FCO examines Section 19a of the German Competition Act for the first time

The 10th amendment of the German Act against Restraints of Competition (ARC), also known as the ARC Digitalisation Act, just recently came into force on 19 January 2021. One of the most controversially discussed amendments is the newly introduced Section 19a ARC. This provision goes beyond the well-known abuse control of the German Federal Cartel Office (FCO) and enables the competition authority to intervene at an early stage in the event of competition being threatened by certain large digital companies by preventively prohibiting certain types of conduct.

The concept of "paramount significance of a company for competition across markets" is new under German law; the same applies to the further requirements stipulated by § 19a ARC. In addition, the legislator has implemented a remarkable particularity with regard to legal recourse: According to the new Section 73 (5) ARC, the Bundesgerichtshof, the German Federal Court of Justice, decides directly on appeals against decisions of the FCO under Section 19a ARC. In its press release of 19 January 2021, the FCO already emphasized how much it welcomes the amendment and, in particular, the modernisation of abuse control with regard to digital tech giants.

In its press release of 28 January 2020, the German competition authority now announced that it will examine the applicability of the provision for the first time: The FCO extends its market power abuse proceedings which it had initiated against Facebook according to its press release of 10 December 2020. The subject of the (second) proceedings against the company is the planned linking of Oculus virtual reality (VR) products with the Facebook network. The FCO wants to investigate to what extent a coupling of Facebook's activities in the VR sector with its social network on facebook.com, as planned by Facebook, violates the market power abuse ban (our report on this). According to its latest press release, the German competition authority now also intends to examine whether Facebook falls under the new regulations of Section 19a GWB and whether the linking of the services should be measured against this.

It is hard to predict when the proceedings will be concluded. In the meantime, the legal debate on the FCO’s first Facebook decision from 2019 is ongoing (our report on this).