GWB-Digitalisation Act: Germany goes it alone on big tech
- Digital Law
2020 could be described as the year of "Big Tech" in antitrust law. Almost every week, competition authorities around the world initiated proceedings against Google, Amazon and Facebook. The enormous market power of these companies and the apparent powerlessness of the authorities to act against it also triggered a wide-ranging regulatory debate. While the European Commission is calling for a pan-European solution, Germany went its own way and added a large number of regulations to the German Act against Restraints of Competition ("GWB"), by means of which the enormous market power of digital corporations is to be limited and controlled in the future.
With the Act Amending the Act Against Restraints of Competition for a focused, proactive and digital competition law 4.0 and other competition law provisions ("GWB Digitalisation Act"), numerous amendments to the law came into force on January 19, 2021. The stated aim of the amendment is to keep markets open, promote innovation through new data access rules, and quickly put a stop to any abusive behaviour by big tech companies. On procedural level, the German Federal Cartel Office (Bundeskartellamt - "BKartA") is to be enabled to act more quickly and efficiently. The GWB Digitalisation Act can thus be seen as the world's first advance by a national legislator directly against the Big Tech companies. If Hansjörg Durz (CSU) is to be believed, the new law represents the birth of the social digital market economy.
§ Section 19a GWB - Storming the GAFAs?
As the centrepiece of the amendment, the newly introduced Section 19a of the GWB concerns the abusive behaviour of companies of paramount significance for competition across markets and is primarily directed at the so-called GAFAs (Google, Amazon, Facebook, Apple). In the future, the BKartA will be able to determine by means of a limited injunction whether a company is of paramount significance for competition across markets. Based on this, the company can be prohibited from engaging in anti-competitive practices, such as self-preferencing when brokering access to procurement and sales markets or hindering competition by complicating or refusing to make products interoperable. Among prohibited practices in Section 19a (2), those in subsections (2), (4) and (7) are particularly interesting:
- Subsection 2 allows the BKartA to prohibit that GAFAs take measures that hinder other companies in their business activities on procurement or sales markets if the undertaking’s activities are important for access to these markets. In the explanatory memorandum the pre-installation of a search engine in browsers, on mobile and desktop devices and voice assistants is cited as an example. It is probably self-explanatory that Google is the main target here.
- Based on Subsection 4, the BKartA may prohibit companies from making the use of services conditional on the user's consent to the processing of data from other company-owned or third-party services without giving the user sufficient choice. The data abuse offence is preceded by the still ongoing Facebook proceedings (B-22/16), in the course of which Facebook was prohibited by the BKartA at the beginning of 2019 from requiring users to consent to the combining of their data with that collected by Facebook on company-affiliated third-party services such as Instagram or Oculus.
- Section 7 allows the BKartA to prohibit in the future that benefits are demanded for the processing of another company's offers which are disproportionate to the reason for the demand. The source of inspiration here was probably Google and Amazon, which had their commercial customers to grant them extensive rights of use to their sales materials.
Section 73 (5) - Abuse Proceedings at a brisk pace
Based on the new Section 73 (5), the German Federal Court of Justice (Bundesgerichtshof - "BGH") will in future rule on all disputes relating to Section 19a, including all independently contestable procedural acts, in the first and last instance. The background to this is that structural damage in digital markets often cannot be remedied anymore after protracted court proceedings. For other complaints that do not concern Section 19a, the Düsseldorf Higher Regional Court will remain competent in the first instance.
EU Digital Markets Act vs. Section 19a GWB
The revised Section 19a is in tension with a European draft regulation, the Digital Markets Act ("DMA"). The proposed EU-regulation is intended to grant the European Commission comprehensive regulatory rights over powerful platforms. The European Commission would be able to prohibit these platforms from certain practices per se, such as self-preferencing, aggregation of platform user data with data from third-party services, and interoperability restrictions. If one compares the DMA and the GWB Digitalisation Act, one finds many identical provisions. This raises the question of the relationship between these two regulations in the future.
In contrast to the GWB Digitalisation Act, the DMA is in principle not a set of rules for the protection of competition law. The basis of competence for the DMA is not Art 103 TFEU, which is intended for the implementation of Art 101 and 102 TFEU, but Art 114 TFEU, which standardizes internal market law with the intention of harmonization. The European Commission bases this decision on the fact that a uniform solution is required for the functioning of digital markets. Although the provisions of national antitrust law are not affected, the first sentence of Article 1 (5) of the DMA explicitly states that its aim is full harmonization: Member States shall not impose on gatekeepers further obligations by way of laws, regulations or administrative action for the purpose of ensuring contestable and fair markets. According to the current DMA draft, member states would therefore be excluded from applying their own national regulations. However, it will probably take another one to two years until the DMA enters into force. Until then, the BKartA will have ample opportunity to apply the new Section 19a GWB.
And where do we go from here?
Shortly after the GWB Digitalisation Act entered into force, the BKartA announced already that it would expand its ongoing abuse proceedings against Facebook (regarding the linking of Oculus virtual reality products with the company's own social network) and, in doing so, examine whether Facebook falls under the new regulations of Section 19a.
It is now necessary to observe how the BKartA deals with its new powers in the first application cases, how the BGH reacts to this and what conclusions the European Commission draws from this for the DMA. The focus should by no means be on the trial of strength between the German BKartA and the European Commission, but rather on the question of whether it is now finally possible to integrate GAFAs into an effective normative corset.
Please note: This blog merely provides general information and does not constitute legal advice of any kind from Binder Grösswang Rechtsanwälte GmbH. The blog cannot replace individual legal consultation. Binder Grösswang Rechtsanwälte GmbH assumes no liability whatsoever for the content and correctness of the blog.