Tech Companies versus Competition Authorities – the Next Big Battleground

To coincide with the Chambers research into Competition law in Germany, my original plan was to write an article about the role of the Digital Markets Act (DMA).  After all, every firm I spoke to suggested that digital topics were key in Germany currently and that the Bundeskartellamt was putting a lot of focus on investigations into Apple, Google, Facebook and Amazon. 

But of course, the DMA only became applicable on May 2^nd.  What the German authorities were actually looking at was potential breaches of the slightly less snappily titled Section 19a of the German Competition Act, which had entered into force in January 2021. 

To some extent, this is a case of “what’s in a name?” – both acts seek to take action against anti-competitive behaviour by large digital companies and so make the sector more equable.  Both target so-called “gatekeepers”, large companies providing core platform services.  These include online search engines, app stores and messaging services.  Who could they mean? 

However, when the DMA was initially proposed, it was intended that the European Commission would be the sole enforcer and the national competition authorities would have no role to play.  This irked some of the national authorities who wanted the power to investigate companies under the DMA, rather than allowing the Commission to have all of the fun.   

Several law firms mentioned the desire of the Bundeskartellamt to be seen as the top enforcer in the digital sphere.  Some of the lawyers in Germany, therefore, see the recent spate of investigations under Section 19a as part of a private battle between the German authorities and the Commission, with the Bundeskartellamt eager to carry out their own investigations before the DMA fully comes into effect. 

Where does this leave the likes of Google and Facebook, or indeed companies wishing to claim that the big gatekeepers are abusing their dominant position? For the plaintiffs, the early move by the German authorities is obviously beneficial.  The Commission is still at the stage of identifying who it considers the ‘gatekeepers’ are, so trying to bring a lawsuit against the big tech companies in Germany is likely to produce faster results. 

For the tech giants, they are faced with the choice between coming to an amicable agreement with the German authorities or stalling and taking the chance that the DMA will supersede any proceedings in Germany. 

Some lawyers felt that the broad powers granted to the authorities under section 19a left a lot of uncertainty around terms such as “enveloping” or “self-preferencing” and highlighted the concern that, although the authority had so far limited itself to investigating tested areas, it had the potential to be much broader in its investigations.  This threat might lead some of the technology companies, at least according to their lawyers, to wonder whether it was worth doing business in Germany if dealing with the authorities became too problematic. 

And this, of course, ties in neatly with comments from Microsoft and Activision following the CMA’s decision to block their proposed merger.  Personally, I suspect that someone in the CMA simply got tired of saying “Activision’s acquisition” (try saying it five times as fast as possible), but this theory has not yet been proven.  But according to Microsoft, the decision was a sign that the UK is not a good place for tech companies to do business. 

This is likely to simply be a statement for the press in preparation for the inevitable appeal, and of course, the CMA instantly argued that the same decision proved the UK was a good place to do business.  But this and the investigations in Germany suggest that some very interesting battles between the technology companies and the competition authorities will be brewing over the next few months.

Previous articles in the series about European jurisdictions are available here and an article about the trends in the UK legal market is available here.