{"id":3824,"date":"2020-06-23T23:31:28","date_gmt":"2020-06-23T21:31:28","guid":{"rendered":"https:\/\/www.d-kart.de\/?p=3824"},"modified":"2020-06-24T11:50:45","modified_gmt":"2020-06-24T09:50:45","slug":"facebook-bgh","status":"publish","type":"post","link":"https:\/\/www.d-kart.de\/en\/blog\/2020\/06\/23\/facebook-bgh\/","title":{"rendered":"Facebook @ BGH"},"content":{"rendered":"\n

The German Federal Supreme Court has ruled against Facebook and in favour of the Bundeskartellamt, the German competition authority, in preliminary proceedings on a leading competition\/data case. This goes into the heart of Facebook\u2019s business model. For the Bundeskartellamt, it is the most important case in the era of the data economy. The decision is, at the very least, a surprise. Rupprecht Podszun has first thoughts on it.<\/em><\/p>\n\n\n\n

You may read this post in German, too, by switching the language button.<\/p><\/blockquote>\n\n\n\n

Before today\u2019s decision by the Bundesgerichtshof, the German Federal Supreme Court (BGH) in the Facebook case, we in my team had calculated the chances for the Bundeskartellamt, the national competition agency. Let\u2019s put it this way: I would not have bet anything like a good original ORDO volume that the Bundeskartellamt would win. Reason is: The D\u00fcsseldorf Higher Regional Court with its 1st Senate under J\u00fcrgen K\u00fchnen had set the bar damn high for the BGH. We had calculated that it would be very difficult to overrule the OLG for two reasons.<\/p>\n\n\n\n

But first a reminder for the not so regular readers of this blog: in February 2019, after an investigation lasting about three years, the Bundeskartellamt issued a decision against Facebook that was<\/a> over 300 pages long. We had reported about it in this blog here<\/a> and here<\/a> and here<\/a> and here. <\/a>In August 2019, the Cartel Office\u2019s decision was overturned<\/a> by the D\u00fcsseldorf Higher Regional Court in summary proceedings involving the order of suspensive effect \u2013 with pithy words for which the 1st Cartel Senate is well known. We reported<\/a> on this here<\/a>. This decision was now subject to review by the BGH, still in interim proceedings.<\/p>\n\n\n\n

Against all odds<\/strong><\/h2>\n\n\n\n

There were two reasons why it was not very likely that the BGH cartel senate would decide differently from the lower court:<\/p>\n\n\n\n

Firstly, the D\u00fcsseldorf Senate had not really been happy with the decision of the Sixth Decision Division of the Bundeskartellamt and had ordered the suspensive effect for a number of reasons (lack of causality, no damage to competition, wrong remedies). After reading the straight-forward attack, even well-meaning observers of the Bundeskartellamt – such as myself – had doubts as to whether everything in the authority’s decision was the last word of wisdom.<\/p>\n\n\n\n

Secondly, the standard of review in interim proceedings before the Federal Court of Justice is extremely limited: The BGH examines whether the serious doubts of the lower court are justifiable<\/em>. This is a mere plausibility check provided for such preliminary proceedings \u2013 see for example BGH 2007 in Lotto im Internet<\/em>. There it says<\/a> (at para 17):<\/p>\n\n\n\n

\u201eAccording to Section 65 (3) no. 2 GWB [the Germa competition act], the standard for reviewing the legality to be carried out by the Court is whether there are \u201eserious doubts about the legality of the contested decision\u201c. The court only examines the result found by the lower court for legal plausibility. The appeal decision is therefore valid in the appeal proceedings to the extent that it proves to be justifiable.”<\/p><\/blockquote>\n\n\n\n

Well, it seemed to me that some of the objections of the OLG D\u00fcsseldorf were justifiable. <\/em>(But maybe my standards have also slipped: As a university teacher I am constantly correcting exams, and you wouldn\u2019t believe what I find \u201ejust about justifiable\u201c\u2026 but \u2013 oh, let\u2019s drop that). I am quite curious to see how the BGH will define its own examination mandate in the decision.<\/p>\n\n\n\n

So far, I have only a press release from the BGH<\/a>, so that all statements made here are based on a thin foundation. However, what can be deduced from this press release is, at least, \u201espectacular\u201c.<\/p>\n\n\n\n

The result<\/strong><\/h2>\n\n\n\n

The result alone is impressive. After the defeat that the office had suffered with the D\u00fcsseldorf Court, I had the impression that the fizz was gone. The Facebook case suddenly looked like a nice idea which unfortunately did not work. Now, okay, it served as some sort of justification that the tools of the Bundeskartellamt do not suffice and the planned 10th amendment to the GWB, the German act, is necessary.<\/p>\n\n\n\n

