Germany: German FCO Launches Sector Inquiry Into Online Price Comparison Websites

The German Federal Cartel Office ("FCO") has launched a sector inquiry into "online price comparison websites." This sector inquiry is the first specific proceeding in which the FCO applies its new competencies in the area of consumer protection given to it by the 9th amendment to the German Act against Restraints of Competition ("ARC"). Another sector inquiry concerning consumer protection issues in everyday digital life might follow next year.

Background

Sector inquiries are not targeted against individual companies. Their purpose is to thoroughly examine the conditions on a general market in order to identify potential infringements of legal provisions. The FCO will summarise the results of its investigation in a report. If infringements by individual companies are detected in the course of the sector inquiry, this might subsequently lead to the initiation of proceedings against individual companies. In the past, this was only possible in relation to infringements of competition law.

By the amendment to the ARC, which entered into force on 9 June 2017, the FCO has also been given such competencies in the area of consumer protection and has set up a new division for this specific purpose. The new competencies should be seen as a supplement and back-up to the well-established system of privately enforced consumer protection. Currently, the FCO has only investigative powers, but it has not yet been granted decision making and enforcement powers in relation to consumer protection issues.

Its new investigation powers allow the FCO to launch a sector inquiry whenever there are indications for a severe violation of consumer protection laws or the legal requirements for general terms and conditions that affect a large group of customers.

The FCO has identified the so-called "digital economy" as an area where one infringement by one company could harm millions of customers. Therefore, it decided to focus on this area for its first sector inquiry by its new division for consumer protection.

The current sector inquiry into online price comparison websites

The FCO considers online price comparison websites as a field where it has to ensure the reliability, objectivity, and transparency of the information that is used by millions of consumers daily.

In its sector inquiry, the FCO will focus on comparison websites active in the area of travel, insurance, financial services, telecommunications, and energy. The FCO has already sent out first questionnaires to website operators on topics such as rankings, financing, corporate links, reviews, availability or market coverage.

Outlook and Comment

The FCO's new competencies for consumer protection issues do not include decision making and enforcement powers and thus appear to be relatively weak when compared to its powers in relation to potential competition infringements.

However, it needs to be taken into account that these investigative powers should be seen as a supplement to the private enforcement of consumer protection. Consumer protection associations, which often take infringements of consumer protection provisions to court but currently lack the powers to obtain information on details of the infringements will, in the future, be able to rely on information gathered by the FCO in its sector inquiries and the results published in its report. Therefore, they will be in a much better position than they were before.

In addition to that, the FCO is now allowed to act as amicus curiae in court proceedings that concern consumer protection laws, which will also strengthen the position of consumers and consumer protection associations when bringing a claim.

Moreover, it is expected that the FCO might also use the information gathered in the course of a sector inquiry concerning consumer protection laws for the purposes of an investigation of potential competition law infringements. In particular, aspects of consumer protection might lead to proceedings concerning the potential abuse of market power. This applies all the more taking into account that the 9th amendment to the ARC has a specific focus on competitive aspects of data and their market power. Hence, it is not a surprise the FCO identified the so-called digital economy as the first field for the first two sector inquiries under its new competencies.

Overall, it should be noted that while the FCO's competencies for consumer protection seem to be relatively weak at first sight, they might turn out to be an effective instrument for consumer protection and its effects should not be underestimated by companies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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