Enforcement risks mount in Germany for comparison and intermediary platforms

The German Centre for Protection against Unfair Competition, or the Wettbewerbszentrale, has reacted since spring 2022 to numerous complaints by monitoring 64 comparison and intermediary platforms more intensively, including 24 platforms from the tourism sector, eight from the financial sector and 20 from the care sector. 

The Wettbewerbszentrale has concluded that more than 70% of the platforms it examined are advertising in an anti-competitive manner. The most frequent violations are actions or omissions that violate the misleading conduct provisions of the German Unfair Competition Act, which transposes the EU’s Unfair Commercial Practices Directive.

Missing ranking information 

Many of the comparison platforms observed by the German regulator violated the law by not providing information on how their ranking or search results were generated; for example, in one case better rankings and highlights in the search results list were sold but not marked as advertising. "Gold", "silver" and "bronze" entries were offered and in a column called "verified premium partners", a payment could book a place on the hit list. 

The Wettbewerbszentrale found that other platforms also did not differentiate clearly enough between ordinary search results and paid advertising. According to German case law and the new rules introduced by the Omnibus Directive, however, such entries must be clearly distinctive as advertising. In addition, information about the main parameters and their weighting must be provided for the ranking.

Misleading customer reviews

The Wettbewerbszentrale's "sweeps", which are checks to identify breaches of consumer law, aim to enforce the new regulation introduced by the Omnibus Directive against fake customer reviews. According to the new regulation, information must be provided on whether and, if so, how the trader ensures that the published reviews come from consumers who have actually used or purchased the goods or services. The Wettbewerbszentrale received complaints about a lot of cases where no sufficient and clear information was given or the information was only provided in a way that only well-versed persons could find it through a targeted search.

Market coverage transparency

Beyond the new legal regulation, the sweep also revealed further competition law problems: In contrary to German case law and newly introduced national laws for online marketplaces, some websites did not provide transparent information on what market coverage they show. On closer inspection, supposedly objective comparisons, especially in the financial sector, turned out to be a collection of links only to those providers who paid commissions to the portal.

Wettbewerbszentrale initiates proceedings

The results of these observations and their legal evaluations led the Wettbewerbszentrale to issue official warnings to several providers of intermediary platforms. The unfair competition watchdog has issued 33 warnings and eight informal legal notices. In 27 of these cases, providers of intermediary platforms have agreed out of court to refrain from violations in the future. Some platforms have already made their offers more transparent. In four cases, the Wettbewerbszentrale filed a lawsuit. In the first case, the District Court of Cologne issued a default judgement against a comparison platform on study courses (District Court of Cologne, default judgement of 11 November 2022, 84 O 123/22, not final). Other proceedings are ongoing and out of court. 

Osborne Clarke comment

A question that remains unanswered by German courts is whether information on how the ranking was generated is required if the main parameters of the ranking are self-explanatory. The Wettbewerbszentrale, in a recent press release, stated that it is particularly eager to clarify this question, so that there is a high risk for litigation in Germany.