Abuse of a dominant position in German law: Sections 19, 20, 29 GWB

Sections 19, 20, 29 GWB

In the German code, Sec. 19, 20, and 29 GWB treat abusive practices. Market ma-nipulations of any form might only be subsumed under Sec. 19 GWB, which reads:

“(1) The abuse of a dominant position by one or several undertakings is pro-hibited.

(2) An abuse exists in particular if a dominant undertaking as a supplier or purchaser of a certain type of goods or commercial services

1. directly or indirectly impedes another undertaking in an unfair man-ner or directly or indirectly treats another undertaking differently from other undertakings without any objective justification;

2. demands payment or other business terms which differ from those which would very likely arise if effective competition existed; in this context, particularly the conduct of undertakings in comparable markets where effective competition exists shall be taken into ac-count;

3. demands less favourable payment or other business terms than the

316 European Regulation N° 1/2003. EU Official Journal from May 1, 2004, 2003 N° L 1, 1.

317 Volker Emmerich, Kartellrecht, 11th ed. (München: C.H. Beck, 2008), 173.

318 Holger Dieckmann, Handbuch des Kartellrechts, 2nd ed., ed. Gerhard Wiedemann (München: C.H. Beck, 2008), 1588 Ref. 1.

319 Ibid, 1509 Ref. 17.

320 Volker Emmerich, Kartellrecht, 11th ed. (München: C.H. Beck, 2008), 174.

321 Courage Ltd v. Bernard Crehan. Case C-453/99. European Court Reports 2001, I-6297. Also Manfredi v.

Lloyd Adriatico Assicurazioni SpA. Joined Cases C-295/04 to C-298/04.European Court Reports 2006, I-06619.

See also Holger Dieckmann, Handbuch des Kartellrechts, 2nd ed., ed. Gerhard Wiedemann (München: C.H.

Beck, 2008), 1510 Ref. 20.

dominant undertaking itself demands from similar purchasers in comparable markets, unless there is an objective justification for such differentiation;

4. refuses to allow another undertaking access to its own networks or other infrastructure facilities against adequate consideration, pro-vided that without such joint use the other undertaking is unable for legal or factual reasons to operate as a competitor of the domi-nant undertaking on the upstream or downstream market; this shall not apply if the dominant undertaking demonstrates that for oper-ational or other reasons such joint use is impossible or cannot rea-sonably be expected;

5. uses its market position to invite or cause other undertakings to grant it advantages without any objective justification.

(3) Paragraph 1 in conjunction with paragraph 2 nos 1 and 5 also applies to associations of competing undertakings within the meaning of §§ 2, 3, and 28(1), § 30(2a) and § 31(1) nos 1, 2 and 4. Paragraph 1 in conjunc-tion with paragraph 2 no. 1 shall also apply to undertakings which set resale prices pursuant to § 28(2) or § 30(1) sentence 1 or § 31(1) no. 3.”

Sec. 19 GWB aims, in parallelism to the European rules, at the protection of third parties´

liberty of action in case of exposure to dominant firms.³²² Like the European code, Sec. 19(1) GWB has two elements: The dominant position and abusive behavior, the def-inition of which will be introduced subsequently.

a) The dominant position

With regard to the identification of dominance, the German law parallels the Euro-pean concept for the definition of the relevant product and geographic market (Sec. 18 GWB).³²³ Dominance is assumed if a monopoly exists or no substantial competition is observed in a market (Sec. 18(1) N° 1 GWB), a firm has a paramount market position (Sec. 18(1) N° 3 GWB), or has no substantial competition (Sec. 18(1) N° 2 GWB).³²⁴ In legal practice, courts judge market power by way of an overall view of the relevant factors, mainly examining a firm´s ability to influence the market price.³²⁵

322 Volker Emmerich, Kartellrecht, 11th ed. (München: C.H. Beck, 2008), 339.

323 Ibid, 341.Please refer to the preceding subsection for details. In depth Anne Godde, Marktabgrenzung im Stromsektor (Baden-Baden: Nomos Verlagsgesellschaft, 2013), 92.

324 See Gerhard Wiedemann, Handbuch des Kartellrechts, 2nd ed., ed. Gerhard Wiedemann (München: C.H.

Beck, 2008), 983-991.

325 Sachs v. GKN, KVR 4/77, BGHZ 71, 102 (1978). Also Klöckner v. Becorit, KVR 1/80, BGHZ 79, 62 (1980).

And Springer v. MZV, KVR 2/80, BGHZ 82, 1 (1982).

b) Abuse of a dominant position

Besides the sweeping clause in Sec. 19(1) GWB, there are a variety of rule examples for abusive practices in Sec. 19(2) GWB. Excessive pricing is listed in Sec. 19(2) N° 2. The rule defines the “hypothetical competitive price” as a benchmark for price controls.³²⁶ This price is found by comparison with prices paid in similar markets (so-called analogue mar-ket conception - Vergleichsmarktkonzept).³²⁷ Yet, this approach, as other indirect concepts to approach the competitive price³²⁸, has not proved to be a successful instrument in competition policy.³²⁹

As a consequence of their weaknesses, price controls may only be a corrective in cases where all other measures of competition law fail.³³⁰ An in-depth analysis of the drawbacks of this instrument in its current form will be conducted in chapters 2 and 3 of this work, combined with possible alternative regulatory concepts presented likewise in chapter 3.

c) Sanctions

Infringements of the abuse provisions are punished both in German public and civil law. The German public law empowers antitrust authorities to issue injunctive relieves against firms engaging in abusive pricing, Sec. 32 GWB³³¹, and contains provisions on fines, Sec. 83 GWB et sqq. with reference to the German code on administrative offences (Ordnungswidrigkeitengesetz – OWiG).³³²

For damages claims, Sec. 33 GWB is the legal basis.³³³ With reference to the German Civil Code, aggrieved parties may sue dominant firms for unlawful, culpable abusive actions that caused them damages.³³⁴ The value of this instrument in competition law and prob-lems of this approach will be discussed in chapters 4 and 5 of this work.

326 Gerhard Wiedemann, Handbuch des Kartellrechts, 2nd ed., ed. Gerhard Wiedemann (München: C.H. Beck, 2008), 1003 Ref. 51.

327 Volker Emmerich, Kartellrecht, 11th ed. (München: C.H. Beck, 2008), 368-369.

328 E.g., approaches observing profits and profit margins based on a comparison of production cost and reve-nue have been developed, but failed to deliver convincing results due to missing data on actual production costs. See ibid, 371.

329 See also the references in the preceding section on European competition law.

330 Volker Emmerich, Kartellrecht, 11th ed. (München: C.H. Beck, 2008), 369, 371.

331 Tobias Klose, Handbuch des Kartellrechts, 2nd ed., ed. Gerhard Wiedemann (München: C.H. Beck, 2008), 1775 Ref. 1.

332 Martin Klusmann, Handbuch des Kartellrechts, 2nd ed., ed. Gerhard Wiedemann (München: C.H. Beck, 2008), 1900 et sqq.

333 Julia Topel, Handbuch des Kartellrechts, 2nd ed., ed. Gerhard Wiedemann (München: C.H. Beck, 2008), 1753 et sqq.

334 Volker Emmerich, Kartellrecht, 11th ed. (München: C.H. Beck, 2008), 533.