German Competition Law (GWB)

The Gesetz gegen Wettbewerbsbeschrankungen

German competition law is codified in the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschrankungen, GWB), first enacted in 1957 and substantially amended through eleven amendments. The GWB operates in parallel with European Union competition law (Articles 101-109 TFEU and Regulation 1/2003), with the GWB applying where anti-competitive conduct affects interstate trade only indirectly or where EU law leaves scope for national enforcement. The 2005 introduction of the European model (Europaischer Ansatz) aligned the GWB’s substantive provisions with Articles 101 and 102 TFEU, creating a largely parallel framework.

Prohibition of Cartels

Section 1 GWB prohibits agreements between undertakings, decisions by associations of undertakings, and concerted practices that have as their object or effect the prevention, restriction, or distortion of competition. This mirrors Article 101(1) TFEU. The prohibition covers horizontal cartels (price-fixing, market-sharing, output limitation, bid-rigging) and vertical restraints (resale price maintenance, territorial restrictions).

Exemptions are available under Section 2 GWB, which applies Article 101(3) TFEU directly: agreements that contribute to improving production or distribution or promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, may be exempted. The Block Exemption Regulations (Gruppenfreistellungsverordnungen) adopted by the European Commission are directly applicable in Germany for vertical agreements, technology transfer, research and development, and specialisation agreements. The BKartA (Federal Cartel Office) may also issue exemptions in individual cases.

Hardcore cartels — price-fixing, market-sharing, and bid-rigging — are treated as criminal offences under Section 298 of the Criminal Code (StGB), punishable by imprisonment. The BKartA operates a leniency programme (Bonusregelung), modelled on the EU model, granting immunity or reduction of fines to undertakings that self-report cartel participation and cooperate with the investigation.

Abuse of Dominance

Section 19 GWB prohibits abusive conduct by undertakings with a dominant market position. An undertaking is dominant if it has no competitors or is not exposed to substantial competition (market dominance), or if it has a paramount market position relative to its competitors (relative market power). Market share thresholds provide presumptions: a single undertaking with a market share of at least 40 per cent is presumed dominant; three or fewer undertakings with a combined share of 50 per cent, or five or fewer with 66 per cent, are presumed oligopolistically dominant.

Prohibited abuses include: directly or indirectly imposing unfair prices or trading conditions (exploitative abuse), limiting production, markets, or technical development to the prejudice of consumers, discriminating against trading partners in equivalent transactions (discriminatory abuse), and tying or bundling products. The essential facilities doctrine has been recognised by German courts since the BKartA v. Deutsche Telekom decisions, requiring dominant undertakings to grant access to infrastructure where refusal would eliminate competition on a downstream market.

Section 20 GWB extends certain prohibitions to undertakings with relative market power (relative Marktmacht) — undertakings that depend on the dominant undertaking for supply or access — and superior market power (uberlegene Marktmacht). These provisions are particularly significant in German retail and franchise contexts, protecting smaller businesses from abuse by larger commercial partners.

Merger Control

German merger control is governed by Sections 35-43 GWB and enforced exclusively by the BKartA. A transaction constitutes a merger (Zusammenschluss) under Section 37 GWB where: (1) an undertaking acquires assets of another; (2) an undertaking acquires direct or indirect control; (3) an undertaking acquires shares conferring 25 per cent or 50 per cent of voting rights; or (4) any other combination enabling an undertaking to exercise significant competitive influence.

Notification thresholds (Section 35 GWB) require pre-merger notification where: the combined worldwide turnover of all undertakings exceeds EUR 500 million and the domestic turnover of at least one undertaking exceeds EUR 50 million and that of another exceeds EUR 17.5 million. Lower thresholds apply for media mergers and certain other sectors. Transactions below the thresholds but with competitive significance may be referred to the BKartA under the transaction value threshold (Transaktionswertschwelle), introduced by the 9th GWB amendment, which captures transactions where the consideration exceeds EUR 400 million and the target has significant domestic operations.

The BKartA reviews notified mergers in a two-phase procedure: Phase I (one month) and Phase II (four months, extendable). A merger must be prohibited if it would create or strengthen a dominant market position (Marktbeherrschung) — the dominance test (Marktbeherrschungstest), distinct from the EU’s SIEC test. Since the 9th GWB amendment, the BKartA may also prohibit mergers that would significantly impede effective competition, aligning with the EU standard while retaining the dominance test as the primary criterion.

Enforcement by the BKartA

The Federal Cartel Office (Bundeskartellamt, BKartA), headquartered in Bonn, is the principal competition enforcement authority in Germany. Established in 1958, it operates as an independent federal authority within the portfolio of the Federal Ministry for Economic Affairs and Climate Action. The BKartA has exclusive jurisdiction over cartel prohibition, abuse of dominance, and merger control, while state competition authorities (Landeskartellbehorden) enforce competition law in public procurement and certain local matters.

The BKartA may impose fines (Geldbussen) of up to 10 per cent of the total worldwide turnover of the undertaking for intentional or negligent infringements of Sections 1 or 19 GWB or EU competition law (Section 81 GWB). Fines are calculated in accordance with the BKartA’s fining guidelines, considering the gravity and duration of the infringement, and may reach hundreds of millions of euros. The agency may also adopt interim measures, conduct dawn raids (Nachpruefungen) without prior notice, and issue commitment decisions accepting behavioural or structural remedies.

The 10th GWB Amendment and Digital Regulation

The 10th GWB amendment (GWB-Digitalisierungsgesetz), effective 19 January 2021, introduced the most significant reforms to German competition law in decades, specifically targeting the digital economy. Key innovations include:

• Section 18(3a) GWB: factors for assessing market power in multi-sided markets and networks, including direct and indirect network effects, economies of scale, data advantages, and competitive pressure from innovation
• Section 19a GWB: a new instrument allowing the BKartA to prohibit anti-competitive practices by undertakings with paramount significance for competition across markets (uberragende marktubergreifende Bedeutung) — a category specifically designed for digital giants such as Google, Meta, and Amazon
• Section 20(1a) GWB: extending relative market power protection to intermediaries and platforms, prohibiting self-preferencing and other discriminatory practices

Section 19a GWB empowers the BKartA to designate an undertaking as having paramount significance and thereafter prohibit specific practices without requiring an individual abuse finding in each case. The BKartA designated Google/Alphabet in December 2021 and Meta in May 2022 under this provision, initiating proceedings concerning data processing terms, cross-service data combination, and self-preferencing in search and advertising markets. The 10th amendment has influenced digital regulation at the EU level, particularly the Digital Markets Act.