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No Like for Facebook at Karlsruhe.<\/figcaption><\/figure>\n\n\n\n

So, today\u2019s decision is a reversal of thrust, also in emotional terms. The antitrust law-loyal Twitter community and the data protection foxes had been eagerly awaiting the decision, and every tweet from Politico reporter Simon van Dorpe, the<\/a> only one to tweet faithfully from the \u201emedia workspace<\/a>\u201c in Karlsruhe, was gratefully absorbed. A decision was then announced for 4 p.m., after apparently three hours of intensive negotiations starting at 9.30 a.m. This decision is a small, subtle vulgarity for the data protection foxes \u2013 more on this later. For the antitrust lawyers, however, it is an important impulse. In substance, it means that the suspensive effect of seeking a legal decision which the OLG had ordered is no longer given.<\/p>\n\n\n\n

Of course, the pulse of those who sat in the court room in Karlsruhe was racing probably much more than that of Twitteritos. Let me take some of the work off the shoulders of the esteemed reporters from JUVE, the glossy German legal magazine, and report here on the team line-up: the Bundeskartellamt\u2019s tried and tested head of the litigation department, J\u00f6rg Nothdurft, had taken the stand. At his side: Irene Sewczyk and Sandro Gleave as well as Silke Hossenfelder, head of the policy department. Three law firms were in for Facebook: Latham Watkins had already dealt with the antitrust aspects and Wilmer Hale with the data protection issues. In addition, Gleiss Lutz, another well-proven warhorse of antitrust law, joined as second adviser.<\/em> (It is reported that they sat in corona-like seating arrangements, i.e. at a distance. This is perhaps not a bad idea for rival yet cooperating lawyers, even without corona.) The Cartel Senate was chaired by Peter Meier-Beck, framed by his deputy Wolfgang Kirchhoff, Patricia Rombach, Jan Tolkmitt and Birgit Linder. It is said that the importance of the case was in the air when the judgement was handed down. <\/a>However, it is not every day that 30 million euros in dispute and headlines in the New York Times are at stake<\/a>.<\/p>\n\n\n\n

The next steps<\/strong><\/h2>\n\n\n\n

There was no audible cheering after judgement was given, but the Bundeskartellamt, which had held back before the OLG decision, will now, it can be assumed, begin to implement its decision. To do so, Facebook must first present a plan, and then start implementing it. However, it cannot be ruled out that before the reform of the Facebook data policy, a decision will be made in the main proceedings in the meantime. The ball is now once again in the field of the D\u00fcsseldorf Higher Regional Court. The readers of this blog are well aware that the bench there does not always follow the course of the BGH, so that a decision in favour of<\/em> Facebook cannot be ruled out even after this day. (I repeat this once again for our foreign readers: The lower court will continue the main proceedings, and it is conceivable that this court, which has so far supported Facebook, will continue to do so). Then the BGH will be allowed to go for it again.<\/p>\n\n\n\n

There is another unknown variable: In the main proceedings (which Facebook is planning to go through according to an initial announcement), the European Court of Justice could also be called upon. A word from Luxembourg could possibly be a game changer<\/em> for the senate in D\u00fcsseldorf or the one in Karlsruhe, which have both taken a pointed stand on this matter. During the hearing the Bundeskartellamt apparently suggested such a submission to Luxembourg. But how the proceedings will play out is ultimately speculation. If, at some point, a final decision in favour of the Bundeskartellamt is reached, then the creation of user “super-profiles” with data from all sorts of sources will come to an end for the time being. That would, in my perception, be a very painful blow to Facebook.<\/p>\n\n\n\n

A spectacular reasoning<\/strong><\/h2>\n\n\n\n

The Bundeskartellamt\u2019s decision had a serious catch. It was not quite clear where the competitive damage would occur, for which Facebook would be held liable. The D\u00fcsseldorf Higher Regional Court (OLG) had also perceived it that way. \u201eWhere is the competitive harm in that case?\u201c became the battle cry of those who found this case esoteric from the beginning.<\/p>\n\n\n\n

The ratio of the Office in its (abbreviated) form seemed very much like a simple equation:<\/p>\n\n\n\n

Violation of the General Data Protection Regulation = violation of the prohibition of abuse, if market dominance<\/em><\/p>\n\n\n\n

The Bundeskartellamt had used the infringement of non-competitive legal norms \u2013 the GDPR \u2013 as a yardstick for an exploitative abuse and justified this with decisions of the Federal Court of Justice (BGH) such as VLB Gegenwert<\/em> and Pechstein<\/em>. However, these two decisions are not in themselves the most easily digestible dietary dishes on the menu of competition law.<\/p>\n\n\n\n

The data protection standard posed several problems:<\/p>\n\n\n\n