Competition Outlook 2020

As part of the evaluation of the Vertical Block Exemption Regulation (EU) No 330/2010 (“VBER”) and the corresponding Guidelines on Vertical Restraints (“Vertical Guidelines”), the European Commission (“Commission”) held an open public consultation on the revision of the VBER between February and May 2019. As the VBER will expire at the end of May 2022, the purpose of the Commission’s evaluation is to determine whether it should let the VBER lapse, prolong its duration or revise it. The entire evaluation process is anticipated to end in the second quarter of 2020.

The objective of the VBER is to help companies in assessing the legality of vertical agreements under Article 101 TFEU and to provide a safe harbour for certain vertical agreements. When the VBER came into force, the Commission had a classic distribution system in mind, consisting in particular of manufacturers and dealers. However, the ever-increasing importance of online trade has led to the emergence of new players with significant market power, such as digital platforms acting as intermediaries. These are not explicitly covered by the VBER. Specific restrictions of competition in online distribution have already been the subject of recent judgments by the European courts. Thus, there is a great need for legal certainty on the part of the undertakings concerned, which the current evaluation attempts to meet.

The necessity of adapting competition law to changing market conditions and new case law was largely confirmed by the 164 participants. Most participants were also in favour of maintaining the VBER. The contributions submitted also indicate that when revising the VBER the Commission will have to address the classification of online platforms, the scope of the withdrawal exception for dual distribution, the market share thresholds and an adjustment of current hardcore restrictions.

In addition to the VBER, the Commission is currently also evaluating two regulations on horizontal agreements, namely those on research and development and specialisation agreements. Furthermore, the corresponding Horizontal Guidelines are also under review. Both regulations will expire on 31 December 2022. The Commission is therefore in the process of undertaking an evaluation process with objectives comparable to those of the VBER revision. The Commission has already conducted an initial evaluation, which ended in October 2019. The entire evaluation phase is scheduled to be completed in the first quarter of 2021. Stakeholders currently have until 12 February 2020 to participate in this process through public consultation.

The new data economy, the prevalence of platform business models and the growing importance of cross-market digital ecosystems are having a significant impact on competition law in the EU and beyond. In this context, a number of reports have recently been published. These include the European Commission’s Special Advisers’ Report, the report of the Commission on ‘Competition Law 4.0’ set up by the German Federal Minister for Economic Affairs and Energy (see here), the joint memorandum of the Belgian, Dutch and Luxembourg competition authorities, the Furman Report as well as the working paper on algorithms and competition by the French and the German competition authorities.

These reports deal with the still unresolved issues of how competition law should apply to dominance in online platforms, access to data, merger control in digital markets and new forms of potentially anticompetitive behaviour by using algorithms and artificial intelligence. The reports contain a wide range of different recommendations, such as introducing new provisions to cover the particularities of digital markets, commissioning economic reports to gain further insights into the concerned markets or even considering regulation, for example for dominant online platforms.

In Germany some of these recommendations have already been picked up in the recently published Draft bill for the 10th amendment to the Act against Restraints of Competition. For example, the prohibition on abusing a dominant market position is being modernised by introducing the concept of intermediation power. The German Federal Cartel Office will have more and far-reaching powers to intervene with regard to companies with overwhelming importance for competition across multiple markets. This includes the option of prohibiting “self-preferencing” (as found by the European Commission in the Google Shopping Case) or of banning companies from using competitively sensitive data collected in a dominant market to introduce or raise barriers to market entry into other (non-dominant) markets.

Germany is also likely to make use of its Presidency of the Council of the European Union in 2020 to launch similar initiatives at EU level. 

In 2020, competition law and policy in the EU might be set for their biggest change yet. The European political setup, at least, has all the necessary ingredients to shake up competition policy: The von der Leyen “Geopolitical Commission” took up office on 1 December 2019 with Margrethe Vestager as the old and new Commissioner for Competition adding the role of Executive Vice President to her job title. Also, internally at DG Competition the important positions of Director-General and Chief Economist saw changes in 2019, with Olivier Guersent and Pierre Régibeau taking over the jobs respectively.

Against this background, Margrethe Vestager’s mission letter provides a glimpse of what to expect in the coming year(s):
With Commissioner Vestager as Executive Vice President for “a Europe fit for the Digital Age” the digital economy will remain a focus of competition policy and enforcement in the EU.

In addition, the intersection between competition law and industrial policy will also play an important role. France, Germany and Poland are currently pushing for a competition policy, which takes better account of potential competition by state-backed companies from third countries and allows for “European Champions”. This policy proposal will likely be one of the focal points during the German Presidency of the Council of the European Union in the second half of 2020. 

