Opinion & Analysis

Will Germany interfere in Brussels’ efforts to tame big tech?

In the past few years, Germany has passed several antitrust bills and opened a handful of cases aimed at keeping in check the powers of the world’s biggest technology companies. Most recently, the German government approved an amendment to the German Competition Act that will reinforce the powers of the German competition authority, the Bundeskartellamt (BKartA). The BKartA has already designated MetaAlphabetAmazon (under appeal) and Apple (under appeal) as falling within the scope of German competition law. Microsoft might soon join the club. The BKartA has become the digital antitrust authority that big tech fears.

Brussels is also wary of the BKartA. When the European Union adopted its flagship digital competition law – the Digital Markets Act (DMA) – the BKartA stated it would continue applying similar national legislation against the designated digital firms: Section 19a of the German Competition Act. Germany’s laws complement and sometimes overlap with the DMA, making the BKartA the leading digital competition authority in conflict with Brussels.

With the powers given to him, Andreas Mundt, BKartA president, has considerable discretion over what big tech cannot do in Germany. For instance, he can prevent designated companies from promoting their own services over rivals, or combining data without giving choice to end users or business users over how their data is used. Mundt has already used these powers against all the designated firms in several ongoing cases.

Meanwhile, Brussels is playing catch-up. It is still implementing the DMA and has yet to designate the firms it will cover. Margrethe Vestager, the EU Competition Commissioner, will likely target the same firms as Mundt. Vestager has very similar powers to dictate what big tech can and can’t do in Europe, but with far less discretionary leeway than Mundt.

Germany thus competes with Brussels in overseeing big tech. But Brussels has a card Germany does not have and will never have. Brussels is the sole enforcer that can tame big tech in Europe, whereas BKartA can do it only within Germany in areas unregulated by Vestager through the DMA. EU legislators adopted this card with Germany in mind to avoid market fragmentation arising from a patchwork of national legislation.

Conscious of this limit, the German government (and Mundt) stated that they would assist Brussels in enforcing the DMA and that Section 19a would complement it rather than compete with it. The latest amendment to the German Competition Act empowers Mundt to help Vestager with the DMA. But the amendment also enables the BKartA to open a market investigation in any market and force market players to change their behaviour, and even how they operate structurally by breaking them up. Brussels contemplated this power with a proposal for a new competition tool, but finally rejected it in favour of the DMA.

In practice, this power will enable the BKartA to be a market regulator, including in digital markets. It is a superpower that Mundt will likely use if Vestager does not tame big tech as he desires. Mundt could, for example, investigate a service outside the DMA scope, such as video streaming, leading to an order to a firm within the DMA scope to divest its services.

More importantly, the BKartA could investigate under the DMA and share its findings with Brussels and the public. The public report will likely put pressure on Brussels to adopt its conclusions. Even if Brussels disagrees, plaintiffs might use the findings in future private litigation before a national court to condemn big tech – something Brussels and big tech are very unlikely to appreciate as they want to avoid fragmentation.

Is the German enforcement approach desirable? It depends. Germany has a stick in its hand that forces Brussels to act, and that will be useful to fill any enforcement gaps. Germany might also make the life of big tech much more complicated in Europe, as the companies will have to please both the BKartA and Brussels, in the hope that the authorities will coordinate their approaches to avoid market fragmentation to the detriment of German and European users. For a positive outcome, Mundt and Vestager should establish a healthy relationship that clarifies the lines of action, to prevent unhealthy competition between them.

About the author

Dr. Christophe Carugati is an affiliate fellow at Bruegel on digital and competition issues.

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