{"id":3379,"date":"2020-01-30T17:00:34","date_gmt":"2020-01-30T16:00:34","guid":{"rendered":"https:\/\/www.d-kart.de\/?p=3379"},"modified":"2020-01-30T22:41:01","modified_gmt":"2020-01-30T21:41:01","slug":"gwb10-die-lage-1","status":"publish","type":"post","link":"https:\/\/www.d-kart.de\/en\/blog\/2020\/01\/30\/gwb10-die-lage-1\/","title":{"rendered":"GWB10: the situation (1)"},"content":{"rendered":"\n

The arena was opened on 24.1.2020: On this day,\nthe Federal Ministry of Economics and Technology presented the draft bill for\nthe \u201cGWB Digitization Act\u201d (the 10th amendment of the German competition act).\nNow, supporters and opponents of an update of the antitrust rules can work on\nconcrete proposals. Rupprecht Podszun looks at the situation after week 1 and\nfocuses on the digital issues of the amendment. <\/em><\/p>\n\n\n\n

Freedom or socialism?<\/strong><\/h2>\n\n\n\n

Really nice SSNIPpets had been ready for \u201cprint\u201d last Friday. But at 10\na.m. the Federal Ministry of Economics cut the SSNIPpets short by officially\npublishing the draft bill for a new competition\nlaw on the Internet. From then on, of course, the newsroom of our blog was like\nthe editorial offices of a British tabloid paper when a royal couple decides to\nleave the family cartel and prove themselves in free competition: everything\nturned upside down. The SSNIPpets have been wilting in the drawer ever since, I\nguess I get back to them in the silly season.<\/p>\n\n\n\n

First of all, the publication of the draft bill was a reassuring sign that\nthe Grand Coalition (GroKo) in Germany\u2019s government is still alive. We had\nspent about six months last year trembling at the question of whether the Social\nDemocrats (SPD) would leave the GroKo. Then two people were elected as leaders\nof the SPD, who somehow stood for exactly that. Since then, we have not heard\nanything about the end of the GroKo anymore. It was probably enough to elect\nopponents of that coalition government into party leadership to secure the coalition\ngovernment. Call it politics. In terms of competition policy, Saskia Esken, one\nof the two newcomers in office, enriches the discussion with occasional praise for socialism<\/a>, which in her view is not so wrong after all. Hadn\u2019t that strategy proved incredibly successful with Jeremy Corbyn? (Or\nwithout \u201csuccessful\u201d?).<\/p>\n\n\n\n

Sussex Royal, Corbyn, are we\ntalking English, now?<\/strong><\/h2>\n\n\n\n

Corbyn was the second reference to the still United Kingdom, and we want to\nleave it at that. For all our love for the competition draft bill, we take note\nof the fact that there are other developments in the world, such as the\nwithdrawal of the UK from the European Union. <\/p>\n\n\n\n

\"\"
Yes, this may remain here…<\/figcaption><\/figure>\n\n\n\n

This makes us very sad for various reasons: One of the most open countries in the world for decades is closing the windows. An important stimulus for free markets in the EU consultations has been lost. The line that the UK will take in competition policy lurches between market radicalism and protectionism at the extremes. Negotiations on future relations are tying up forces in Brussels that should actually be working on other issues. Ian Forrester, to name just one, leaves his job in the European institution (in his case it is the Court). And the Brexit vote itself, along with the election of Trump as US president, remains a frightening indicator of the state of information markets and political competition in the early 21st century. (By this I do not imply that voters would necessarily have made a different choice if the information basis had been different. But if even The Times<\/em><\/a> <\/em>cannot distinguish between the ECJ in Luxembourg and the ECtHR in Strasbourg, it was certainly not a well-informed choice).<\/p>\n\n\n\n

Competition policy as a\ndiscovery procedure<\/strong><\/h2>\n\n\n\n

With the reform bill the official battles are now being fought. At times\nwhen this blog was the only outlet for the draft of the draft, assosciations,\npolicymakers and others could still shy away from comments. <\/p>\n\n\n\n

I myself have been pretty outspoken already in different media. You know my\nopinion by now: I think the reform proposals regarding digital issues are\nlargely to be welcomed. The legislator shows some courage, even if some details\nmay still be altered. For me, the need for new rules is beyond question: the\nkind of economic revolution we have experienced in recent years and continue to\nexperience presents challenges that can only be met with great difficulty using\nthe existing rules. I know it is tough for lawyers to admit these difficulties\n(as it is difficult for lawyers to admit any shortcoming on their side). Yet, all\nstudies, whether Schweitzer\/Haucap\/Kerber\/Welker<\/em>,\nEU Special Advisers, Furman Report, ACCC, Stigler Center, Kommission Wettbewerbsrecht4.0\npoint in the same direction: reform is necessary.<\/p>\n\n\n\n

