Recent Amendments to Germany’s Competition Act (GWB)

Germany’s Competition Law System and the Importance of the GWB

Germany has one of the most well-established and advanced competition law frameworks in the world. German competition law has largely been shaped in alignment with the European Union’s competition policies, aiming to prevent unfair competition and protect market structures. In this context, the Gesetz gegen Wettbewerbsbeschränkungen (GWB), or the Act Against Restraints of Competition, serves as the fundamental legal framework governing competition in Germany.

The GWB is enforced by the Bundeskartellamt (Federal Cartel Office), which is responsible for overseeing market competition by regulating mergers, preventing market dominance, and implementing anti-monopoly measures. The 10th Amendment to the GWB, which came into effect in 2021, made a significant impact, particularly due to its regulations targeting digital platforms and major technology companies. The most recent amendments further align the GWB with EU competition policies and aim to ensure effective competition in digital markets.

Recent Amendments: Regulations Targeting Digital Markets and Big Tech

Recognizing the growing dominance of the digital economy, Germany introduced the 11th Amendment to the GWB, which imposes stricter regulations on major digital platforms. Key changes include:

• New Measures Against Big Tech Companies: Companies such as Google, Amazon, Facebook (Meta), and Apple are subject to special regulatory oversight due to their “paramount significance for competition” in the market.

• Expanded Powers of the Bundeskartellamt: The Federal Cartel Office has been granted greater authority to assess the market impact of large digital firms more rapidly and prevent anti-competitive practices more efficiently.

• Data Access Regulations: Digital platforms are now required to provide competitors with access to certain data they collect.

• Preventive Intervention Mechanism: The Bundeskartellamt can now intervene before competition violations occur.

A key component of these amendments is Section 19a GWB, which introduces the concept of “undertakings of paramount significance for competition”, allowing regulators to scrutinize companies that exceed certain market thresholds.

Legal Analysis: Position within German and EU Competition Law

These amendments closely align German competition law with the European Union’s Digital Markets Act (DMA). Notably, Section 19a GWB bears strong similarities to the EU’s “gatekeeper” regulations.

• Harmonization with EU Competition Law: Germany’s reforms complement the EU’s Digital Markets Act, ensuring a more consistent enforcement mechanism across Europe.

• Judicial Precedents and Legal Interpretation: Early enforcement actions under the 10th and 11th GWB amendments have included investigations into Google’s search engine and advertising algorithms. These cases provide key examples of how regulators are addressing market dominance.

• Preventive Intervention Authority: Granting the competition authority the power to act before an actual infringement occurs has sparked debate among legal experts.

Given these developments, legal challenges at the European Court of Justice (ECJ) and Germany’s Federal Constitutional Court are expected in the near future.

Impact on Businesses

The recent amendments to the GWB have significant implications for both German and international companies.

• Major Tech Companies: Firms like Google, Meta, Apple, and Amazon now face stricter regulations regarding data sharing and market dominance.

• Small and Medium-Sized Enterprises (SMEs): The new rules aim to create a more competitive environment in digital marketplaces, potentially benefiting smaller businesses.

• Compliance Obligations: Companies are required to submit transparent reports and disclose their algorithmic practices to competition authorities.

Violations of the new regulations can lead to substantial fines and legal sanctions, including penalties of up to 10% of a company’s global annual revenue.

Comparative Perspective: Germany vs. Other EU Countries

While Germany’s GWB amendments align with broader EU competition law reforms, they also present unique regulatory approaches compared to other jurisdictions:

While Germany’s GWB amendments align with broader EU competition law reforms, they also present unique regulatory approaches compared to other jurisdictions. For instance, Germany has implemented Section 19a GWB, which imposes stricter oversight on Big Tech companies and grants competition authorities the power to intervene preventively before an actual infringement occurs. In contrast, France primarily enforces the EU’s Digital Markets Act (DMA) without granting national authorities preventive intervention powers. Similarly, the Netherlands follows general EU competition regulations but does not introduce additional national measures. On the other hand, the United Kingdom has established the Digital Markets Unit (DMU), which actively monitors digital markets and allows for preventive oversight of anti-competitive practices. Unlike France and the Netherlands, both Germany and the UK take a more proactive regulatory stance, with Germany focusing heavily on high fines based on global turnover for companies violating competition rules.

Germany’s most significant innovation is its preventive intervention mechanism, which allows national regulators to take direct action against dominant digital firms before an actual violation occurs.

Conclusion and Future Outlook

The recent amendments to Germany’s GWB introduce substantial changes, particularly in digital markets and Big Tech regulation. By enhancing the Bundeskartellamt’s powers, strengthening preventive intervention mechanisms, and expanding data access requirements, Germany has positioned itself as a pioneer in European competition law.

Key developments to watch in the coming years include:

• Judicial Review and Legal Challenges: The implementation of new regulatory powers will likely be tested in German and EU courts.

• Strategic Responses from Global Tech Firms: Companies such as Google, Meta, and Amazon will need to adjust their business models to comply with the new requirements.

• Further Integration with EU Law: Germany’s reforms may serve as a model for broader European regulatory changes under the Digital Markets Act (DMA).

In conclusion, the latest changes to the GWB demonstrate Germany’s proactive approach to regulating digital competition and may influence global competition policies in the long run.