News

“Women in Antitrust”

25.11.2020

Sarah Blazek, Associated Partner in the competition law team of Noerr, interviewed Birgit Krueger from the German Federal Cartel Office. This interview has been published in the book “Women & Antitrust, Voices from the Field – Vol. II”, November 2020, in which leading competition professionals from around the world present reflections and forecasts on topical issues in antitrust and competition law and policy.

From Food Retail to Digital Economy

"Before heading the Bundeskartellamt’s General Policy Division, you helped shape its approach to antitrust in the food retail sector during your time as head of the 2nd Decision Division. You led spectacular proceedings, such as the one leading to the Bundeskartellamt’s prohibition of the Edeka/Tengelmann merger, and provided guidance on the prohibition of vertical price fixing in the bricks-and-mortar food retail sector. Can you give us a short retrospective of this time?"

I chaired the 2nd Decision Division for eight years until the end of 2015. It was a very exciting position that comprised a multitude of interesting competencies throughout the value chain in food manufacturing and distribution, from the agriculture sector and the entire food industry through to the highly concentrated food retail sector. The way in which case-handling and independent decision-making are organised in the Decision Divisions already ensures that the heads of divisions are always highly involved in practical case work and have to know the facts of the cases in detail.

Certainly the prohibition of the Edeka/Tengelmann merger and the subsequent ministerial authorisation received a high level of public attention. The fine proceedings for vertical price-fixing in the food retail sector were important pilot proceedings to punish companies for their clearly prohibited pricing practices, which harmed consumers in important product areas. However, these fine proceedings were not conducted by my former Decision Division, but by our 10th Decision Division, which specialises in fine proceedings. Such major proceedings of course call for guidelines and guidance for the economic sectors involved. You have mentioned the example of our guidance note on the prohibition of vertical price-fixing that made the most important information on the scope of the prohibition of vertical price-fixing in the food retail sector accessible to the public. With the guidance note, the Bundeskartellamt intended to provide the sector and anyone interested with practical examples of the possibilities and limits of coordination between retailers and manufacturers.

"Which general antitrust concerns regarding vertical restraints have manifested themselves or arisen since then due to the growing world of online trade and the ensuing restrictions on online distribution?"

The “digital” part of my work for the 2nd Decision Division originated in the increasing digital transformation of distribution channels in the general consumer goods industry rather than in the food retail sector. To this day I consider the antitrust law debate of vertical restrictions imposed by powerful manufacturers on online sales one of the most important aspects of my career.

Over the last two decades e-commerce has become a supplementary distribution channel of great importance, which allows even smaller retailers to extend their reach on the market. It has also enhanced (price) transparency across different products and different retailers. This has often increased the competitive pressure on both manufacturers and retailers; several of them have responded with new forms of restrictive practices in order to secure their margins. Here the competition authorities in Europe have an important role to play. While restrictions addressing legitimate concerns by manufacturers about the quality of distribution usually do not raise competition concerns, we closely examine restrictions which have the sole purpose of reducing price pressure from online competition on the merits. The latter applies in particular to per se bans on online-specific distribution or search formats that can be considered essential for a dealer’s reach, and transparency on the range offered to the end customer. We have therefore worked on several cases primarily involving selective distribution agreements and unlawful restrictions of online sales. One example was the ASICS case.

Despite court decisions at European and national levels, the discussion on how to deal with such online restrictions is still ongoing. It will be one of the key issues in the upcoming amendment to the Vertical Block Exemption Regulation and its accompanying guidelines and we (inter alia) suggest amending the Vertical Guidelines with a more nuanced position on online restrictions and, in particular, platform bans.

"You currently head the Bundeskartellamt’s 9th Decision Division. Can you share a brief overview with us of how digitalisation and the typical features of our new digital economy have impacted your work there? Can you illustrate this with a concrete example or a specific case?"