These policy objectives will shape competition law as reviews of the Vertical Block Exemption Regulation and the Horizontal Guidelines are ongoing or just starting. Most importantly, the European Commission also announced a review of its 1997 Notice on Market Definition, which will most likely be the battle ground for the EU’s diverging interests when it comes to balancing industrial policy with competition law and enforcing competition rules in the digital age. It will certainly be crucial to monitor these developments in 2020 as the EU starts shaping its competition policy for the new decade.

From 12 July 2020, platforms must comply with the P2B Regulation, which came into force in July 2019. The rules of the P2B Regulation apply to all online platforms operating either as search engines or as intermediary services between business users and consumers (Art. 1(2) P2B Regulation). Mere B2B platforms are, therefore, not covered by the scope of the P2B Regulation.

The P2B Regulation imposes, inter alia, transparency obligations on platforms:

• Regarding a possible “double role”, platforms are obliged to disclose to their business users whether the company behind the platform is also active as a business user of the platform itself (Art. 7 P2B Regulation). In that case, the platform needs to provide information to its business users on how its own business user entity is treated differently compared to all other business users.
• With regard to the possibility of business users gaining access to data collected by the platform (Art. 9 P2B Regulation), platforms need to inform their business users if and to what extent data-access is granted to business users. Furthermore, platforms need to disclose information regarding their own use of data collected from business users and whether any third parties receive access to this data.
• Platforms also need to inform users about the reasons for the use of most favoured nation (“MFN”) clauses (Art. 10 P2B Regulation).

The underlying issues are also discussed as potential antitrust law infringements. By obliging platforms to be transparent in this respect, the P2B Regulation can make it easier for both business users and competition authorities to identify and to prove potential infringements. Companies that qualify as platforms within the meaning of the P2B Regulation have already been confronted with antitrust allegations. For instance, the German Federal Cartel Office (“FCO” – Bundeskartellamt) investigated Amazon’s double role as a provider of a marketplace as well as a supplier of goods traded on its own marketplace. Another example is the dispute between Booking.com and the FCO regarding Booking.com’s MFN clause for hotels. For further information on the P2B Regulation, please also see this article.

On 24 January the German Federal Ministry for Economic Affairs and Energy presented its official Draft bill for the 10th amendment to the Act against Restraints of Competition (“ARC-Draft bill”).The ARC-Draft bill will now enter the interdepartmental consultation and then the legislative process as a government bill. Some changes can therefore be expected, but the ARC-Draft bill will without doubt bring about many new developments in the German antitrust landscape:

The ARC-Draft bill transposes the ECN+ Directive into German law; it is intended to strengthen the competition authorities of EU Member States, in particular regarding their investigative powers. 
However, the ARC-Draft bill, which is also referred to as the ARC Digitalisation Act, goes much further. It is intended to create a “digital regulatory framework” and to modernise the ARC to face the challenges in digital markets. As regards the abuse of dominance, the ARC-Draft bill provides for new, far-reaching powers to intervene in companies “with overwhelming importance for competition across multiple markets". 

Also in the area of merger control law, major changes are to be made to the relevant thresholds, the examination period and new powers to – potentially – deal better with “killer acquisitions”. 

In addition, undertakings might see improvements and more legal certainty regarding the calculation of fines.

Overall, the ARC-Draft bill shows an increase in the degree of regulation and strengthens the German Federal Cartel Office’s power to intervene in this regard. It is likely that the FCO will continue to be one of the most active national competition authorities, particularly in the area of the digital economy.

According to the Draft bill for the 10th amendment to the Act against Restraints of Competition (“ARC-Draft bill”), three major changes are planned for German Merger Control. First, the second domestic turnover threshold for the notification obligation is to be increased from EUR 5 million to EUR 10 million. The rationale behind this is to reduce the number of merger control notifications by around 20%, especially in cases that do not give rise to impediments to effective competition. The new resources gained thereby are to be used for cases which are more problematic and therefore require extensive examination.

Second, in the case of complex main examination proceedings (known as Phase II proceedings), the examination period is extended from four to five months. This change is in alignment with the procedural rules of other countries and takes the complexity of the examination into account. 

Third, the ARC-Draft bill gives the German Federal Cartel Office the power to oblige companies to notify each acquisition of a company whose turnover exceeded EUR 2 million in the past financial year. As a prerequisite for this, there have to be indications that future mergers may restrict competition on the relevant market. In doing so, the German legislator is trying to improve control over corporate strategies to expand and develop strong cross-market positions, and in particular to regulate “killer acquisitions”.

The implementation of the ECN+ Directive ((EU) 2019/1) will result in a strengthening of German law, especially with regard to the investigative powers of antitrust authorities. 

First, according to the Draft bill for the 10th amendment to the Act against Restraints of Competition, companies will be obliged to cooperate in dawn raids conducted by the antitrust authorities, and the antitrust authorities may impose fines if they fail to comply. Second, the antitrust authorities will be able to oblige individuals to provide information and to hand over documents. Both the individuals questioned as witnesses and individuals against whom the administrative offence proceedings are directed will only be able to refuse to provide information if they would incriminate themselves by doing so. 

