More powers for cartel office
Federal government tightens antitrust law
04/05/2023, 4:40 p.m
If companies violate competition rules, they should be reined in more quickly. One suspicion will be enough in the future to skim off profits. The cabinet passes a bill intended to protect consumers from skyrocketing prices.
In view of the experience gained during the energy crisis, the federal government has initiated a tightening of competition law. The cabinet in Berlin passed a draft law intended to noticeably expand the powers of the Federal Cartel Office. According to this, the authority should no longer have to prove specific anti-competitive behavior on the part of companies, but can take action as soon as the market is disrupted.
“In view of the current crises, we have to use the great strengths of the competition more consistently,” said Federal Minister of Economics Robert Habeck. “Competition is the best way to protect consumers from unjustified price increases.”
The Federal Government hopes that fair competition will result in the Federal Cartel Office being able to order direct measures following a sector audit. “For example, market access can be facilitated, concentration tendencies stopped or – in extreme cases and as a last resort – companies can be unbundled,” explained the Federal Ministry of Economics.
“Competition authority with bite”
In addition, the hurdles for skimming off advantages under antitrust law are to be significantly lowered. As stated in the draft law, the suspicion that a violation of the competition rules “has caused an economic advantage” should in future be sufficient to skim off profits. And: “The amount of the economic advantage can be estimated.” Previously, it had to be determined exactly.
“We need a competition authority with bite,” said Federal Justice Minister Marco Buschmann. The Federal Cartel Office is “one of the most respected competition authorities in the world” and will now be further strengthened. The Ministry of Economics had initiated the reform of the so-called Act Against Restraints of Competition (ARC) because of the rapid price increases for diesel and petrol as a result of the Russian attack on Ukraine in March 2022. Buschmann was initially reluctant to accept the proposals.
In the months of negotiations, however, it was apparently primarily about questions of detail. The basic idea of the original proposals from Habeck has also been retained in the draft law that has now been passed.
“Positive effects in your wallet”
There was sharp criticism from the economy. Iris Plöger from the Federation of German Industries explained that it was a “national legislative solo effort” that would further weaken Germany as a business location in international competition. In the future, the Federal Cartel Office could “intervene in corporate legal positions without violating the rules with sanctions up to and including demerger”. That will deter investors.
CDU MP Julia Klöckner agreed: “Competition law must not become a playground for state intervention,” she said. Stephan Wernicke from the German Chamber of Industry and Commerce spoke of a “paradigm shift towards state market design as the last resort”. The federal government is thus moving away from European competition law. He warned the Bundestag not to agree to this.
SPD MP Verena Hubertz also sees a “paradigm shift”. However, she expressly welcomed this. “In this way, we put a stop to abusive practices, even below the threshold of illegal price fixing,” she told the AFP news agency. “Citizens will feel the positive effects in their wallets.”