Instead of leaving enforcers and courts on their own with the role of data,\nwith platforms and their network effects, with the shortcomings of applying the\nlaw, I would like to see a signal from the legislator as to where the journey\nshould go. Peter Altmaier’s house now delivered. It may be that the route (to\nstay in that metaphore) may lead astray, take a detour or simply pass a nice\nstop (as it happens with Wolfsburg in German ICEs once in a while). But\ncompetition policy is nothing else but a \u201cdiscovery procedure\u201d.<\/p>\n\n\n\n

Interim measures<\/h2>\n\n\n\n

In its press release<\/a> on the publication of the\ndraft bill, the Federal Ministry of Economics and Technology emphasises the\nfacilitations for adopting interim measures (Section 32a GWB-E). The Minister himself is quoted as\nsaying:<\/p>\n\n\n\n

\u201eAnd the Bundeskartellamt needs more clout and should in future be able to react more quickly and prevent abuses of market power at an early stage by taking interim measures.\u201d<\/p><\/blockquote>\n\n\n\n

The\nPresident of the Bundeskartellamt, Andreas Mundt, probably thought to himself:\nExactly, and how many new staff members will you grant us? Company bosses who\nare groaning under a million-Euro-fines may have a slightly different view of\n\u201cmore clout\u201d for the Bundeskartellamt.<\/p>\n\n\n\n

\"\"
Minister Peter Altmaier (photo by Lucas Gasser)<\/figcaption><\/figure>\n\n\n\n

Adrian\nDeuschle and I looked at interim measures in the past year. They do not speed\nup proceedings, but tend to prolong them. They are there to secure a state of\naffairs, but this will be considered – also in future – especially in\nconstellations such as the Commission’s Broadcom<\/em>\ncase: when the facts of the case are clear and the remedy easily determined. In\nmore daring proceedings, Google Shopping<\/em>\nor Facebook<\/em> for instance, interim\nmeasures are very unlikely. For details see: Podszun\/Deuschle<\/em>, WuW 2019, pp. 613 ff. #selfpreferencing<\/p>\n\n\n\n

The Lobbies<\/h2>\n\n\n\n

If the draft bill makes it into the Bundestag (the cabinet decision is\nstill pending), then the discussion should really get going again there in\nthe back rooms<\/s>. We are already hearing about last-minute exemptions for\nindividual industries, and the GAFAs – Google, Amazon, Facebook, Apple – have\nalso woken up and are getting their machines up and running. In this context,\nthe news published by the Washington Post<\/em>\n(owned by Amazon boss Jeff Bezos) may be of interest<\/a>: The big techies have spent\nabout half a billion dollars on lobbying in the past decade.<\/p>\n\n\n\n

So it is only fair, that there is also lobbying from the other side: The\nNGOs Oxfam, Restrict Corporate Power, Entrepreneurial Green, Digital Courage\nand the Digital Society have called on legislators to enact stricter rules for digital gatekeeper<\/a>s. (Probably with a slightly lower budget). It seems to me that the non-governmental\norganisations only discovered the subject of antitrust law in recent years,\ntriggered by Bayer\/Monsanto<\/em>. The\nalliance has mastered a steep learning curve. Here comes pressure from the\nleft, which broadens the spectrum of opinion in competition policy.<\/p>\n\n\n\n

In mid-February there will be a hearing of associations and a hearing of\nthe Federal States, the L\u00e4nder. The criticism of the most important association, the BDI  (Federation of German Industries) is not as\nharsh as you may imagine.<\/p>\n\n\n\n

First point of criticism: German and EU abuse law should not be allowed to\ndevelop apart. Divergent approaches, however, are perfectly with Art. 3 (2) sentence\n2 of Regulation 1\/2003, and it is – for example in the case of abuse of\nsuperior bargaining position \u2013 common and uncontroversial practice. The EU will\nprobably not enact new rules on abuse any time soon. This, however, should not\nmake member states sit and wait.<\/p>\n\n\n\n

