German antitrust authority assumes additional consumer law jurisdiction

A recent amendment to the German Competition Act has given the federal antitrust authority (the “Bundeskartellamt”) additional jurisdiction to investigate violations of consumer protection law. While the authority will not be able to impose any fines, it can launch sector-wide investigations and intervene as an amicus curiae in court procedures, and has already created a new consumer protection division for this purpose.

The new rules

Under the new statutory regime, the Bundeskartellamt can start investigations if there is

“evidence of material, permanent or repeated violations of consumer protection law that by their nature or extent impair the interests of a large number of consumers”

If such far-reaching violations become the subject matter of a court proceeding, then the authority can also intervene, provided it deems an intervention

“reasonable in order to protect the public interest”.

In that case, courts have to provide it with copies of any filings, minutes and decisions upon request, and the Bundeskartellamt can file briefs noting points of law or additional evidence, and even participate in any hearings, where its representatives may question witnesses and experts.

The sector-wide approach becomes particularly interesting where consumer protection laws and their practical implementation raise broader questions rooted in the specificities of an industry or product. Examples include the implementation of consumer withdrawal rights in relation to digital content, or “industry standard” terms and conditions that may not be entirely compliant with German and EU law.

With its expanded jurisdiction, the German antitrust authority will become more similar to the US’ Federal Trade Commission, which also has a dedicated Bureau of Consumer Protection, in addition to the classic antitrust Bureau of Competition.

Practical consequences

Even under the new rules, the Bundeskartellamt cannot target individual companies with its consumer law investigations, let alone take indiviual companies to court over alleged consumer violations. Its powers in the consumer law domain are focussed on sector-wide large-scale compliance issues.

It also remains to be seen how the authority and the courts will interpret and apply the numerous open-ended terms in the new rules, for example regarding the character of the evidence needed before the authority can investigate, or when the goal of safeguarding public interest makes it “reasonable” to intervene in litigation.

In any event, the activities of the Bundeskartellamt in the consumer law sphere will impact the way consumer protection rules are enforced:

• We expect that consumer protection watchdog groups and potentially also individual competitors will not hesitate to send cease and desist letters to individual companies, based on general findings contained in the Bundeskartellamt’s investigation reports.
• In Germany, non-compliance with a cease and desist letter also very often leads to court injunctions, which are relatively easy to obtain both for consumer watchdog groups and competitors.

Therefore, anyone doing B2C business in Germany should carefully evaluate any published investigation reports, benchmark their own practices against them, and make the necessary changes as soon as possible after the publication of a report draws public attention to the issues it addresses.