On 24 October 2009, the new German government published its
roadmap for the next four years. As part of its plans, the
government has announced its intention to introduce a power to
break up companies ("Entflechtung") into German antitrust
law. It is an understatement to say this has the potential to
affect significant German businesses in the coming years.
The 2009 to 2013 government will be formed by a coalition
following a general election on 27 September 2009. Frau Angela
Merkel will continue to be Chancellor, although the parties forming
the coalition have changed.
For the past three weeks, the party leaders have been
negotiating a detailed plan ("Koalitionsvertrag") for all
sectors of the new administration. The roadmap contains a number of
initiatives that will affect how business is done in Germany.
In the area of competition law, the government has proposed
amendments to the German Antitrust Act ("Gesetz gegen
Wettbewerbsbeschränkungen" - GWB) including, most
importantly, the instrument of unbundling being made available
"as a last resort" to remedy competition issues.
Unbundling is not an instrument of the German competition law
currently in force. However, certain types of unbundling have been
introduced over the past few years for regulated industry sectors
(telecommunications, energy and railroads). These instruments have
to date been used to limit sharing of information within groups of
companies and to separate accounting, management and legal
structures. These industry-specific instruments mirror EC
directives and regulations, and the details vary from industry to
The concept of unbundling is based on the premise that large
businesses have an increased potential to limit competition. German
competition law prohibits certain types of business strategies that
are regarded as abusing market power.
However, the current competition rules of Germany do not find
fault with the fact that businesses are developing and growing
through skill and foresight, not even where growth results in
market power, or dominance. It is the abuse of market power and not
its existence that triggers the powers of the Federal Cartel Office
("Bundeskartellamt") and the courts.
The new government's roadmap does not provide any details on
the proposed power to unbundle that will be incorporated in the
GWB. The "last resort" threshold envisaged in the plan is
particularly vague. The workplan also is silent on which part of
the administration will have the power to unbundle (in particular,
if it will be the Federal Cartel Office or the Ministry of the
Economy, or both), as well as on which type of unbundling the
government has on its agenda.
Furthermore, it is not clear at this point whether the new power
will apply to all sectors of the economy or only to the energy
industry. Politicians have let it be known that the energy sector
has given rise to the proposal, as the German energy market is
highly concentrated and the Federal Cartel Office is regarded by
some as lacking the powers to control consumer prices
Details will be negotiated in ministerial workgroups over the
next few months. Read more on the workplan (in German) at the CDU website.
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