EU/Competition – Legal News
German Federal Cabinet passes 11th GWB amendment
On 5 April 2023, the German Federal Cabinet (the Bundeskabinett) approved the government draft for an 11th amendment of the German Act against Restraints of Competition (ARC), the so-called draft of the Competition Enforcement Act (available in German here: LINK). The thrust of the reform has not changed compared to the draft bill of the German Federal Ministry of Economic Affairs and Climate Action from September 2022 (we reported here: Link). The declared goal is thus still that "disturbances of the competition can be better stopped in the sense of the consumers", so the Ministry in its current press release (available in German here: Link).In particular, the powers of the German Federal Cartel Office (FCO) in the area of so-called sector inquiries are to be expanded. In future, it shall be possible to order remedial measures, including ownership unbundling, already if the FCO concludes that there is a "disturbance of competition". Up to now, a standardized violation of antitrust law has been required for measures under the ARC.
Agreement has also been reached on simplifying profit absorption under competition law. Specifically, the requirements for proof of advantages gained from antitrust violations are to be reduced. The government hopes that illicit profits can be skimmed off more effectively.
The amendment as presented would also authorize the Federal Cartel Office to investigate infringements of Regulation (EU) No. 2022/1925 (Digital Markets Act), which will come into force on 1 May 2023, and to report them to the European Commission.
Compared to the draft bill from 2022, the amendment is somewhat less drastic (e.g., the thresholds for intervention in the area of sector inquiries have been increased and specified). Nevertheless, the reform continues to receive strong criticism. Due to the far-reaching powers of the FCO, companies would have to fear interventions even if they have not acted unlawfully. This would also have constitutional implications. In addition, the political dimension of the reform is criticized: After the FCO failed last year to prove price fixing by mineral oil companies, the new approach would simply intend to lower the hurdles to make it easier to skim the profits.
In the legislative process, the Competition Enforcement Act will now be forwarded to the German Federal Parliament (the Bundestag) and the German Federal Council (the Bundesrat). It is not yet possible to predict whether the Competition Enforcement Act will come into force in this form or when the 11th GWB amendment will enter into force.
The Chatham Partners’ EU/COMP-team is specialized in complex issues in the areas of EU and German competition, State aid and public procurement law and has extensive practical experiences in these fields.
We would like to thank Moritz Wiechert for his valuable support in the compilation of this newsletter.