The second point of criticism is that #GWB10 makes it harder for German\ncompanies to become strong in the digital field. I am not convinced. It is\n(unfortunately!) not foreseeable that German companies will come into the focus\nof the new \u00a7 19a GWB-E \u2013 as an undertaking with paramount significance for\ncompetition across markets. The new provisions in \u00a7 20 GWB-E are aimed at\nmaking it easier for companies, including the German industry players, to make\nconnections in the Internet of Things (not to mention the comfort letter<\/em> in \u00a7 32c GWB-E). [Oh, that E by the way stands for\n\u201cEntwurf\u201d \u2013 draft. This is how we abbreviate that in Germany.]<\/p>\n\n\n\n

The BDI explicitly demands: Access to data as before on a negotiation basis\ninstead of interference of competition law. The BDI will know better what its\nmembers need, but my impression was that these data access rules should exist\nespecially for BDI members so that they are not left out in the Internet of\nThings. In tough negotiations on data access, a company can starve to death on\nthe outstretched arm of the negotiating partner. However, the follow-up\nquestions on the data access claim (who, what, when where,\nwhy?)<\/a> are still completely open – the BDI has a point here.<\/p>\n\n\n\n

Questions on the new\nmerger control regime<\/h2>\n\n\n\n

Big news compared to the draft we had presented here earlier is the new\npossibility of the Federal Cartel Office to oblige Remondis<\/s> companies to\nnotify all acquisitions even if the turnover thresholds are not otherwise met.\nThe requirements are extraordinarily low: the target must achieve at least 2\nmillion euros in sales, 2\/3 of these sales must be achieved in Germany (\u00a7 39a\nGWB-E). Otherwise, it is sufficient if the acquirer has a worldwide turnover of\nEUR 250 million and there are “indications” that competition could be\nrestricted in Germany. <\/p>\n\n\n\n

\"\"
A case on waste disposal, involving the company Remondis, sparked this debate.<\/figcaption><\/figure>\n\n\n\n

That is pretty vague for a new notification regime deluxe<\/em>. Is it really\nnecessary?<\/p>\n\n\n\n

The German discussion centers around the case of Remondis, a waste disposal\ncompany that allegedly buys up small competitors that are only relevant on\nregional markets. You may call this \u201ckiller acquisitions\u201d, somehow, even if\nunrelated to the Silicon Valley.<\/p>\n\n\n\n

In the earliest version of a draft for the German merger regime, back in\n1971, the legislator had thought into the other direction: it exempted small\nenterprises that were independent and had a turnover of less than 50 million\nDeutsche Mark. It is an interesting read, this 50-year-old document:<\/p>\n\n\n\n

\u201eSuch mergers are not irrelevant from the point of view of competition policy, since large companies can also acquire or strengthen dominant positions through repeated takeovers of small and medium-sized enterprises. Nevertheless, it seems justified to exempt from merger control companies with sales revenues of no more than DM 50 million, since this is the only way for the entrepreneurs to fully exploit the assets of their company. (…) From the point of view of competition policy, the clause is justified because it can facilitate the decision to become independent and thus keep the market open for newcomers. Without the 50 million clause, self-employment would thus be burdened with an additional risk.\u201c<\/p><\/blockquote>\n\n\n\n

Please note: Startups were called newcomers back then.<\/p>\n\n\n\n

If such a notification deluxe rule is inserted, I would favour tougher\ncriteria for the acquirer, and I would scrap the domestic turnover rule and\nreduce it to what is necessary under international law. This would at least\nmake it more likely to have the next Facebook\/WhatsApp<\/em>\nin the merger files of the Bundeskartellamt.<\/p>\n\n\n\n

This is the law-maker\nspeaking<\/h2>\n\n\n\n

In the leading party in Parliament, the CDU, Dr. Matthias Heider is\nresponsible for competition issues. He is the most important voice in\nparliament on the reform. (It has to be admitted that the voice of his\nGreen-party colleague Katharina Dr\u00f6ge is louder at times, she is an economist with\nplenty ideas for reforming competition law. Yet, she is on the benches of the\nopposition.). Heider (a lawyer) issued a press release on the draft bill<\/a>. This is\nimportant, because the legislator is speaking here: <\/p>\n\n\n\n

\u201eThe draft bill offers great opportunities for the free development of medium-sized companies in the digital economy – on the one hand by curbing certain market foreclosure practices of the tech giants and on the other hand by creating additional legal certainty for the cooperation between companies.\u201c<\/p><\/blockquote>\n\n\n\n

