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Federal Cartel Office classifies Alphabet/Google as a company with paramount significance across markets

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Germany

The German Federal Cartel Office ("FCO") announced on 5 January 2022 that for the first time with Google/Alphabet ("Google") a company is subject to extended abuse control.

Further decisions against large digital corporations such as Amazon and Apple as well as Facebook are expected soon. The extended abuse control is a new instrument that was only included in 2021 in the German Competition Act ("GWB"). The new provision shall enable the FCO to act more quickly in the future if competition is threatened by large digital corporations.
 

Decision

The FCO held that Google has a paramount significance for competition across markets within the meaning of Section 19a para. 1 GWB. Google has a position of economic power that gives it scope for cross-market conduct that is not sufficiently controlled by competition.
According to the FCO's findings, Google has a market share of over 80% on the market for general search services in Germany. This is a multi-sided, so-called platform market within the meaning of Section 18 para. 3a GWB. The activity on a platform market is a prerequisite for the application of Section 19a GWB. Furthermore, according to the FCO, Google is one of the most important providers of search-based advertising and overall a strong market provider of a wide variety of other services with a high user reach such as YouTube, Google Chrome, Android and the Play Store.
Thus, according to the FCO, these services can be said to have an "infrastructural character". A large number of other services can in fact only be provided by using these services.
The FCO also had to take into account that Google has "outstanding" access to data through its services, when carrying out the overall assessment within the framework of Section 19a para. 1 GWB. With the help of the data obtained, Google is able to market targeted advertising as well as to further develop its services in a highly efficient manner and opened up cross-market scope for conduct that was not sufficiently controlled, which made it necessary to subject Google to the extended abuse control under Section 19a GWB.
Google has already stated that it accepts the finding that it is deemed to be a company with paramount significance across markets and will not appeal against this decision.
 

Background to Section 19a GWB

Section 19a GWB was included in the GWB in the course of the 10th amendment to the GWB. The aim of the provision is to enable the FCO to take faster and more effective action against large companies in the digital economy. As soon as the FCO has determined an overriding cross-market significance for competition with regard to a company, it can, in a second step, prohibit the companies from certain conduct that could endanger competition. This is intended to ensure that competition also remains active in the digital economy, despite the gatekeeper function of large digital corporations.
 

Further proceedings against Google

The President of the Bundeskartellamt, Mundt, sees the decision that has now been issued as an important milestone in the fight against the power of digital corporations. According to President Mundt, this decision is "a very important step since based on this decision the Federal Cartel Office can now take action against specific anti-competitive practices by Google."
The Bundeskartellamt already started to assess the processing of personal data by Google (press release of 25 May 2021) as well as the issue of Google News Showcase (press release of 4 June 2021).
 

Further proceedings against other digital groups

Further proceedings on the basis of Section 19a GWB against the other important companies of the digital industry, namely against Facebook, Amazon and Apple, have also already been initiated by the FCO, see press release of 28.01.2021 and press release of 18.05.2021 as well as press release of 21.06.2021.
 

Comment

It is to be expected that the FCO will also classify the other companies against which proceedings have already been initiated under the new Section 19a para. 1 GWB to have a paramount significance across markets and will subsequently prohibit these companies from engaging in certain conduct. It is important to note that other companies cannot take direct civil action on the basis of a finding of paramount significance across markets, but must first rely on the prohibition of certain conduct by the FCO. However, the FCO has already received numerous complaints about practices of the above-mentioned companies that threaten competition.
 
Links
Federal Cartel Office: Press release Google Section 19a GWB
Federal Cartel Office: Google Section 19a GWB case report
Fieldfisher: 10th amendment to the GWB
 

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