Out-Law News 1 min. read

Businesses can expect German competition authority to take a more active interest in online markets, says expert


Businesses can expect Germany's main competition authority to take a more active interest in online markets in future, an expert has said.

Munich-based competition law specialist Michael Reich of Pinsent Masons, the law firm behind Out-Law.com, said the Federal Cartel Office (FCO) has wants to protect smaller companies that are active in the internet economy.

President of the FCO Andreas Mundt recently suggested that clearer legislation could be required to help authorities address the risk of monopolies in online markets, according to media reports in Germany.

Recently, the German government laid out plans to modernise competition rules to allow competition authorities in the country to assess planned takeovers even where existing triggers on the notification of such deals to the authorities are not engaged. The reformed rules will allow the authorities to scrutinise deals where "the transaction value" is "particularly high", even where the sales threshold for merger control referrals are not met, it said.

Reich said the reforms would allow the FCO to give closer scrutiny to mergers involving data-rich start-up businesses.

"With a merger control threshold based on the transaction value, the FCO could get a handle on acquisitions where the purchasing price is not based on the target company's profit or revenue levels, but instead reflects the desire to access a broad consumer base – data is the key asset of the internet economy," Reich said.

The expert said, however, that beyond the merger control regime the FCO is already taking an interest in competition in online markets.

"Rarely has the FCO taken such an active interest in vertical competition restrictions as it does in the context of the internet economy," Reich said. "It appears aware of the internet's potential to facilitate a quick and early concentration of power in markets, with immediate effects on competition."

"The Federal Cartel Office has clearly has set itself the goal of protecting smaller companies that are active in the internet economy," Reich said. "There are already high-profile examples of the FCO trying to identify all types of agreements or unilateral behaviour that may make it harder for smaller retailers or platforms to survive. Whether it is the best price clauses in the hotel booking cases, the platform restrictions in the Asics case or the exclusivity arrangements between Audible and Apple, the major concern of the FCO is always the same: does it become more difficult for smaller retailers or platforms to survive?"

Reich said that suppliers, major online retailers and platforms might have to ask themselves the same question in future before they finalise contracts containing exclusivities or sales restrictions.

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