Berlin First a blockade, then marathon negotiations, and finally a deal. The traffic light alliance’s legal model is also applicable to competition law. Shortly before 2:00 a.m. on Saturday and Sunday, the three factions of the Social Democrats, Greens and Liberal Democrats reached an agreement that was officially announced on Monday: a fundamental change in antitrust law will be completed. Andreas Audretsch, leader of the Greens’ parliamentary group, spoke of “the biggest reforms since Ludwig Erhard”. The new competition law is due to pass the Bundestag this week.
This means that the Federal Cartel Office will be able to intervene in markets in the future where there is no real competition in the market (for example no new companies can enter the market). There, it can enforce measures ranging from disclosure of data, design specifications for corporate contracts, to corporate breakups as a last resort.
So far, authorities have only been able to intervene if they detect illegal activities such as price manipulation. Initial applications may be in the cement industry, the furniture trade and oil refining. In the latter case, the intervention of the cartel office would have a significant impact on fuel prices.
State Secretary for Economic Affairs Sven Gigold spoke of the new European standards that will ensure greater competition in weak markets. “It is now the European Commission’s turn to follow the example of the UK and Germany,” Gigold told Handelsblatt.
The Liberal Democrats, in particular, have long been fighting federal Economy Minister Robert Habeck’s (Greens) House project. Among the liberals, there are some opponents who worry that the reforms will lead to an invasion of the state, while others are in favor of more competition to improve the functioning of markets.
Recent Changes Affecting SMEs
Habeck negotiated the law with Finance Minister Christian Lindner and Justice Minister Marco Buschmann for six months, with a cabinet decision in April. In the Bundestag, the law is again on the sidelines. Some Liberal Democratic Party politicians wanted to discuss the heart of the law again, temporarily halting negotiations. However, this did not happen and the leaders of the parliamentary group have now secured the agreement.
According to the “Business Daily” news, the Liberal Democratic Party has made some changes. If a company disrupts competition, that alone is not enough to intervene. It must also make a significant contribution, ensuring that consumers are thus disadvantaged, for example by price increases. It is therefore expressly stipulated that before intervening, the cartel office must check whether the company is of significant importance to the market.
The revised law reveals that the following wording has been adjusted: “Measures may be targeted at companies that, through their actions and their importance to the structure of the market, cause a significant disruption to competition.”
“It is therefore unlikely that medium-sized companies will be affected by the measures taken by the cartel office,” says FDP economic politician Gerald Ulrich. In addition, the law adds that opposition to measures taken by the cartel office has a moratorium. effect. Any intervention in the market must first be subject to judicial review.
“We are making what the Federal Cartel Office calls a sectoral investigation an effective competition law tool.”
(Photo: Imago Images)
The criteria in the law also apply to corporate mergers, but only above a certain size. Alliance partners have adjusted the applicable thresholds: only companies with revenues of more than one million euros in the previous financial year are eligible. Previously, it was planned to invest 500,000 euros.
SPD economic politician Sebastian Roloff said that despite the changes, the cartel office’s new intervention options created “an effective competition law tool”.
>> Read here: How the LDP is wrestling with Harbeck over new competition policy and itself
The law was inspired by the business of oil companies. In the early summer of 2022, after the outbreak of the war in Ukraine, fuel prices continued to rise – although oil prices fell again. A lack of competition between gas stations and refineries has made this possible.
The cartel office was unable to intervene because there was no evidence of illegal price fixing. Seeking to change that, Harbeck presented his draft law in September. He has considered antitrust law as a new pillar for the entire economy. Discussions on fuel prices present opportunities.
Fiery letter from industry lobby: ‘Destructive signal for Germany’
The proposal sparked massive protests from business associations. This has only gradually come to be accepted across the federal government, though. Attorney General Buschman made some changes ahead of the cabinet decision, raising hurdles for the cartel office to intervene. But the heart of the law remains.
At the end of June, the Confederation of German Industries (BDI) made a final attempt. The powerful association sent a dismissal letter to the MPs involved and renewed calls for the law to be repealed. Otherwise, there is “the risk of a systemic breakdown, which would send very negative and even damaging signals for investment and innovation and thus damage Germany’s position as a business location,” said the documents obtained by Handelsblatt.
The head of the agency, Andreas Mundt, a member of the Liberal Democrats, will gain considerable powers as a result of the new law.
(Photo: Imago Images)
On the other hand, most economists support the project, as does the chairman of the cartel office and member of the Liberal Democrats, Andreas Mundt. The head of the agency will be next on board after the Bundestag decides this week. The authorities in Bonn are already preparing to implement massive new powers. It needs employees and new ways of working.
Harbeck officials are already drafting the next amendment to the competition law. This time it should be a new option to offer legal and safe cooperation options for companies on climate protection issues. This also promises new discussions with the LDP.
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