So, \u00a7 19a GWB-E and \u00a7 32c GWB-E will not meet\nopposition. But Heider is not completely satisfied:<\/p>\n\n\n\n

\"\"
Matthias Heider, deputy chairperson of the Econ Committee in Bundestag<\/figcaption><\/figure>\n\n\n\n

\u201eHowever, Heider is critical of a new provision according to which the Bundeskartellamt may oblige certain undertakings to notify any merger, even below the threshold of merger control. \u201cThis last-minute addition of the rule,\u201d says Heider, \u201ctakes too little account of the legitimate interest of many smaller start-ups and medium-sized companies, whose corporate strategy is currently focused on an exit to a larger competitor.\u201c<\/p><\/blockquote>\n\n\n\n

Word.<\/p>\n\n\n\n

Btw, Mrs Dr\u00f6ge from the Green Party also gets\nsome criticism from Mr Heider for her \u201cexpropriation phantasies\u201d that would\ndamage the German economy. Elizabeth Warren<\/s> Katharina Dr\u00f6ge had said:<\/p>\n\n\n\n

\u201eIf market power is too big, it must be possible to unbundle digital monopolies.\u201c <\/p><\/blockquote>\n\n\n\n

Heider\u2019s criticism may be seen as a little\ngesture of respect for the colleague. In non-digital terms, by the way, the\nGreen Party recently tabled a motion in the Bundestag, to better protect farmers from excessive market power on the other side.<\/p>\n\n\n\n

\"\"
Katharina Dr\u00f6ge, the Green’s shadow secretary for Economics (photo by Johanna Fecke).<\/figcaption><\/figure>\n\n\n\n

Heider and Dr\u00f6ge \u2013 it is not\nreally a CDU \/ Green love affair (as some in Germany would love to see). Yet,\nwith these protagonists (and others) we will see a lively and knowledgeable\ndebate in Parliament. And that is more than we dare hope for these days.<\/p>\n\n\n\n

Advice for the government <\/h2>\n\n\n\n

The Monopolies Commission has also made its voice heard with a “policy brief”<\/a>. The Commission, headed by star economist Achim Wambach, is an independent government think tank for competition policy. The short statement, well \u2026 baffled me. This is the executive summary: <\/p>\n\n\n\n

\u201cThe new types of abuse for companies with paramount cross-market significance should not be introduced in haste.<\/p>

In the case of exploitative abuses, a causal link between dominant position and abusive behavior should still be present.<\/p>

The companies affected by the proceedings should be required by law to cooperate more strongly if effective enforcement by the antitrust authorities cannot otherwise be ensured.<\/p>

An increase in the merger notification thresholds and the associated lowering of competition protection should be combined with a targeted increase of merger review in regional markets.\u201d<\/p><\/blockquote>\n\n\n\n

Actually, the Commission also had some positive\npoints for the Ministry (if not in that summary). However, I am still stuck on\nthe first sentence. \u00a7 19a GWB-E does not meet with the approval of the\nMonopolies Commission. There are too many open questions about the scope of\napplication, the concrete prohibitions, the sanctions (the Commission is\nthinking here more of monitoring or regulation). True, there is a need for\ndiscussion. Yet: That is what the legislative process is for. The proposal had\nbeen on the table at least since 14 October 2019 (when we published it in the\nblog), before that the Furman Report had proposed a similar rule, in the past\nyears we sat through 750 conference panels where we discussed new digital\nrules, and Google has a market share of 95 % in general search in Germany for\n10 years. I think one can say a lot of things but not that a new rule for\ndigital platforms comes \u201cin haste\u201d. Come on, let\u2019s not wait ten more years, let\u2019s\ndiscuss the details!<\/p>\n\n\n\n

They also have a real crackerjack in that policy\nbrief: The Monopolies Commission proposes a tougher merger control on regional\nmarkets by doubling the turnover of companies in merger control that are merely\nactive in a maximum of three L\u00e4nder<\/em>.\nI take every bet that this will not be realised \u2013 it would hit half of the\nGerman Mittelstand<\/em> probably \u2013 for instance\nall the companies dealing with the car manufacturers in the L\u00e4nders<\/em> Bavaria (the one with the beer\nfestival) or Baden-W\u00fcrttemberg (the one where they discard their\nhyper-intelligence with unintelligible German).<\/p>\n\n\n\n