It is true that the addressee of a request for information should not be forced to confess to a criminal offence or an infringement of antitrust law. Under certain circumstances, however, he must nevertheless provide information with which he incriminates himself. This information cannot then be used in administrative or criminal proceedings against the individual who provided the information. However, the information may be used in proceedings against the company that employs the individual. 

This provision corresponds to the Orkem case law of the European Court of Justice (Case 374/87). However, the previously higher level of protection in Germany is hereby lowered to the level under European law, thus limiting companies’ rights of defence. Companies operating in Germany will therefore have to revise their internal guidelines for conduct during dawn raids by the antitrust authorities. 

Another innovation resulting from the ECN+ Directive concerns fines imposed on associations of undertakings. In future, fines may be imposed on associations of undertakings which are not only based on their own revenues (usually membership fees) but also on the revenues of those members whose activities are connected with the association’s breach of competition law.

Finally, the implementation of the ECN+ Directive regulates in detail the cooperation between the German antitrust authorities and the antitrust authorities of the other EU Member States. The German Federal Cartel Office’s ability to enforce fine decisions from other Member States in Germany is particularly noteworthy.

The ECN+ Directive will certainly be the next big milestone in the history of EU antitrust law enforcement. Companies should be aware that the investigative powers of antitrust authorities will increase significantly and national competition authorities will intensify their network activities even further. 

The 10th amendment to the Act against Restraints of Competition (“ARC” – Gesetz gegen Wettbewerbsbeschränkungen (GWB)) will likely include a Section (Sec. 81 d ARC-Draft) outlining the criteria regarding the calculation of fines to provide a greater “uniformity of the assessment criteria used by competition authorities and courts.” 

The background of this new provision is the deviation in the fine calculation methods adopted by the German Federal Cartel Office (“FCO” – Bundeskartellamt) and by the competent Higher Regional Court of Düsseldorf (“HRC Düsseldorf” – Oberlandesgericht Düsseldorf). In the past these differences have often led to substantial increases in the fines originally imposed by the FCO.

Two important developments in 2019 suggest, however, that in the future undertakings might see improvements in the risks for challenging the FCO’s decisions, and also with respect to the calculation of fines in general. 

First, the Federal Court of Justice (“FCJ” – Bundesgerichtshof) annulled and referred back to the HRC Düsseldorf three judgments in which the latter had increased – in some cases significantly – the fines imposed by the FCO in cartel fine proceedings (Case KRB 51/16 – Liquefied petroleum gas; Case KRB 10/18 – Confectionary cartel; Case KRB 37/19 – Rossmann). Although the annulment decisions were not based on material grounds (i.e. the application of competition law), but were instead very case-specific or even of a formal nature, the decisions confirm that evidence requirements and compliance with the German Code of Criminal Procedure are taken very seriously by the FCJ in appeals concerning competition matters. 

Second, the proposed sec. 81 d ARC-draft could provide more legal certainty for undertakings concerned. However, the main criterion for the calculation of fines should be the infringement-related turnover. In this respect, the Draft bill for the 10th amendment to the ARC („ARC-Draft bill“) does not fully harmonise the methods currently adopted by the FCO and German courts. 

As a consequence, although the risks of a substantial increase in fines imposed by the FCO are expected to be mitigated, the ARC-Draft bill cannot completely exclude these risks.

In the opinion of the German Federal Ministry for Economy and Energy, the increasing digitalisation of the economy requires a “moderate adjustment” of the Act against Restraints of Competition (“ARC” – Gesetz gegen Wettbewerbsbeschränkungen (GWB)). Following the recommendations put forward in studies commissioned by the Ministry, the Draft bill for the 10th amendment to the ARC („ARC-Draft bill“) proposes the following changes and additions to the rules of German law concerning abusive market conduct:

• With regard to the assessment of market power of a company operating as an intermediary on multi-sided markets (e.g. platform operator, social network, etc.), the ARC-Draft bill provides that the intermediary’s relevance for market access to suppliers and customers be taken into consideration. 


• The provision concerning market abuse by the refusal of access to an essential facility is to be complemented by explicitly including access to data and networks as an example of such an “essential facility”. 


• The German Federal Cartel Office (“FCO” – Bundeskartellamt) will gain the option of establishing that an undertaking operating in a multi-sided market or network is of “paramount relevance for competition across markets”. If the FCO adopts such a decision, it may then use this as a basis for prohibiting certain business practices. Examples of these practices are the preferential treatment of their own services, the use of data collected by the undertaking on a dominated market in order to erect or increase barriers to entering other markets, or impeding competition by obstructing the interoperability of products and services or the portability of data, unless the undertaking can demonstrate an objective justification for these practices.


