PublishedJanuary 14, 2021

German Legislature Preempts EU Reforms with National Competition Law Amendments Targeting the Digital Economy

Berlin, GERMANY — Members of the German parliament voted to approve far-reaching regulations for large digital platforms today. Once signed into law, the proposal would make Germany the first jurisdiction in the EU specifically regulating market power in the digital economy.

The reform introduces article 19a in the German “Act against Restraints of Competition,” setting a new standard of behavior for companies “of paramount significance to competition across markets.” These companies will, among other things, not be allowed to leverage their resources as a platform to gain an advantage in other markets. The provision contains rules on self-preferencing, the use of data and interoperability.

Appeals under the new regime are proposed to be brought immediately to the Federal Supreme Court, which will rule in “first and last instance”. This means that for enforcement cases brought under the new amendments, defendants will have less judicial protection than in “non-digital” cases.

The German competition authority, the Bundeskartellamt, could start applying the rules from March.

In December 2020 the European Commission introduced its own proposals for regulation of market power in the digital economy, the Digital Markets Act. Article 1(5) of the Digital Markets Act prohibits Member State action that would “impose on gatekeepers further obligations by way of laws, regulations or administrative action for the purpose of ensuring contestable and fair markets.”

The following quotes can be attributed to CCIA Competition & Regulatory Counsel Kayvan Hazemi-Jebelli:

“The German law risks frustrating the European Union’s attempts to harmonise digital economy rules under the Digital Markets Act.”

“It would be a major blow to the EU Single Market if companies were forced to implement different product designs in different Member States.”

“European businesses and consumers would not have access to the same quality digital services or technological innovations in every Member State.”

“Rather than pursuing diverging national rules we encourage European decision makers to pursue a single, objective and evidence-based framework across the entire EU single market.”

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