No exemptions, please!<\/strong><\/h2>\n\n\n\n

I take no bets on another question: Will there be special rules,\nprivileges, exemptions for certain industries? Please not! But it happened\nagain in the last amendment – in favour of the press publishers in \u00a7 30 GWB.\nAnd then there was this back-office merger of public savings bank service providers\nthat failed due to the Bundeskartellamt (or so they say). Such a fiasco<\/em>, the savings bank lobbyists in\nthe Bundestag were clear about that, must never happen again. Since then, \u00a7 35 (2)\nSentence 3 of the German competition act is a monument of special-interest-protection-turned-into-law.\n<\/p>\n\n\n\n

\"\"
No. This is not the decision division in the Bundeskartellamt dealing with the health sector.<\/figcaption><\/figure>\n\n\n\n

The thought of special rules flashed through my mind when I read that the\nBundeskartellamt has become active again with the Presse-Grosso<\/a>, distributer cooperations for newspapers and magazines, and eliminated discrimination against lower-turnover titles through a minimum\nturnover criterion. I am sure, lobbyists could find a place in \u00a7 30 to remedy\nthis latest intervention. But then, the Bundeskartellamt has also approved the cooperation of two press houses<\/a> in Berlin, Berliner Morgenpost<\/em> and Tagesspiegel<\/em>, on the basis of the\ngenerous exemption \u00a7 30 (2b) GWB. Perhaps the publishers are satisfied for now.<\/p>\n\n\n\n

I am more concerned about news from the health care system: Several mergers of hospitals were opposed by the Bundeskartellamt. Klinikum Stadt Soest and the Marienkrankenhaus<\/a> were the last to be affected by tough merger review, and a case in Unna is pending.<\/p>\n\n\n\n

According to information from the Allgemeine Zeitung<\/a> the government of North-Rhine Westphalia (NRW, the Land with that beautiful capital city called D\u00fcsseldorf) is now thinking about relaxing the merger laws for hospitals. There could be a case \u2013 I am not sure \u2013 to reorganise the hospital sector. Yet, if this is done, the Ministries of Health should at least get the advice of the Bundeskartellamt when doing so before scrapping merger control altogether. An injection of free competition does not seem to be an entirely wrong medicine for this field. <\/p>\n\n\n\n

\"\"
D\u00fcsseldorf – isn’t it lovely?<\/figcaption><\/figure>\n\n\n\n

Incidentally, political observers have not failed to notice that a merger of two hospitals in G\u00fctersloh has also failed<\/a>. Why is that relevant?\nG\u00fctersloh is the constituency of Ralph Brinkhaus, who chairs the CDU\/CSU\nparliamentary group in the Bundestag. Let’s hope that he doesn’t believe, out\nof false patriotism, that adherence to regulatory principles is like having to\nmake a forest run with a pole across your mouth (Bismarck is said to have said that<\/em>).<\/p>\n\n\n\n

Why not close this blog post about law in the making with that Otto von Bismarck?\nYou know the well-known quote\nattributed to him about laws and sausages<\/a>. (Germans are experts in both\nfields.) Enjoy your meal!<\/p>\n","protected":false},"excerpt":{"rendered":"

The arena was opened on 24.1.2020: On this day, the Federal Ministry of Economics and Technology presented the draft bill for the \u201cGWB Digitization Act\u201d (the 10th amendment of the German competition act). Now, supporters and opponents of an update of the antitrust rules can work on concrete proposals. Rupprecht Podszun looks at the situation after week 1 and focuses on the digital issues of the amendment. Freedom or socialism? Really nice SSNIPpets had been ready for \u201cprint\u201d last Friday….<\/p>\n

Read More Read More<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":3383,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[311,308,310,313,312],"class_list":["post-3379","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-allgemein","tag-aufgreifschwellen","tag-gwb10","tag-krankenhausfusionskontrolle","tag-reform","tag-remondis"],"translation":{"provider":"WPGlobus","version":"3.0.0","language":"en","enabled_languages":["de","en"],"languages":{"de":{"title":true,"content":true,"excerpt":false},"en":{"title":true,"content":true,"excerpt":false}}},"_links":{"self":[{"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/posts\/3379","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/comments?post=3379"}],"version-history":[{"count":12,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/posts\/3379\/revisions"}],"predecessor-version":[{"id":3400,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/posts\/3379\/revisions\/3400"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/media\/3383"}],"wp:attachment":[{"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/media?parent=3379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/categories?post=3379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.d-kart.de\/en\/wp-json\/wp\/v2\/tags?post=3379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}