• Under German law, the prohibition of unreasonably obstructing or discriminating between undertakings applies not only to market-dominant undertakings, but also to undertakings with “relative market power” vis-à-vis small and mid-sized undertakings if the latter do not have adequate and acceptable alternative sources of supply or demand. The ARC-Draft bill proposes extending the protective scope of this provision to large undertakings too and clarifying that intermediaries may also be classified as having relative market power. 


• Another notable proposal is that an undertaking with relative market power in a multi-sided or network market is to be prohibited from obstructing the generation of positive network effects by its competitors if this seriously increases the risk of “tipping” in the affected market.

These are the most significant additions and amendments proposed by the German Federal Ministry for Economy and Energy. However, substantive changes to the proposal are likely during the coming months, especially once the draft has been discussed in the Bundestag and by the representatives of the federal states in the Bundesrat.

The German Federal Cartel Office (“FCO” – Bundeskartellamt) has previously been given the power to conduct sector inquiries where there is reasonable suspicion that consumer law provisions have been severely, constantly and/or repeatedly breached which in terms of their type or extent infringe the interests of a large number of consumers. 

The FCO's sector inquiries have so far focussed on issues which affect consumers’ everyday digital life, such as the sector inquiries into user evaluation, smart TVs and comparison websites. While the sector inquiry into comparison websites was concluded last year, the others are still ongoing. According to the FCO’s Review of 2019, we can, however, expect a final report for these two sector inquiries in the course of this year. 

The FCO still lacks the power to eliminate any infringements it detects, which is why the FCO’s President Andreas Mundt called for a selective enhancement of the FCO’s powers in order to enable the authority to enforce existing consumer-protection legislation in a quick and targeted manner. However, so far such additional powers of the FCO do not seem to be taken into account by the Draft bill for the 10th amendment of German Act against Restraints of Competition. 

It will be interesting to observe which – potentially again digital – sectors are next on the agenda of the FCO, and whether the authority will keep on pushing for more powers to not only be able to uncover but also to remedy alleged deficiencies in certain areas significant for consumers. 

In any event, it can be expected that the FCO will continue to increasingly focus on consumer welfare. Consumer protection is therefore no longer the blunt instrument it might have been in the past. When developing (digital) business models, it will thus be crucial for companies to not only comply with antitrust law but also safeguard that consumer protection provisions are not being infringed.

In 2019, lively debates on the relationship between merger control and industrial policy took place (see here). The debates stemmed from the fundamental question of whether safeguarding the competitive process as the object of merger control or specific industrial policy objectives should take precedence.

In the spotlight of this discussion was the European Commission’s (“Commission”) prohibition of the merger of the train divisions of Siemens and Alstom (see Case M.8677). The proposed merger was prohibited due to concerns of the Commission about the effects of the merger on competition in the markets for signalling technology and high-speed trains, which the Commission defined as “at least EEA-wide”. Even far-reaching remedies offered by the parties could not eliminate the Commission’s concerns in this respect. 

Critics of the decision remarked that the Commission had not paid sufficient attention to the (potential) competitive pressure from non-European train manufacturers. In this context, the “Franco-German Manifesto for a European industrial policy fit for the 21st Century” by the French Minister of the Economy and Finance and the German Federal Minister for Economic Affairs and Energy was particularly noted. The Ministers called for European merger control to be modified in such a way that it would “take greater account of competition at the global level, potential future competition and the time frame when it comes to looking ahead to the development of competition”. The Manifesto went on to suggest that a political instrument – similar to the German ministerial approval (Ministererlaubnis) – should be introduced at the European level to allow the European Council to override merger control decisions of the Commission. The European Parliament (Econ committee) also called in a draft report for an increased role in competition law enforcement. 

In response to the political debate surrounding the Siemens/Alstom decision, the Commission announced that it would revise the current “Commission Notice on the definition of relevant market” (97/C 372/03). In contrast, the political instrument similar to a ministerial approval has not yet been taken up by the Commission.

Over the last few years, the European Commission (“Commission”) has imposed fines for gun jumping in various merger cases and increased its enforcement activities in this area. 

The latest Commission decision from 2019 concerned Canon’s acquisition of control of Toshiba Medical Systems Corporation (“TMSC”) using a two-step or “warehousing” transaction (Case M.8179, under appeal). In a nutshell, the Commission held that both steps of the acquisition of TMSC via an interim holding company were notifiable as a “single concentration”. Accordingly, it imposed a EUR 28 million fine on Canon for not notifying and implementing the first step of the transaction before notifying the second step. In more detail: 

In the first step – that was carried out prior to a notification to the Commission – an interim buyer acquired 95% of the share capital in TMSC for less than EUR 1,000, while Canon paid more than EUR 5 billion for the remaining 5% of shares and a share option for the interim buyer’s shares. This first step can generally be described as “warehousing” or “parking” the target for the time being with the interim buyer. In the second step – following the clearance of the merger by the Commission – Canon exercised its share option acquiring the remaining 95% of shares in TMSC from the interim buyer.  

