INTERNATIONAL : GERMANY - REFORM OF COMPETITION LAW - PRICING ABUSES - ENERGY - FOOD TRADE SECTORS - ENERGY SECTOR - DOMINANT PLAYERS - PRICE ABUSES - FOOD TRADE SECTOR - BELOW COST - GERMAN FEDERAL CARTEL OFFICE / BUNDESKARTELLAMT

Germany : Reform of the Competition Act

The German parliament has voted in favour of a reform to the Act against Restraints of Competition which is inter alia aimed at improving the fight against pricing abuses by companies in the energy and food trade sectors. As regards the energy sector, the reform introduces a new section 29 of the ARC which aims specifically at preventing dominant players from abusing their position, by establishing two new criteria to identify excessive price abuses. Under the first criterion, the abuse of a dominant position through excessive prices can henceforth be found when gas or electricity suppliers who individually or collectively hold a dominant position charge a higher price or impose other unfavourable conditions compared to those of other gas or electricity suppliers or companies active on comparable markets. The second criterion states that an abuse of a dominant position arises when the fee charged by the dominant entity is disproportionate to the costs it is expressed to cover. As regards the food trade sector, amendments to section 20(4) ARC introduce a general prohibition on sales below cost irrespective of the duration of the offer, in order to counter the price war being conducted by big distribution chains and to safeguard the quality of the products being sold. Furthermore, a new provision in section 20(4) ARC will also forbid an undertaking with superior market power from demanding higher prices from (upstream) small- and medium-sized businesses with which it also competes on the downstream market than those it usually applies vis-à-vis its other downstream customers, when it supplies them. Finally, the ARC is now clear in that the German Federal Cartel Office can impose fines of up to 10% of the entire group’s worldwide turnover for a number of competition law infringements.

*This article is an automatic translation of the original article, provided here for your convenience. Read the original article. 1. A further reform of the Act on Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen), the central text of German competition law, entered into force on 22 December 2007. The energy sector on the one hand and the food retailing sector on the other are directly affected by the new amendments. I. Two opposing findings of fact 2. Paradoxically, these changes were motivated by two opposing findings of fact. The German Government observes that, just under ten years after the liberalisation of the energy markets in Germany in 1998, competition in the sector is still insufficient and wishes to respond to the exasperation of consumers who are

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Authors

  • Freshfields Bruckhaus Deringer (Berlin)
  • Freshfields Bruckhaus Deringer (Berlin)

Quotation

Frank Röhling, Bertrand Guerin, Germany : Reform of the Competition Act, May 2008, Concurrences N° 2-2008, Art. N° 16326

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