Abuse of dominance proceedings against Facebook

BGH publishes its 2nd decision and German FCO opened further proceedings

On 10 January 2021, the German Federal Supreme Court (Bundesgerichtshof - BGH) published the full text of its decision of 15 December 2020 on an appeal of the German Federal Cartel Office (FCO) against the so-called suspended decision (“Hängebeschluss”) of the Higher Regional Court of Düsseldorf in the first Facebook proceedings (Case No. KVZ 90/20 – available only in German).

In these interim legal proceedings, Facebook and the FCO are disputing the second urgent legal application against the FCO's decision of 6 February 2019, against which the main proceedings are pending as well: With its decision of 2019, the FCO imposed far-reaching restrictions on Facebook’s processing of users’ data against the global player. The FCO declared its decision immediately enforceable, but granted a transitional period (Ref. No. B6-22/16 – available only in German, Case summary in English). At its core, the FCO alleged that the extent to which Facebook collects, merges and uses data from different sources in Facebook user accounts constitutes an abuse of a dominant position: “By combining data from its own website, company-owned services and the analysis of third-party websites, Facebook obtains very detailed profiles of its users and knows what they are doing online”, the president of the FCO explained in 2019. The FCO concluded that a breach of EU data protection law led to an illegal abuse of conditions within the meaning of Section 19 (1) of the German Act against Restraints of Competition (ARC).

These Facebook proceedings not only substantively concern numerous disputed questions of competition law at the crossroads with data protection law, but are also already procedurally remarkable: Although Facebook's complaint on the merits is to be heard orally for the first time before the Düsseldorf Court in March 2021, the Düsseldorf Court as well as the BGH have already dealt with the matter twice: In 2019, the Higher Regional Court of Düsseldorf granted Facebook's first urgent motion for the restoration of the suspensive effect of its appeal and, in doing so, harshly criticised the FCO’s argumentation. Thus, the Düsseldorf Court agreed with Facebook’s objections (Case No. Kart 1/19 V – available only in German) and stated that "even after summary examination" the assessment of the FCO raised "far-reaching legal concerns".

Upon FCO’s request, however, the BGH reversed the Düsseldorf decision on 23 June 2020 and restored the immediate enforceability of the FCO decision (Case No. KVR 69/19 – available only in German). Unlike the FCO, the BGH did not link the antitrust accusation to a violation of data protection law. Rather, the BGH considered Facebook's terms of use abusive since they did not allow consumers to choose the level of personalisation of the user experience.

At the end of November 2020, when the deadline for the implementation of the FCO decision was about to expire, Facebook filed a second application for interim measures with the Higher Regional Court of Düsseldorf. By decision of 30 November 2020, the Düsseldorf Court issued a suspended decision (“Hängebeschluss”), restoring thereby the suspensive effect of Facebook's complaint for the time being (Case No. Kart 13/20 V – available only in German). This decision proves that the Düsseldorf Court will not bow to the BGH’s legal assessment without further ado and the Court did not even grant leave for appeal on points of law – which is why the FCO filed a non-admission appeal with the BGH which the BGH now granted in the recently published decision of 15 December 2020.

This procedure, however, is not the only one that underpins the ongoing legal battle between the authorities involved regarding the application of Section 19 (1) ARC for digital platform economies, data protection and the global tech giants. And the BKartA is not letting up against Facebook either:  

By Press Release of 10 December 2020, the German authority announced that it has initiated further abuse proceedings against the company, thus reinforcing its supervision of the global player.

At the centre of the new examination is the linkage between Oculus’ virtual reality (VR) products and the social network and Facebook platform: The FCO will investigate whether Facebook’s future condition of log-in via a Facebook account when using Oculus’ products constitutes an illegal abuse of market dominance.

Since 2014, the company Oculus is part of the Facebook group. Oculus offers VR hardware (namely the corresponding goggles) as well as the complementary VR software. So far, Oculus offers its own platform to users. Now, however, Facebook has started to integrate the Oculus services into the social network: The use of the new generation of Oculus VR glasses "Quest 2" will – in Germany and elsewhere – require the registration on the platform. Since the FCO considers Facebook to be dominant in the market for social networks and also considers Facebook to be already a significant player in the VR market, it now felt compelled to initiate proceedings due to the coupling of both services.

The forthcoming 10th ARC amendment, already designated as the ARC Digitalisation Act, will in all likelihood also provide far-reaching impetus for these areas. Contrary to the original plan, a decision on the present draft law will be taken in the current year.

Chatham Partners' experienced EU/COMP Team is a trusted advisor for companies and their managements on all aspects of EU and Competition Law, including abuse of dominant position and data protection law. The EU/COMP Team regularly conducts (industry-related) trainings and webinars on the above-mentioned topics. Please feel free to contact us to find out how we can support your business.

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