Insights

Antitrust Alert: New German government's roadmap could change antitrust rules for large firms in Germany

On 24 October 2009, the new German government published its roadmap for the next four years.  As part of its plans, the government has announced its intention to introduce a power to break up companies ("Entflechtung") into German antitrust law.  It is an understatement to say this has the potential to affect significant German businesses in the coming years. 

The 2009 to 2013 government will be formed by a coalition following a general election on 27 September 2009.  Frau Angela Merkel will continue to be Chancellor, although the parties forming the coalition have changed.  

For the past three weeks, the party leaders have been negotiating a detailed plan ("Koalitionsvertrag") for all sectors of the new administration.  The roadmap contains a number of initiatives that will affect how business is done in Germany. 

In the area of competition law, the government has proposed amendments to the German Antitrust Act ("Gesetz gegen Wettbewerbsbeschränkungen" - GWB) including, most importantly, the instrument of unbundling being made available "as a last resort" to remedy competition issues.

Unbundling is not an instrument of the German competition law currently in force.  However, certain types of unbundling have been introduced over the past few years for regulated industry sectors (telecommunications, energy and railroads).  These instruments have to date been used to limit sharing of information within groups of companies and to separate accounting, management and legal structures.  These industry-specific instruments mirror EC directives and regulations, and the details vary from industry to industry.

The concept of unbundling is based on the premise that large businesses have an increased potential to limit competition.  German competition law prohibits certain types of business strategies that are regarded as abusing market power.  

However, the current competition rules of Germany do not find fault with the fact that businesses are developing and growing through skill and foresight, not even where growth results in market power, or dominance.  It is the abuse of market power and not its existence that triggers the powers of the Federal Cartel Office (“Bundeskartellamt”) and the courts. 

The new government’s roadmap does not provide any details on the proposed power to unbundle that will be incorporated in the GWB.  The "last resort" threshold envisaged in the plan is particularly vague.  The workplan also is silent on which part of the administration will have the power to unbundle (in particular, if it will be the Federal Cartel Office or the Ministry of the Economy, or both), as well as on which type of unbundling the government has on its agenda.

Furthermore, it is not clear at this point whether the new power will apply to all sectors of the economy or only to the energy industry.  Politicians have let it be known that the energy sector has given rise to the proposal, as the German energy market is highly concentrated and the Federal Cartel Office is regarded by some as lacking the powers to control consumer prices effectively.  

Details will be negotiated in ministerial workgroups over the next few months.  Read more on the workplan (in German) at the CDU website

Lawyer Contacts

For more information, please contact your principal Jones Day representative or either of the lawyers listed below.

 

Johannes Zöttl

Frankfurt

49.69.9726.3939

jzoettl@jonesday.com

 

Thomas Jestaedt

Frankfurt/Brussels

49.69.9726.3612

tjestaedt@jonesday.com

 

Carsten T. Gromotke

Frankfurt

49.69.9726.3942

cgromotke@jonesday.com

 

Jones Day prepares summaries of significant antitrust enforcement, litigation, and policy events as a service to clients and interested readers, to provide timely insight on antitrust and competition law developments relevant to business, but not as legal advice on any specific matter.  Please visit our Publication Request form to add your name to our distribution list.

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