Current legislative changes in the German Competition Act and the Federal Forest Act bring a set of new antitrust exemptions. We briefly present them in our blog:
1. Cooperation between press companies
Press companies can from now on cooperate more easily. Newspaper and magazine publishers (but not mere press distributors) are exempt from the German cartel prohibition in cases of economic, non-editorial cooperation if the cooperation allows them to strengthen their economic basis for intermedial competition. Effects cushioning competition on the press markets (intramedial) are thus tolerated to strengthen the press’s position in competition with other media (intermedial). As long as the cooperation does not affect editorial content, the privilege goes far; it includes, for instance, purchasing cooperation (e.g. for non-editorial services), production cooperation (e.g. for printing) and distribution cooperation (e.g. for subscriber acquisition, delivery or even coordination of resale prices). If the parties to cooperation can demonstrate a substantial legal and economic interest they are even – beyond the normal rules in competition law – entitled to a formal decision from the competition authority establishing a lack of need to intervene. European law remains however unaffected of all this. The privilege does therefore not apply if the cooperation has cross-border effects. This can be the case for cooperation on a federal level already, which is why the privilege may rather be a suitable basis for regional cooperation. Likewise, the prohibition of abuse of market power remains applicable.
2. Mergers within cooperative or savings bank associations
Mergers between companies that are members of cooperative or savings bank associations are now exempt from German merger control. They need therefore not be notified any more. The exemption applies if the parties to the transaction provide services for the most part for (other) companies in the association, provided that they do not, when providing such services, have contractual relations of their own with end customers. The exemption therefore concerns mergers between pure back office service providers. It does not cover mergers relating to end customer business. According to the new law’s explanatory notes, activities are “for the most part” for the association if the parties to the transaction render at least 75% of their back office services for their respective association. The circumstance that the cooperative and savings banks’ within the associations are treated as independent companies, between which competition prevails and the cartel prohibition applies, remains however unaffected by the new exemption.
3. Cooperation in the timber industry
Another current antitrust exemption is not in the Competition Act but in the Federal Forest Act. It concerns the pooling of silvicultural activities relating to state, municipal and private forests. Background to this is a 2015 prohibition decision from the Federal Cartel Office against the public forestry operator of the state of Baden-Wuerttemberg. The public forestry operator undertook not only distribution of timber from the Baden-Wuerttemberg state forest but also from municipal and private forests. Moreover it undertook distribution-related services (timber tagging, care of timber harvest measures, timber intake and printing of timer lists) and other silvicultural services (annual operation planning, forestry general management and ranger service) for the other forest owners. Although the new law does not provide an antitrust privilege for pooling of timber distribution and distribution-related services, it does so for pooling of the more distribution-unrelated activities of planning and realization of silvicultural measures, marking, harvesting, furnishing and registration of raw timber. These activities are directly exempt from the German cartel prohibition. For cases in which the cooperation has cross-border effects, the law creates a (rebuttable) presumption that these activities are also exempt from the European cartel prohibition (which would normally require that the parties to the cooperation demonstrate efficiency gains that are passed on to end consumers). One may doubt how reliable this exemption from the European cartel prohibition will prove to be in practice: In the Baden-Wuerttemberg case, the competition court already refused to apply it. It argued that the exemption collided with EU law in so far as it puts the onus to demonstrate that no exemption applies on the competition authority, whereas (higher-ranking) EU law puts the difficult onus to demonstrate that an exemption does apply on the parties to the cooperation (not the competition authority).
The Federal Cartel Office has clearly criticised the above-described exceptional provisions in the course of the legislation procedure. It will most likely interpret and apply them narrowly.
The next post from our blog series on the German Competition Act reform “For the good of the consumer – consumer protection in the 9th amendment of the ARC” will be published tomorrow.