In my current position as head of the 9th Decision Division, whose competencies include transport and Mobility as a Service (MaaS), the rise of the platform economy with intermediaries increasingly replacing the traditional purchase – resale distribution models is a hot topic. One ongoing set of proceedings concerns the sale of tickets of Deutsche Bahn via so-called mobility platforms. On mobility platforms, travellers can search for travel information either online or via apps: they can compare routes and book tickets. Some mobility platforms even offer to organise a complete journey with different means of transport. Digital platforms through which travellers can book all means of transport to their destination from a single source will be an important market in the future. In Germany, these providers rely on Deutsche Bahn for tickets and information. As things stand at present, mobility platforms do not, for example, receive real-time information about departures and delays. What is more, Deutsche Bahn’s requirements for online marketing and granting rebates are extensive. We are following up these allegations and will examine whether Deutsche Bahn is unlawfully restricting the visibility and attractiveness of mobility platforms for consumers.

"You headed the Bundeskartellamt’s General Policy Division from 2015 until 2019. This period was characterised by intense discussions about whether adjustments of the regulatory framework were required in view of the internet economy. Against this background, in 2015 the Bundeskartellamt established an in-house project group, the Internet Platforms Think Tank, to develop competition law strategies to deal with the digital economy and platform markets. It led to the publication of a corresponding working paper. Can you explain how the Bundeskartellamt has built on this early conceptual work and how it has organised its approach to digital matters?"

While I was head of the General Policy Division, I of course dealt intensively with antitrust phenomena in the context of a significant digital transformation and a platform economy that is gaining strength. It has to be emphasised that general policy work is always closely linked to the Decision Divisions’ case work. The Internet Platforms Think Tank you mentioned was created based on the case practice of and questions raised by the 6th Decision Division, which is responsible for a number of platform-related issues. Since 2015, the working groups have prepared practice-orientated working papers, some of them in close cooperation with the French Autorité de la Concurrence: “Market Power of Platforms and Networks” and “Competition Law and Data” in 2016, and “Algorithms and Competition” in 2019. The latter two are about data and algorithms as technological drivers of digitalisation and understanding technical aspects of current business models, in particular topics like data analysis and software tools used by companies. Basically, we always follow the same approach when preparing working papers. Our aim is to (a) expand antitrust expertise regarding the digital economy and provide an analysis of current literature and other materials, (b) develop examination concepts for the quick and efficient processing of digital economy cases and (c) trigger the legislative measures we consider necessary.

The digital economy of course also influences the way in which we organise our work.

Almost every industry division in my authority now deals with digital matters, from the platform economy and numerous multi-channel sales systems to all digitalisation initiatives in the context of “Industry 4.0”. This obviously requires more internal coordination but also leads to many fruitful discussions about the “correct” antitrust approach to these cases, which sometimes involves new theories of harm. I enjoy this close cooperation within the authority on the digital economy.

We have also created a new Digital Economy Unit (G6) under the umbrella of the General Policy Division. The unit is composed of an interdisciplinary team of lawyers, economists and mathematical/ technical experts. Not only did this unit co-author and coordinate the paper on algorithms, but it also represents the Bundeskartellamt in European Competition Network working groups and advises the Decision Divisions in cases involving multisided markets or platforms, algorithms used by companies and in matters of access to competitively relevant data. Many authorities are currently gaining knowledge and experience on how to promote an interdisciplinary exchange within established organisational structures and make cooperation even more effective. We are of course also discussing these matters with other authorities.

"The digital economy is characterised by incredibly fast technological developments. Digital power, including in terms of data collection, and economic power increasingly go hand in hand. This trend and the best way to “tame” digital giants have been debated by the global antitrust community intensely and quite controversially. Against the background of the newer legislative developments, as well as developments in enforcement and your conceptual work and insights on these matters, do you believe that antitrust law in Germany (and the EU) is now on the right path to finding appropriate answers? What efficient and adequate tools are still missing to avoid a potential “digital underenforcement”?"

