Federal Economics Minister Robert Habeck announced antitrust law with “claws and teeth” in the summer – not least as a reaction to the increased fuel prices at German petrol stations. The first reform proposals met with a mixed response – some spoke of “antitrust populism”.
The ministry has now submitted a draft bill for a corresponding amendment to the Act Against Restraints of Competition (GWB). In essence, in addition to facilitating the skimming off of benefits, the main focus is on strengthening so-called sector inquiries. It’s about market analyzes to take a very close look at whether price movements in crude oil or corresponding reductions in VAT are also being felt at the pumps. They provide information as to whether oligopolistic structures or agreements are causing consumers to pay too high fuel prices and if so, whether this is due to the gas stations, refineries or mineral oil companies.
One may argue about whether the occasion justifies the proposals. In any case, they are to be welcomed, and some of them take up the recommendations of the Monopolies Commission. In the United Kingdom in particular, the antitrust authorities there have achieved good results with the very selective application of the sharpened instruments.
The Ministry would like to shorten the sometimes long duration of the sector inquiries, among other things by setting stricter deadlines. At the same time, the publication of the final report on a sector inquiry for the Federal Cartel Office is to be obligatory in future. As a rule, the antitrust authorities are given 18 months to do this.
The draft bill also provides the Monopolies Commission with the right to initiate sector investigations by the Federal Cartel Office. The proposed amendments have the potential to make the instrument more effective in German law.
An obligatory report by the Federal Cartel Office on the interim results of the investigation and a public consultation on this would also be desirable. This would make the procedures more transparent. The effort increases, but sector inquiries are anyway a time-consuming instrument for – few (!) – problematic and, above all, permanently encrusted markets.
However, the Bundeskartellamt’s proposals to impose remedial measures, which are closely related to the sector inquiry, met with sharper criticism. These can range from access to data to the sale of parts of the company. The competition authorities already often initiate antitrust proceedings on the basis of the knowledge they have gained during such an investigation into the competitive conditions in an economic sector.
However, in both Union and German law, further official measures following a sector inquiry require that the companies concerned have acted in violation of antitrust law. The Ministry would now like to authorize the Federal Cartel Office to take measures to (re)invigorate competition in an economic sector, even if the competitive deficits are not the result of an antitrust violation. In this respect, all that is required is the determination of a “considerable ongoing or repeated disruption of competition”.
A catalog with examples of such remedial measures contained in the draft bill initially provides for the arrangement of data access, the supply of companies or the organizational separation of company or business areas.
The sharpest – and therefore most explosive – sword is usually the unbundling of ownership, i.e. the obligation to sell company shares even if no violation of antitrust law has been found. In the UK, for example, the quasi-monopoly airport operator in London and Scotland had to sell airports to allow for more competition
Constitutional concerns are sometimes reflexively raised about this measure. There is no doubt that the “breaking up” of a company will involve a far-reaching encroachment on fundamental rights; but it is justifiable. The fact that the instrument can be designed in conformity with the constitution was already shown by the Monopolies Commission in its 2010 special report on a similar legislative project.
The necessary compensation for the business owners for their loss of property can be guaranteed through additional compensation from public funds. This would also minimize negative preliminary effects that lead to a loss of investment and innovation incentives. However, the draft bill does not contain a compensation rule.
Otherwise, unbundling should only be considered in markets with established, non-competitive structures. In this respect, there is still room for improvement with a view to the current legislative proposals: the draft bill rightly emphasizes the character of the instrument as a last resort, but does not create sufficiently high material hurdles for its use.
In terms of the process, it is intended that the monopolies commission and the relevant state antitrust authority be given the opportunity to comment before a demerger order is issued. It seems sensible to allow third parties to do this before any remedial action as part of a brief public consultation. In addition, the sector inquiry and in particular the remedial measures enacted should be externally evaluated afterwards.
If the legislature were to combine the fundamentally welcome system change towards non-compliance measures outside of merger control with stronger safe guards, it could possibly help the new rules gain more acceptance among their critics.
On the other hand, a complete waiver of the Federal Cartel Office’s extended scope of action would not do the enforcement of competition in Germany any good. Contrary to some sharp criticism, the reform steps are going in the right direction, but still require individual improvements.
Jürgen Kühling is Chairman of the Monopolies Commission and teaches public law at the University of Regensburg.
