On 3 April 2023, the Federal Cartel Office ("FCO") issued a decision finding that Apple Inc. (including its subsidiaries) holds a position of "paramount significance for competition across markets" within the meaning of Sec. 19a (1) of the Act against Restraints of Competition. This new law entered into force in January 2021 as part of a whole set of rules targeting the digital economy in general and so-called digital gatekeepers in particular, providing the FCO with ever more, earlier and stricter enforcement powers (see our January 2021 edition of Competitive Edge here). The decision was expected after the FCO came to the same conclusions regarding Facebook, Amazon and Google Alphabet (see our February 2022 edition of Competitive Edge here). Other proceedings have just been launched against Microsoft.
The FCO found that Apple is one of the strongest companies in the world in terms of sales and profits and the operator of a comprehensive digital ecosystem with high significance for competition not only in Germany, but also in Europe and worldwide. According to the FCO, Apple has a strong market position across various market levels including smartphones, tablets and smartwatches, and proprietary operating systems. Furthermore, the Apple App Store is the only digital distribution platform for apps as well as other software products.
For these and other reasons the FCO concluded that Apple runs a complex ecosystem affording it a power to behave independently of its competitors, customers and, ultimately, consumers.
Following the FCO's 3 April 2023 decision, the FCO now has the power to investigate self-preferencing, restrictions on data portability, interoperability of products or services etc.
Government passes draft bill on 11th amendment of the German Competition Act
On 5 April 2023, the Government approved a draft of the 11th amendment to the Act against Restraints on Competition ("ARC"), which will now be submitted to the parliamentary legislative procedure. The aim of the amendment is to ensure that disruptions to competition can be better remedied in the interests of consumers by sharpening the FCO's instruments of intervention. The most important changes include:
- Sector enquires can now lead to behavioural or structural remedies including, in the worst cases, unbundling of companies. Notably, this is even where no specific infringement of competition has been found but markets are nevertheless dysfunctional in the view of the FCO.
- Profits from anti-competitive conduct can be skimmed, and an undue advantage of at least 1% of the cartelised products in Germany will be assumed (up to a maximum of 10% of the total global group turnover).
- Implementation of the EU Digital Markets Act.
Originally published May 17 2023
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