Things are on the move, both in Germany and in Europe. I would even go so far as to say that so many initiatives have been started, both in competition law and in the area of potential regulation, that we should wait and see how effective the underlying concepts actually are before considering further initiatives.

The (upcoming) 10th amendment to the German Competition Act (GWB) will see a considerable change to the abuse provisions in sections 19 and 20. To give you an idea of the scope involved, I will simply list the relevant aspects at this point.

The new law would go far beyond our traditional rules on abuse of dominance. Our tools will likely be sharpened to put us in a more comfortable position to tackle our challenges. The following examples illustrate the range:

The Bundeskartellamt can declare a company to be “of paramount significance for competition across markets”. Once such a paramount significance is determined, we can prohibit practices like self-preferencing, market envelopment, establishing entry barriers related to data, hindering interoperability or data portability, even on markets where the company in question is not yet dominant.
The new law facilitates interventions below the dominance threshold by proving dependency on stronger platforms and their competitive advantage in controlling big data.
It broadens our national essential facilities doctrine by explicitly referencing access to data.
It clarifies that intermediation power (gatekeeping) is a special factor contributing to market power.

Even if our toolkit allows us to capture data-related concerns, finding good remedies is still not an easy task. But we do have some experience in this. In our Facebook case we placed restrictions on the use of data and prohibited Facebook from combining user data from different sources without the user’s consent. Although the Federal Court of Justice rejected Facebook’s request to order the suspensive effect of its appeal, the main proceedings are still pending before the courts.

DG COMP is also considering new tools to facilitate intervention, in particular in “structural antitrust issues” like monopolisation strategies or the transfer of market power below the threshold for market dominance. DG CONNECT is simultaneously discussing the introduction of a tool for platform-specific ex ante regulation.

"In the past, there have been demands for exemptions from antitrust law for “traditional” industry players in Germany, sometimes disguised in a “national champions” argument, to protect them from online competition. You talked about this “spectre of digitalisation” which would continue to haunt us further in the form of extensive exemptions claims. What is your position on these discussions today?"

Indeed. The spectre of digitalisation is often used as an argument by traditional industries when demanding far-reaching exemptions from competition law. Established economic actors do not always find it easy to keep up with the digital big techs, even when it comes to specific projects they discuss with us. They do not necessarily fail to implement the technological aspects involved; however sometimes the interests behind and strategies in favour of a joint initiative just differ considerably. As an example, I would like to mention digital payment systems, which fall within my Decision Division’s area of competence.

Antitrust law in principle provides for cooperation opportunities to counterbalance dominant platforms, both on a European and a national level. A critical mass is often required to achieve the necessary network effects without losing the essential entrepreneurial variety. However, antitrust guidelines are just as essential. Cooperation between major suppliers may not hinder new competitors from entering the market and may be non-discriminatory. We also have to ensure that there is no limitless flow of competitively significant data. Over the last few years, the Bundeskartellamt has developed practice-orientated approaches towards quick examination involving guidance and informal procedures. However, success or failure often does not depend on the possibilities provided for by competition law.

The German banking industry, for instance, is under considerable competitive pressure from powerful payment systems, most of which are operated by US companies, e.g. Apple Pay or PayPal. Some payment models launched in Germany are very successful at the point of sale, e.g. Girocard, whereas others like Paydirekt or Giropay are less successful. In any case, these models are not a real counterweight.

#DK is one new business case of the German Banking Industry Committee. However, it is not easy to pool the various interests and strategies of the participating associations and individual banks. In my opinion, an innovative and quick leap forward is essential. Such a leap would involve the development of a payment system that can be used on an international scale and on all types of devices, both digital and mobile, i.e. an “omnichannel” system that should also provide for an instant payment function. The structure must be quick and effective, focus on payment and work in an open and non-discriminatory way. Efficiencies for commerce and consumers must be the priority, and they are also important for examination under competition law. We are ready to accompany the process from an antitrust perspective.

