On 28 September 2016, the Federal Government approved the draft bill of the Federal Ministry for Economic Affairs and Energy on the 9th amendment to the Act against Restraints of Competition (“GWB”) with some changes.
The amendment particularly concerns the implementation of the EU Cartel Damages Directive (“CDD”), the take-up thresholds (Aufgreifgrenzen) in merger control, the introduction of group liability, the changes to the legal succession to close the so-called “sausage gap” and the consideration of unpaid business relations within the framework of abuse control.
The CDD must be implemented into national law until 27 December 2016. Therefore, the legislator plans that the 9th GWB amendment should become effective at that time. The essential reforms of the 9th GWB amendment and its effects are briefly explained below.
Implementation of the EU Cartel Damages Directive
One of the essential changes effected by the 9th GWB amendment is the implementation of the CDD into German law. The CDD aims to enforce cartel damages claims of aggrieved parties more easily. For this purpose, special liability and procedural rules shall be added in national law.
A statutory presumption is added that damage has occurred due to cartel arrangements. The cartel members are obliged to disprove the statutory presumption. However, the presumption does not include any statement on the amount of the damage and also leaves the question whether the plaintiff is actually impaired by the cartel unanswered.
From a procedural perspective, it shall be made easier for the aggrieved parties to demand from the cartel members and also from third parties the provision of information and surrender of evidence required for the assertion of the cartel damages claims. At the same time, however, the cartel member is also entitled to demand information and surrender from plaintiff and third parties to defend itself against a cartel damages claim. A disclosure of official records, except for leniency applications and settlement submissions is intended as well. However, this claim should be subsidiary to the claim for surrender of the parties or third parties.
Moreover, the limitation period for claims for damages, which depends on the claimant being aware of the facts giving rise to the claim, is extended to five years. According to the draft, the absolute maximum limitation period is 30 years instead of the 10 years that applied so far. With regard to the privileged treatment of principal witnesses, it is planned that principal witnesses are only liable to their direct or indirect purchasers or suppliers. This shall exclude a joint and several liability to direct or indirect purchasers of other cartel members.
Finally, the costs of the joinder of parties shall be limited, i.e. the sum of the value of the individual joinders of parties must not exceed the value in dispute of the main proceedings. This shall restrict the risks of a litigation involving larger cartels for the aggrieved party.
Introduction of group liability
For alignment with the European Union law and the concept of the “economic unit” characterised by the European decision-making practice, the liability to pay fines of parent companies of a subsidiary involved in an antitrust violation is assumed to be joint and several if the companies formed a uniform company at the time the violation was committed, i.e. if a controlling influence was directly or indirectly exercised on the leader of the subsidiary involved in the cartel infringement. When you think about it, this could lead to a de facto premises liability being taken into account in German law. Moreover, the inclusion of a parent company in the setting of a fine (in addition to the limit of the fine) could lead to higher fines if the financial situation of the entire group is taken into account.
Furthermore, to avoid restructuring measures serving the circumvention of a liability to pay fines, a liability of the universal successor and of the economic successor (in cases of movements of assets) is introduced.
Additional assessment criteria in abuse control
In order to adjust the abuse control to the requirements of increasing digitalisation, it shall be stipulated by law that unpaid business relations (e.g. in hotel booking portals or social networks) also establish a (competition) market. With regard to multilateral markets and the assessment of a market position, aspects such as switching costs between the networks for users, network effects and the access to data shall also be taken into account in the future. This shall guarantee an adequate antitrust assessment, particularly of platform markets.
Completion of the merger control take-up thresholds
As a consequence of the acquisition of WhatsApp by Facebook, which did not fulfil the notification thresholds of the German merger control, an additional take-up threshold is introduced in the German merger control. It shall refer to the counter-performance for the merger and apply the merger control if the counter-performance amounts to more than EUR 400 million. In doing so, cases of a large company acquiring a small company with still low sales figures at a relatively high purchase price that reflects the competitive potential of the target company shall also be covered. The cabinet did not only increase the take-up threshold from EUR 350 million to EUR 400 million, but also included as an additional requirement that, if more than two companies are involved, the target company must work within Germany to a considerable extent.
In addition, the 9th GWB amendment led to changes with regard to the prohibition of exploitation of buyer power, the taking up of small mergers in the field of radio and television companies as well as in the field of press cooperation. Finally, the special abuse regulations are extended until 2022 in the field of energy management as well.
Effective date and impact
The draft does not include any transitional provisions. Therefore, the regulations of the 9th GWB amendment apply from their effective date. Legal relations not yet completed are thus not captured at that time. However, it cannot be excluded that a court will take the intended new regulations into account in already pending compensation proceedings.
Please do not hesitate to contact us if you have any questions about the strategic assessment of the effects of the amendments in individual cases.