The Commission reasoned that separate transactions ought to be treated as part of a “single concentration” if the economic reality underlying these transactions warrants such a conclusion. In the case at hand, the first and second steps of the transaction were inherently and closely connected and the first step was necessary to achieve a change in control over TMSC. The Commission concluded that this presents a direct functional link within the acquisition of control. 

Thus, the economic aim of more complex, multi-step transaction structures has to be considered carefully and from the start when assessing notification obligations. Single steps of a transaction – not qualifying as a notifiable transaction on their own – might form part of a larger notifiable “single concentration”.

The German Federal Cartel Office (“FCO” – Bundeskartellamt) examined approximately 1,400 notified merger projects in 2019. Fourteen of them (approx. 1%) went into Phase II, in which the FCO examined the competitive effects on the relevant markets more closely (eight new proceedings in 2019 and six proceedings that started in 2018 and were completed in 2019). In four cases, the proceedings ended with a prohibition of the proposed transactions. In five main examination proceedings, the parties withdrew their notifications, which usually prevents the parties from receiving a prohibition decision. Two cases were ultimately cleared without any conditions. In three of the mergers notified in 2019, the main examination proceedings are still ongoing.

As the public debate about possible negative effects of an increasing concentration in different economic sectors – especially in the digital sector – continues, it can be expected that the FCO will not shy away from opening Phase II proceedings and conducting intensive investigations of markets concerned by a merger in 2020, too. In addition to horizontal effects, vertical aspects will play a central role, as will possible conglomerate effects.

The decision of the Higher Regional Court of Düsseldorf on the prohibition of Remondis/DSD – one of the cases in which a prohibition has been imposed – is also awaited with great interest. Remondis has filed an appeal against this decision and the main hearing date is currently set for March 2020.

In Germany, tensions between the merger control regime and industrial policy considerations became apparent in the merger of Miba and Zollern (Case B5-29/18). In this case, ministerial approval was granted to clear the merger although the Federal Cartel Office (“FCO” – Bundeskartellamt) had initially prohibited it. The businesses of Miba and Zollern overlapped in the production of plain bearings for large and marine engines. The FCO found that the merger would lead to a significant impediment to effective competition in this market and therefore prohibited the merger. Upon application by the notifying parties, Peter Altmaier, the German Federal Minister of Economic Affairs, overruled this decision by arguing that the merger was of paramount importance for enabling innovations in plain bearings used in the wind energy industry. In addition, Altmaier emphasised that the wind energy sector plays a key role in Germany’s energy turnaround plan to tackle climate change. In summary, the political objective of backing the energy turnaround took precedence over the FCO’s competition concerns in this case.

In 2020, we expect legislative tightening of companies’ access to apply for ministerial approval. According to the current status of the Draft bill for the 10th amendment to the Act against Restraints of Competition, an application for ministerial approval is only admissible if the prohibition of the merger has been reviewed in court and upheld.

In Germany, vertical issues continued to be of high practical relevance. This is demonstrated by the prohibition of the proposed Remondis/DSD transaction as well as by the ZEG fine proceedings by the German Federal Cartel Office (“FCO” – Bundeskartellamt). Vertical aspects are also relevant with regard to digital issues.

The FCO prohibited the proposed merger of Remondis and DSD for vertical reasons in particular.

Remondis is by far Germany’s largest waste management company and active in the collection, sorting and reprocessing of sales packaging. DSD is the largest dual system for packaging recycling in Germany. Dual systems such as DSD then commission waste management companies like Remondis. DSD and Remondis are therefore in a vertical relationship. Although Remondis and DSD were competitors in some areas, the FCO was particularly concerned about the vertical relationship between the parties. Remondis would have had a post-merger incentive to charge DSD’s competitors higher prices than prior to the merger in order to put them at a disadvantage compared to DSD. This could have led to significant additional market shares post-transaction, and to higher prices. Also, there was a risk that competitors would have been squeezed out. Thus, the transaction was prohibited. Remondis has lodged an appeal against this decision, which is ongoing.

The FCO has also imposed fines of EUR 13.4 million on the bicycle wholesaler ZEG and its representatives for fixing prices with approx. 50 bicycle retailers. ZEG had agreed on retail prices for certain bicycle models. The independent retailers were asked not to undercut the minimum sales prices set by ZEG. ZEG also monitored the prices. Any deviators were requested to strictly adhere to the (minimum) sales prices set.

In that regard, the FCO increasingly scrutinizes algorithms in vertical relationships, which could be used to detect deviations from an agreed fixed or minimum price (vertical price agreement). At the same time, price adjustment algorithms can further intensify the harmful effects of vertical price restrictions.

