On March 24, 2021, the DCA stayed the proceedings regarding Facebook’s appeal against the FCO’s decision of 2019 prohibiting Facebook to combine data from different sources and referred a number of questions to the CJEU. The CJEU is now called upon to consider the relevance infringements of the General Data Protection Regulation (“GDPR”) under competition law.
Background—The Battle In Interim Proceedings
In its 2019 decision, the FCO prohibited Facebook to combine data collected on its social network with data collected in other business areas (e.g., through WhatsApp Inc. (“WhatsApp”), Instagram LLC (“Instagram”), and Oculus products) without the users’ freely given consent. The FCO based its decision on the novel argument that Facebook’s data collection and processing practices were an exploitative abuse of users, because Facebook’s terms and conditions infringed the GDPR.
In August 2019, the DCA suspended the enforcement of the FCO’s decision in interim proceedings. The DCA found that the FCO failed to establish a strict causal link between the allegedly abusive behavior and Facebook’s dominance, i.e., Facebook’s dominant position was not necessary to impose the allegedly unlawful terms and conditions. Consequently, the DCA did not consider whether Facebook’s behavior infringed the GDPR.
Upon the FCO’s appeal, the FCJ reinstated the FCO’s decision in June 2020. Unlike the DCA, the FCJ did not rely on GDPR infringements. Instead, the FCJ found Facebook to infringe competition law by imposing an additional service in the form of personalized advertising based on aggregated data from different services (such as WhatsApp, Instagram, and Oculus products).
Upon a second motion for an interim order by Facebook, the DCA again suspended the FCO’s decision on November 20, 2020. The FCO appealed the DCA’s decision, but Facebook retracted its motion for the interim order in late December 2020 before the FCJ could decide.
Referral To The CJEU In Main Proceedings
Although, in its first interim decision, the DCA found that it was irrelevant whether Facebook infringed the GDPR, the DCA now stayed the main proceedings to have the CJEU clarify the relevance of GDPR infringements under competition law.
The DCA specifically asked the CJEU whether it is compatible with Article 51 et seq. GDPR if a national competition authority—such as the FCO—finds, for the purposes of monitoring abuses of competition law, that Facebook’s contractual terms relating to data processing and their implementation breach the GDPR and issues an order to end that breach. If the answer is yes, the DCA asked the CJEU a number of additional questions regarding the application of the GDPR. If the answer is no, the DCA asked the CJEU whether the FCO may nonetheless consider compliance of Facebook’s data processing terms and their implementation with the GDPR when assessing an abuse of a dominant position, e.g., when balancing different interests.
The decision to call upon the CJEU suggests that the DCA no longer requires a strict causality between a dominant position and a certain behavior to find a competition infringement. This view would be in line with the legislator’s claim that German law never required strict causality. The result of this view may be that any infringement of non-competition law, such as the GDPR, could be considered an abuse of dominance.
In the oral hearing, the DCA also noted that the FCO’s decision was unlawfully addressed to several companies of the Facebook group. First, the decision was unlawfully addressed to Facebook subsidiaries that were not parties to the proceedings because they were not heard by the FCO. Second, Facebook Deutschland GmbH was unlawfully addressed because it does not have decisive influence over its Irish sister company collecting the data and therefore cannot terminate the alleged infringement. Third, the FCO had discretion to address the parent company Facebook Inc. but failed to give any consideration as to why it chose to address it, thereby rending it unlawful.
DCA Rejects The FCJ’s Reasoning
Not bound by the FCJ’s interim decision, the DCA further noted in the oral hearing that the FCJ’s reasoning which focused on Facebook imposing an additional service on its users, is an entirely different behavior than the GDPR infringement found by the FCO. The FCO neither found that Facebook imposed such a service nor that this conduct hindered competitors. The DCA further rejected the FCO’s decision as disproportionate finding that Facebook could terminate the infringement by closing its social network in Germany or allowing users to choose whether and to what extent they allow Facebook to combine their data across different services. The FCO’s decision ordered Facebook to stop the infringement by changing its terms and conditions, leaving Facebook no choice between these alternatives.
The battle between Facebook and the FCO is expected to drag on for a few more years, as the DCA proceedings are stayed until the CJEU has responded and any DCA decision will likely be appealed to the FCJ. The consequences of GDPR violations, and more generally of violations of non-competition law, for dominant companies will therefore remain an open question for some more time.
In the meantime, the German legislator has— also in reaction to these Facebook proceedings— provided the FCO with a new toolset to prohibit certain behaviors of large digital platforms in the course of the 10th Amendment of the ARC. The new law specifically enables the FCO to prohibit the combination of user data without giving users a choice. The FCO has already opened a new proceeding against Facebook using these new tools.
 Facebook (V-Kart 2/19), DCA decision of March 24, 2021, only available in German here, see also the DCA’s press release of March 24, 2021, only available in German here.
 Facebook (B6-22/16), FCO decision of February 6, 2019, available in English here; the FCO’s case summary is available in English here, see also our article in the German Competition Law Newsletter January – February 2019, p. 1 et seq., available here.
 Facebook (VI-Kart 1/19 (V)), DCA decision of August 26, 2019, only available in German here. See also our article in the German Competition Law Newsletter July – August 2019, p. 1 et seq., available here.
 See Facebook (KVR 69/19), FCJ judgment of June 23, 2020, only available in German here. See also Cleary Gottlieb Alert Memorandum of June 29, 2020, available here.
 Facebook II (Kart 13/20 (V)), DCA decision of November 20, 2020, only available in German here.
 See also the changes to Sect. 19 ARC in the course of the 10th Amendment of the ARC.
 See FCO’s Press Release of January 28, 2021, available in English here.