The German Ministry of Economy and Energy published a new and ambitious draft of the Law on Digitalisation of German Competition Law (the “Law”), expected to enter into force in the second half of 2020. Germany aims to remain a forerunner of antitrust regulation of digital markets by introducing this “digital antitrust law” and by providing its competition authority, the German Federal Cartel Office (the “FCO”), with a legal framework for following the new competition-related challenges of digitally revolutionised markets.
The purpose of this Law is to set stronger regulation of digital platforms, by focusing on their specific business models and by regulating their access to data, ostensibly to allow new entrants an equal footing against the large conglomerates of today. The published draft of the Law inter alia proposes the following novelties:
- Digitalisation of the abuse of dominance rules
The Law introduces important changes to the rules on abuse of dominance related to the conduct of “intermediaries”. Intermediaries are multi-sided digital platforms whose business model is to collect, aggregate and evaluate data in order to reconcile supply and demand between user groups. “Intermediary power” is introduced as a new concept in multi-sided markets and the FCO is granted additional authority to take measures against intermediaries and companies having “paramount significance across markets” Further, access to data is suggested to be essential for determining a dominant market position and will be treated as a facility, similar to the traditional perception of railways or port infrastructure. Refusal to allow other companies access to data shall, under certain circumstances, be considered as an abuse of dominance by the intermediary on digital platforms.
- A new type of market power
“Paramount significance across markets” is a new type of market power proposed by this Law. If the company has such power, the FCO will be able to prohibit the company, for example, to preferentially treat their own services or to create entry barriers by the use of data collected on a dominated market, etc.
- Merger Control
The Law suggests increasing the domestic turnover threshold from EUR 5 million to EUR 10 million and de minimis threshold from EUR 15 million to EUR 20 million with an intention to reduce the number of merger notifications by approximately 20%.
- Interim Measures
The Law intends to allow FCO to deal with possible violations of antitrust law in the future by granting interim measures only on the basis of probable cause of an infringement of the law. Interim measures could be imposed if FCO deems that the order is necessary for the protection of competition or because of an imminent threat of serious harm to another undertaking.
New provisions of the Law entitle companies to approach the FCO to issue a decision on legality od the planned cooperation with a competitor, instead of companies relying only on their self-assessment mechanism. The companies will also be able to have informal consultations before implementing such joint projects with competitors.
With the draft law, German authorities will significantly expand the scope of antitrust regulation into the digital world, with specific rules affecting the industry. It will be interesting to follow the ultimate form of the new digital framework, as well as its ramifications for other competition systems worldwide.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.