protection, and public procurement, and gives a general update on developments in private damages actions. In the first half of 2020, the FCO
- imposed cartel fines of nearly €158 million,
- examined approximately 505 notified mergers, and
- published the reports of various sector inquiries in the digital economy.[2]
- COVID-19
Unsurprisingly, the COVID-19 pandemic has also affected the FCO’s work. The FCO notes three areas in particular:
- The FCO has been asked to provide guidance on numerous industry cooperation projects, in particular cooperation regarding production to avoid bottlenecks, in logistics, distribution, and storage, and in restarting complex supply chains.[3]
- Through international coordination the FCO participated in joint initiatives of European and international competition authorities to provide guidance to companies.[4]
- The FCO also contributed to legislative initiatives to facilitate competition law enforcement during the crisis.[5]
The FCO acknowledges that currently companies in many sectors must cooperate to react to bottlenecks in the production, storage, logistics, and distribution of goods, and that this may also apply between competitors or in a supplier-customer relationship. Under normal circumstances, such cooperation would often be problematic under antitrust law. Therefore, the FCO encourages companies to contact the authority for guidance on any questions of doubt concerning cooperation, and vows to review and provide guidance within a short timeframe.
The FCO has also stated that it will not actively intervene against cooperation aimed at coping with the COVID-19 crisis, provided (i) the cooperation does not go beyond what is necessary to generate efficiencies, (ii) the undertakings concerned keep the FCO informed about the development of the cooperation, and (iii) the cooperation ends without due delay after the end of the COVID-19 crisis. The FCO thus endeavors to ensure that no cartels are formed to the harm of customers or that companies do not illegally abuse their market power.[6]
As regards merger control, the FCO’s President, Andreas Mundt, noted that the FCO would not adopt a lighter review approach due to COVID-19, as any structural deteriorations caused by mergers would continue to have effects post-crisis. While the crisis has led to a decrease of the number of merger notifications compared to previous years, the FCO is expecting a renewed increase in the coming months, especially due to takeovers of companies facing economic difficulties.[7]
- Cartel Prosecution
As in previous years, cartel prosecution remains a key area of focus for the FCO. The FCO concluded its investigation in the plant protection products market, imposing fines of almost €157.8 million on eight wholesalers of plant protection products and their representatives for agreeing on price lists, discounts, and in some instances on individual prices when selling to retailers and end customers in Germany.[8] A number of investigations are ongoing, and the FCO has received seven leniency applications in 2020 so far.[9] 2020 continues the trend of a decreasing number of leniency applications, in particular when compared to the peak years of 2013/2014.
- Merger Control
Merger control also remained a key area for the FCO in 2020 even though only 505 merger projects were notified from January to the end of June 2020, which is over 20% less than in the same period of 2019 (in May 2020 even more than 50% less than in May 2019).[10]
Contrary to 2019, 2020 was not marked by prohibition decisions and filing withdrawals. The FCO did not issue a single prohibition decision, and only one filing was withdrawn for the planned acquisition of Harry’s Inc. by the Edgewell Personal Care Company following an in-depth (“Phase 2”) review.[11]
As reported in earlier newsletters,[12] the Draft Proposal for the 10th Amendment to the German Act against Restraint of Competition (“ARC”) increases the second domestic turnover threshold from €5 million to €10 million with the aim of reducing the number of notifications by approximately 20%. This will enable the FCO to focus on cases that are key to consumers’ interests as well as on Phase II cases which require a substantial amount of time and resources.
- Digital Economy And Consumer Protection
Following the 2017 Amendment of the ARC, which granted the FCO the competence to conduct sector inquiries into consumer protection issues, a number of inquiries were launched and are still pending, including in relation to online advertising, waste-management, and hospitals. Moreover, the launch of the FCO’s Digital Economy Unit in August 2019 and the FCO’s activities in 2020 underline the authority’s continued focus on this space. In July 2020, the final report of the sector inquiry “smart TVs” was published, finding transparency and data protection gaps in manufacturers’ data protection regulations.[13] In October 2020, the FCO also published its “Online User Reviews” sector inquiry, noting a number of issues in the handling of paid-for user ratings by online platforms.[14]
In 2020, the FCO has also continued to provide guidance for digital platform operators to clarify any competition law with respect to cooperation in the digital economy. In early 2020, following a request for clarification of any competition law issues, the FCO announced it had no objections to the launch of the digital trading platform for agricultural products “unamera”.[15]
- Public Procurement
Finally, with respect to public procurement, the FCO will continue working towards the establishment of the so-called Federal Competition Register for Public Procurement, which is intended to enable contracting authorities to check whether a company has previously committed relevant violations of commercial law. The FCO remains confident that this register will be operational by the end of the year.[16]
- Follow-On Damages Litigation
The FCO notes a significant increase in follow-on damage claims related to competition law infringements. Industries concerned include sugar, trucks, rails, bathroom fittings, electronic cash, chipboard panels, detergents, television tubes, packaging, cement, steel abrasives, wallpapers, gas-insulated switchgears, drugstore products, flour, and confectionary. The FCO observes a further professionalization in the bundling and assertion of damages claims, encouraged by law firms specializing in damages actions and litigation funding, and expects a continued increase of such lawsuits.[17]
[1] FCO Annual Report 2019/2020, September 2, 2020, available in English here. For an overview of the FCO’s activities in 2019, see German Competition Law Newsletter of November 2019 – January 2020, p. 6 et seq., available here.
[2] For more details on the FCO’s sector inquiries in the digital economy, see our articles in this newsletter.
[3] For example, the FCO reviewed the German Association of the Automotive Industry’s production and supply measures for overcoming the challenges caused by the COVID-19 crisis and decided to refrain from examining them in more detail under competition law. See FCO Press Release of June 9, 2020, available in English here.
[4] For example, the “ICN Steering Group Statement: Competition during and after the COVID-19 Pandemic” of April 2020, available here; the “Joint Statement by the European Competition Network (ECN) on application of competition law during the Corona crisis”, available here.
[5] For example, on the German legislature’s amendments to German competition law which temporarily extended merger control review periods and temporarily suspended interest payments for antitrust fines.
[6] See Andreas Mundt, “The Bundeskartellamt in times of COVID-19: adaption of workflows and implications for our enforcement practice”, Journal of Antitrust Enforcement, dated June 9, 2020, p. 254, available here.
[7] FCO Press Release of September 2, 2020 available in English here.
[8] FCO Press Release of September 2, 2020, available in English here; see also FCO Annual Report 2019/2020, September 2, 2020, p. 18, available in English here.
[9] FCO Press Release of September 2, 2020 available in English here.
[10] FCO Press Release, September 2, 2020, available in English here.
[11] FCO Case Summary (B5-149/19) dated February 11, 2020 is only available in German here.
[12] See, e.g., German Competition Law Newsletter of November 2019 – January 2020, pp. 3 and 7, available here.
[13] For more details, see our article in this newsletter.
[14] For more details, see our article in this newsletter.
[15] FCO Annual Report 2019/2020, September 2, 2020, p. 40, available in English here. For more details, see German Competition Law Newsletter of February – April 2020, p. 6, available here.
[16] FCO Annual Report 2019/2020, September 2, 2020, p. 7, available in English here.
[17] FCO Annual Report 2019/2020, September 2, 2020, p. 23, available in English here.