Reflections and Advice to Antitrust Practitioners

"Your 30th anniversary with the Bundeskartellamt is approaching. During this time, you have been at the forefront of national and international antitrust law debates, shaping antitrust law policy and enforcement in Germany and beyond. If it is at all possible for you to single out any particular highlights or achievements from all this time, what would these be? Are there any specific cases, discussions or developments that have particularly influenced your approach to antitrust matters?"

Merger control certainly is solid ground for me. I have been involved in many difficult merger control proceedings in very different functions right from the start of my work with the Bundeskartellamt. I started as a young case handler, later became a rapporteur before heading a Decision Division and advised colleagues as a member, later as head, of the General Policy Division. I enjoy case work a lot, particularly when it comes to often very facts-based discussions with the companies concerned. I support a stringent and effective approach to merger control, because it allows us to detect threats to competition and imminent concentrations at an early stage and take corresponding action before it is too late. In my view the introduction of the European SIEC test to German merger control has expanded our definition of market dominance in a reasonable way. I believe that the basic concept gives us more leeway when addressing imminent market concentrations, which may in some borderline cases also involve a powerful group of companies, because we do not have to prove the existence of a dominant oligopoly.

Teamwork is essential when deadlines are tight in the decisive phase of a potential prohibition case. Pressure was enormous in the Edeka/ Tengelmann case, both during the proceedings themself and from the political side. From the back office to case handlers and colleagues in the General Policy Division, the case team always worked constructively together, even in the most difficult situations, and always focused on making the right decision, taking all investigation results into account. For me this was a great experience I would not have wanted to miss.

"Can you share a little bit about what professional experiences – positive and negative – have made a special impact on you and helped you progress in your professional development? What advice can you pass on to female antitrust practitioners? And last but not least: After, as it seems, having “seen it all”, what still excites you, motivates you or even surprises you about antitrust issues in your daily work? What would you tell women who are thinking about taking up a career as an antitrust practitioner about why this is a fascinating and fulfilling area of law or, for more experienced practitioners, why this is an area of law worth continuing to be involved and invested in?"

Joining the Bundeskartellamt in 1991 was the right decision for me. Competition law is fascinating. Even after almost 30 years, new legal issues keep coming up and special market conditions and cases pose new challenges. An economist myself, I have always enjoyed interdisciplinary work at the interface between application of the law and our economic approach to market investigations and analyses. Competition law brings you very close to economic decision-making and markets and what you do can have immense effects on economic processes, consumers and entrepreneurial decisions. This is a privilege but it also comes with great responsibility and can involve difficult, conflicting disputes either during the procedure or in court. Besides sound facts as a basis, a knack for persuasion and negotiations can be an advantage in some situations.

Of course not every step of a long-standing career in a public authority may seem particularly exciting and challenging at first glance, and maybe sometimes also not at second glance. The ability to tolerate such phases is important, because, at least in Germany, you either sign up for only a few years or an entire career in the competition authority. This is the price you pay. In Germany, unlike other European countries, there are very limited opportunities for gathering experience in a company after joining the competition authority and then coming back to the authority. However, I have never regretted my decision to spend my career in one single authority and I very much enjoy going to work (almost) every day.

Birgit Krueger has been chairwoman of the 9th Decision Division at the German Bundeskartellamt since May 2019, in charge of the tourism, hotel, restaurant and catering sector, transport, postal service, financial services, insurance and App Stores. Prior to that, from 2015 to 2019, she was head of the General Policy Division; and from 2007 to 2015, she was chairwoman of the 2nd Decision Division in charge of wholesale and retail, the consumer goods industry and agriculture. After studying economics at the University of Cologne, she joined the Bundeskartellamt in 1991. She was a rapporteur on various sectors (automotive, waste management, engineering, electricity, medical devices) and served as head of the merger control unit.