In 2017, the European Commission (“Commission”) found Campine liable for a single and continuous infringement lasting three years regarding a car battery recycling (purchase) cartel (AT.40018). The Commission imposed a fine of just over EUR 8 million.

On appeal in 2019, the General Court of the European Union (“GC”) cut Campine’s fine nearly in half (Case T‑240/17). It found that the Commission had erred in applying the concept of a single and continuous infringement considering two periods – each slightly under one-year – as relevant periods of interruptions of Campine’s participation in the cartel.

More specifically, the GC reasoned that depending on the circumstances, a single infringement may be continuous or repeated. With respect to a continuous infringement, the Commission may assume an infringement has not been interrupted even if, in relation to a specific period, it has no evidence of the participation of the undertaking concerned in that infringement, on two conditions: (i) that an undertaking participated in the infringement prior to and after that period, and that (ii) there is no proof or indication that the infringement was interrupted in relation to that undertaking. In this case, the Commission – according to the GC – did not adduce sufficient evidence to establish the continuity between the periods of interruption. 

Considering that the GC shortened the duration of liability for Campine from three years to 14 months and accordingly reduced the fine imposed significantly, it is worth considering critically whether an infringement truly qualifies as single and continuous. Taking the particularities of the given cartel scenario into consideration, sufficiently long periods separating two manifestations of the infringement could constitute relevant interruption periods rendering the application of this concept void.

In a world where data is becoming the main economic resource, market participants have a growing incentive to exchange information with others – competitors included. Depending on content and form, however, an information exchange among competitors may be covered by the ban on cartels. 

In two settlement decisions dated 16 May 2019, the European Commission (“Commission”) fined five banks (Barclays, RBS, Citigroup, JPMorgan and MUFG) almost EUR 1.1 billion for violating the cartel prohibition in the foreign exchange spot market for the eleven most traded currencies worldwide. The Commission found that traders operating on behalf of the banks concerned had exchanged competitively sensitive information going beyond standard market research via online chat rooms (including the chat rooms “Three way banana split”, “Essex Express’n the Jimmy” and “Semi Grumpy Old men”). UBS revealed the existence of the communications and benefited from full immunity, thereby avoiding fines of EUR 285 million. These decisions are in addition to fines previously imposed on banks and ongoing investigations in similar matters. 

Interestingly, the Commission explicitly stated that it would continue to pursue other ongoing procedures concerning past conduct specifically in the Forex spot trading market – which once more underlines the Commission’s firm stance not to tolerate collusive behaviour in any sector of the financial markets

Germany continues to be an attractive forum for cartel damage claims. At least 640 new damage claims have been filed in Germany over the course of the last two years. The number of judgments is increasing substantially, too, as cases are progressing after major legal issues have been decided on by the Federal Court of Justice (“FCJ” – Bundesgerichtshof).

Two trends can be seen in the recent case law: First, as predicted last year (see here), the FCJ’s decision against prima facie evidence in cartel damages cases has caused a lively debate in case law and legal literature. At the heart of this debate lies the new positive presumption which the FCJ established in lieu of prima facie evidence regarding the existence of damages and the effect of the cartel on the claimant. Most courts have now raised the bar for claimants to prove these two prerequisites for cartel damages compensation. They are starting to take a closer look at the infringement at hand and evaluating whether and on what condition an effect of the cartel on the claimant is conceivable. As such the Higher Regional Court of Nuremberg refused damages in the case of a mere information exchange, and the Higher Regional Court of Düsseldorf stated regarding trucks that “the EC decision does not state that prices have been increased in a specific country, there might be countries without any effect”. 

Second, when handling the individual case, courts clearly stick to procedural rules of substantiation and tend to regard each purchase as a single claim. Thus, they ask plaintiffs to substantiate purchases on a granular level and attribute damages very precisely within corporate groups. 

The year ahead promises to create further discussions, especially after the European Court of Justice in its Skanska judgment possibly broadened intra-group liability. Also, further cartel damage claims are to be expected as the European Commission and the German Federal Cartel Office continued to fine corporations over the last year for (alleged) cartel involvements on the markets for canned vegetables, car safety equipment, pesticides, liquid gas, steel quarto plates and others. 

In its Skanska decision (C-724/17), the European Court of Justice (“ECJ”) decided on liability for damages in a setting where the three legal entities directly participating in cartel activities had been voluntarily liquidated. Their assets were subsequently acquired by three other companies. The key question referred to the ECJ in a request for a preliminary ruling was whether or not these acquiring companies could be held liable to pay damages for the harm caused by the liquidated companies. 

The ECJ held that a liability for damages can also exist in cases where corporate restructuring of cartelists had taken place. The decisive criterion was whether or not there is – from an economic perspective – an identity between the liquidated and the new company. If there is such an identity, the new entity will assume liability for damages (economic continuity test).

