On June 9, 2017, the 9th amendment of the German Act against Restraints of the Competition (GWB) came into effect. The most significant changes affect the liability for cartel fines, the application of merger control and the compensation for cartel damages.
Extended liability for cartel fines
While the European sanctions law determines the subject for cartel fines through the “economic entity” model, German law would only impose fines on the legal person that was directly involved in the infringement. The amendment now introduces an extended liability concept in German law similar to the economic entity doctrine. From now on, a parent company can be held liable for cartel infringements committed by its subsidiaries. The liability of the parent company only requires its general control over the subsidiary but not any participation in the infringement itself. Apart from this “group liability” the amendment also introduces new rules concerning the “successor liability”. In the past, companies avoided fines by restructuring their business or deleting the legal entity whose representatives committed the infringement. From now on, the German Federal Cartel Office (FCO) will able to impose fines on the legal and/or economic successor of those legal entities.
The amendment introduces a new threshold for the notification requirement regarding merger control. Transactions will be subject to merger control if — in addition to the worldwide turnover thresholds and the first domestic turnover threshold — the counter-value (purchase price and assumed liabilities) amounts to more than 400 million euros. This threshold is primarily introduced in order to make start-ups and digital businesses subject to merger control, as these businesses often do not have high turnovers but great value. Under previous antirust-rules, takeovers of (yet) small, but innovative and by means of revenues highly promising companies have not been subject to notification, when the smaller company did not reach the relevant turnover threshold of EUR 5m — a constellation relatively often found in the digital market.
The new threshold, however, lacks the legal certainty of the common turnover thresholds thus will face difficulties in practice. The determination of the counter-value of transactions will require the FCO and the companies to conduct a detailed prognosis.
Implementation of the European Damages Directive
The amendment implements the European Damages Directive that strives to facilitate the enforcement of claims for damages in the event of competition law infringements. First of all, the limitation period for claims for damages is increased from three to five years. This also applies retrospectively to damage claims which arose before 27 December 2016 and were not statute-barred on 9 June 2017. The amendment furthermore introduces a rebuttable presumption that the cartel caused damages. The burden of proof regarding the amount of damages will remain with the claimant. In addition, it will be presumed that a surcharge has been passed on indirect customers. In order to facilitate proofing, both cartel members and cartel victims will gain easier access to relevant documentation of the FCO. Also the incentive to use the leniency scheme is significantly increased because those cartel members can only be held liable by their direct or indirect customers or suppliers. Other cartel members will still be jointly and severally liable.
Evaluation of markets
The amendment also introduces new criteria for the evaluation of the relevant markets. The fact that a service is provided free of charge is no longer an obstacle to the assumption of a market in the future. This is especially relevant for multi-lateral digital markets, where data mainly serves as a currency. However, according to the explanatory memorandum for the amendment, the prerequisite for a market is that the offer serves at least indirectly or in the long term a profit-oriented strategy. The newly introduced criteria for the evaluation of market power are direct and indirect network effects, access to data that is relevant to competition law, the parallel use of multiple services, innovation potential or the users’ effort to change the service provider.
In conclusion, the 9th amendment of the GWB will have a deep impact on German competition law and compliance practices. Besides, further amendments in the near future are not unlikely. The amendment includes multiple evaluation orders for the Federal Ministry for Economic Affairs whose results may lead to further changes. Furthermore, in March 2017 the EU Commission presented the proposal for a directive for facilitating the enforcement of European Competition Law by the national authorities. Thus, further changes to German Antitrust Law due to EU-legislation can be expected in the not too distant future.