The decision was well received in particular from plaintiffs’ representatives arguing, inter alia, that the European concept of the “undertaking” as an economic unit now has to be applied in civil damage claims (based on national law) in all Member States’ courts. Consequently they also argued for a broader interpretation of (parent) company liability. However, it is worth noting that the ECJ gave a preliminary ruling in a case of economic continuity after a corporate restructuring of cartelists. Accordingly, the ECJ only answered this specific question and it might be that its decision is limited to cases “such as that in the main proceedings”. 

Against this backdrop, it is likely that the question of the applicability of the Skanska decision will remain a topic of controversial debate in damages claims, and potentially has to be resolved by the ECJ – again. As a case in point, at the end of last year the Provincial Court of Barcelona apparently referred multiple questions to the ECJ concerning the scope of liability in intra-group situations and especially the question of whether subsidiaries can be held liable for antitrust infringements by their parent companies. 

At the end of 2019, the European Court of Justice (“ECJ”) with its judgement in Otis (C-435/18) ruled on the question of which entities are entitled to claim compensation for cartel damages. 

Pursuant to the settled case law of the ECJ, “everyone” can claim compensation for damages incurred by cartels as otherwise the full effectiveness of the ban on cartels (Art. 101 TFEU) would be put at risk. In essence, the ECJ in Otis has now held that “everyone” has to be taken literally. Therefore, a specific connection of the claimant with the cartel is not required as otherwise potential victims of the cartel agreement might be excluded from compensation.

In the Austrian case at the heart of the preliminary referral, the State of Upper Austria (“State”) sued members of the lifts and escalators cartel, claiming that it had incurred damages as a lender of low-interest public loans to promote the building of houses. The State argued that the beneficiaries of these public loans had to pay higher prices for lifts and escalators due to the cartel, which in turn resulted in the State having to grant higher loans.

The novelty of the case lies in the fact that the State was neither a competitor nor a direct or indirect customer of one of the cartel members, but operated in a completely separate market. Arguing for the effectiveness of Art. 101 TFEU, the ECJ concluded that the State must be able to claim compensation for cartel damages. 

However, the ECJ also emphasised that the claimant still has to prove the amount of the loss allegedly incurred and a causal link between the cartel and that loss. This can only be assessed by the referring national court which will eventually have to decide if compensation for damages will also be awarded to “everyone”.

During 2019, the European Commission (“Commission”) concluded its investigation of Google’s business practices in the market for brokering online search adverts (AdSense for Search). The Commission established that Google had abused its dominant position in this market and set a fine of EUR 1.49 billion. The abusive conduct consisted initially of strict exclusivity clauses that prohibited publishers from placing search adverts from competing search engines (e.g. Microsoft, Yahoo) on their search results pages. In spring 2009, this clause was replaced with an obligation to reserve the best, i.e. most profitable ad spaces, for Google’s search adverts and also to display a minimum number of Google search adverts. Thus, Google’s competitors were left with significantly less attractive ad space. In addition, Google required publishers to seek its consent for any changes in the way they display competitors’ search adverts. 

The Commission found that these practices severely hampered other companies’ opportunities to compete in the market for the brokering of online search adverts since publishers were either exclusively bound or their most attractive ad spaces were reserved for Google. According to the Commission, Google was not able to demonstrate any efficiencies created by these practices which may have justified the restrictions of competition.

The business practices subject to the decision do not constitute “novel” types of abusive conduct resulting from digitalisation. Thus, this case may be a good example to show that abusive conduct in the digital sphere is not fundamentally different from abusive conduct in the “old economy”. However, since business in the digital sphere is fast paced, competition authorities need to adapt accordingly and speed up their procedures. It took the Commission nine years from announcing the investigation to issuing its fine decision, a virtual eternity in the digital economy. Even if misconduct is established in the end and a nominally significant fine is levied on the perpetrator, it might be too late to preserve or restore effective competition in the market affected. Furthermore, the Commission will now have to defend its decision before the GC after Google appealed against the fine.

In early 2019, the German Federal Cartel Office (“FCO” – Bundeskartellamt) prohibited Facebook from collecting and combining user data generated on third-party websites and apps with user data generated on Facebook’s own services, i.e. Facebook, Instagram, WhatsApp, etc. (decision available here; only in German). The FCO found that Facebook’s data collection and usage practices and their extent breach European data protection rules and, thus, amount to an exploitative abuse of its dominant position on the German market for social networks. Furthermore, in the opinion of the FCO the breach of data protection rules could also be classified as exclusionary conduct foreclosing actual or potential competitors. 

Facebook appealed the decision and also requested an interim decision to suspend the enforceability of the FCO’s prohibition order. In August 2019, the Higher Regional Court of Düsseldorf (“HRC Düsseldorf” - Oberlandesgericht Düsseldorf) granted the latter request. In doing so, the court voiced serious doubts with regard to the legality of the FCO’s decision since, in its opinion, the FCO had not shown that the breach of data protection laws lead to competitive harm. In particular, the users’ data was not “lost”, but could be replicated and the users voluntarily accepted Facebook’s data collection terms. More importantly, the court held that the FCO should have shown a causal link between market dominance and the ability to apply the allegedly abusive data collection and usage terms. With regard to the alleged exclusionary effects, the court held that the FCO had not sufficiently proven that Facebook’s practices barred new market entrants. 

Since the judgment only suspends the enforceability of the FCO’s prohibition decision, the HRC Düsseldorf still has to assess the legality of the prohibition comprehensively. However, as the court’s position in the interim judgment was very clear it seems rather unlikely that it will reverse its position. Given the novel nature of the FCO’s decision, the court also explicitly granted leave to appeal its decision before the Federal Court of Justice. Thus, both the FCO and Facebook will have ample opportunities to convince the courts of their position; however, a decision by either court should not be expected before the end of 2020 or the beginning of 2021. 

In July 2019, the German Federal Cartel Office (“FCO” – Bundeskartellamt) closed its investigation into possibly abusive terms and conditions governing the use of the Amazon Marketplace platform by retailers, after Amazon offered specific amendments to these contractual terms that addressed the FCO’s concerns. 

Specifically, the authority took issue with Amazon’s almost complete exclusion of any liability towards merchants, the lack of transparency concerning the conditions applicable to merchants in general and in particular with regard to the suspension or termination of retailers’ accounts. In addition, the FCO raised concerns regarding the exclusive jurisdiction of Luxembourg courts in the event of disputes, the retailers’ obligation to grant Amazon rights of use for product images and descriptions, as well as terms concerning returns, reimbursements, seller ratings and product reviews. A more detailed description of the terms investigated by the FCO and the changes adopted by Amazon can be found in the FCO’s case report. 

Since Amazon had agreed at an early stage to cooperate with the FCO and voluntarily offered amendments that sufficiently addressed the competition concerns, the FCO terminated its investigation without adopting a decision prohibiting abusive terms and conditions or ordering specific amendments. On the one hand, this might be criticised since retailers are not able to base potential claims for damages against Amazon on facts and findings established by the FCO that would have a binding effect for the courts. 

However, from the viewpoint of safeguarding or restoring effective competition, it appears to be more important that potentially anti-competitive terms and conditions be amended to a satisfactory extent than to wait for many months or perhaps years until a final and binding decision is reached. In the latter case, retailers may receive only ex post compensation – provided that they are able to prove their alleged damages, which is a challenge of its own – or may have already gone out of business.  

It’s been a busy year in the EU state aid world – with new challenges already emerging on the horizon. 

Highlights of the past year include the very first pointers from the EU’s judiciary in the “tax aid saga”: Since June 2013, the European Commission (“Commission”) has been investigating numerous tax ruling practices of EU Member States, culminating in its 2016 decision ordering Ireland to recoup EUR 13 billion from Apple. The General Court has now rejected the Commission’s decision that Starbucks had enjoyed a selective advantage in the Netherlands but confirmed its assessment that Fiat had benefited from an unlawful tax ruling in Luxembourg. With new investigations having been added to its long list already and numerous court proceedings pending, the saga will surely continue with far-reaching – and maybe not always coherent – outcomes regarding the question of when a selective advantage is granted in the context of tax measures. 

It was also a tumultuous year once again for the EU aviation sector: The airline Condor faced an acute liquidity shortage after its parent company, the Thomas Cook Group, went into liquidation. The Commission approved Germany’s plans to grant a temporary EUR 380 million rescue loan to Condor (see here). The rescue measure of the UK government for the troubled regional airline Flybe, on the other hand, was not notified to the Commission for state aid approval. Yet, even after Brexit, EU law will be applicable to and in the UK during the transition period (until 31 December 2020). Thus, hardly surprisingly, the Flybe support has caused a number of loud state aid complaints by competitors. 

A new way forward for the EU to advance its strategic industrial policy interests seems to be the “Important Project of Common European interest” (“IPCEI”) tool: The Commission approved EUR 3.2 billion of public support by seven EU Member States, including Germany, for a pan-European research and innovation project in the common European priority area of batteries.

The foregoing underlines the political aspect of state aid rules. In the wake of the financial crisis starting in 2008, state aid rules became a policy instrument to save and regulate a failing banking sector. The same may now happen once more with regard to industries undergoing major transitions like the automotive sector or the steel industry, which suffer from high and potentially further increasing duties on energy consumption. Unlike in the past, however, this may be seen rather as a call to protect European champions instead of national champions. Thus the scope of applicability of state aid rules is likely to expand once more.