Heinz & Zagrosek has been recognized as one of the top antitrust/competition law firms in Germany in several rankings this year: renowned magazines brandeins, Wirtschaftswoche, Focus as well as Handelsblatt/Best Lawyers all rank partner Silke Heinz and the law firm Heinz & Zagrosek among the top antitrust lawyers in Germany. We are very pleased and would like to thank everyone for the great feedback! This provides us with even more motivation to continuously aim at producing excellent work, offer tailor-made services to our clients and become even better!
Silke Heinz gave a short speech on the topic Competition law compliance and digitization at the webconference Legal & Compliance Forum on April 30, 2020. She speaks about the recent tendencies of competition authorities pursuing hardcore restrictions in vertical supply relations and horizontal cartels, including on the role of technological developments in the digital economy. At the end, Ms. Heinz talks about the role of algorithms, how competition authorities view these and presents conclusions for compliance work. You can find a video of the speech here (in German)
New publication: Knott/Zagrosek, The Company as Perpetrator – Compliance and M&A under the Planned German Corporate Criminal Sanctions Code (November 19, 2019).
The Company as Perpetrator, Compliance and M&A under the Planned German Corporate Criminal Sanctions Code.
Germany law does not yet provide for a corporate criminal liability in general. For anti-trust law, similar corporate criminal provisions compared to those now planned in general do already exist. The level of fines will be much higher than in the past (up to 10% of worldwide group revenues) and violations must be prosecuted, there is no more discretion. The new law shall also provide for successor liability which in M&A transactions may cause the Buyer to be responsible in addition to the Target and the Seller. Indemnities and remedies against future losses as well as careful structuring of transactions is required. The publication is published in Revista de Direito Comercial, 2019, and available at SSRN: https://ssrn.com/abstract=3496803.
Both authors have also published an article about this topic in German in: Zeitschrift für Wirtschaftsrecht (ZIP), 2019, Heft 50/S. 2385, Knott/Zagrosek, „Das Unternehmen als Täter – Compliance-Fragen bei M&A Transaktionen nach dem geplanten Unternehmensstrafrecht“.
Silke Heinz discusses the recently opened EU Amazon antitrust proceedings in a podcast of the ABA Antitrust Law Section’s series “Our Curious Amalgam”, together with the other guest, Damien Geradin, and the hosts Matthew Hall and John Roberti. The discussion covers inter alia the impact of Amazon’s dual role as operator of the Amazon marketplace and as retailer active on the same platform, the information/data collection aspects of the case, and possible lessons for the digital economy. You can listen to the podcast here.
German Supreme Court quashed Higher Regional Court of Düsseldorf’s judgement that had sextupled Rossmann’s Federal Cartel Office cartel fine
On July 9, 2019, the Supreme Court (here) quashed the decision of the Higher Regional Court of Düsseldorf, which had increased the fine for retailer Rossmann from EUR 5.25 million to EUR 30 million on the basis of vertical price agreements in the sale of roasted coffee, and referred it back for a new decision. A formal error caused the annulment and referral: The grounds of the Higher Regional Court Düsseldorf’s judgement were not placed on file in due time after the judgement had been delivered at the end of the main oral hearing.
The Supreme Court only marginally commented on issues of substance as the formal error is a so-called absolute ground for appeal, which results in the judgement being set aside in its entirety. Rossmann had argued that the limitation period for the cartel infringement had already expired. The Supreme Court confirmed the Court of Appeal’s finding that there had been a single and continuous cartel infringement, consisting of a basic agreement and acts of implementation. According to the findings of the Higher Regional Court of Düsseldorf, the infringement had not yet ended by February 2008. The decision of the Higher Regional Court of Düsseldorf of February 28, 2018 had therefore interrupted the (10 years) statute of limitations in due time.
However, the Supreme Court did not comment on the calculation of the fine by the Higher Regional Court of Düsseldorf that had led to a six-times higher fine than the fine originally imposed by the Federal Cartel Office.
In 2016, the German Federal Cartel Office found that roasted coffee manufacturer Melitta and several retailers had entered into vertical price agreements between 2004 and 2008 to maintain a minimum level of retail prices for roasted coffee products, and had imposed fines of EUR 5.25 million on Rossmann (see the case summary in German here )
While all other parties settled the proceedings with the Federal Cartel Office, Rossmann appealed the fine.
In 2018, the Higher Regional Court of Düsseldorf increased the fine against Rossmann to EUR 30 million (Case No. 4 Kart 3/17 OWi, here ). In calculating the fine, the court took the group-wide turnover as the basis instead of the turnover involved in the infringement, which the Federal Cartel Office is using for the calculation, and assessed the severity of the act and the guilt level. Rossmann then appealed to the Supreme Court.
On July 17, 2019 the BKartA announced the settlement with Amazon and closed the abuse of dominance proceedings. Besides a press release (here), it also published a case summary (here). On the same day, the European Commission opened an investigation into possible anti-competitive conduct of Amazon (here).
Heinz & Zagrosek has been representing a dealer of sewing machines as complainant in the German proceedings.
The BKartA investigated Amazon’s liability provisions; termination and blocking of seller accounts; court of jurisdiction (competent court only in Luxembourg); returns and reimbursement; product information and rights of use; confidentiality; transparency; product reviews and seller ratings; etc.
The fact that the BKartA could convince Amazon to change and amend its t&cs in a relatively short period (compared to other abuse of dominance proceedings the case has been closed within ca. 7 months) is very positive. It is quite remarkable that the FCO could obtain a global solution, i.e., not only limited to Germany, the territory of its jurisdiction. The amendments seem to cover most of the complaint topics, but of course it will be crucial how Amazon will implement these promised changes in reality. The devil may well be in the details in this respect, and the FCO is willing to reopen proceedings should Amazon fall short of properly implementing the changes.
In Germany, the proceedings were not predominantly about its dual role as platform provider and dealer – that is now the subject of the European Commission proceedings – but more about exploitative abuse of dealers active on the platform through imposing unfair trading terms.
But the case also involved impeding and foreclosing dealers, in particular through leveraging its dominant platform position into its own retail sales: Amazon only allows product reviews to be posted on its platform if generated by its own “Amazon Vine” service, not by third-party review service providers. At the same time, it prevents platform dealers from using the Vine service, which is only available for suppliers of Amazon’s own retail activities (vendors).
Here Amazon has now promised to grant access to the Amazon Vine service to more dealers and offer services for the review of new products, which is very positive. However, the BKartA did not decide on how to deal with Amazon prohibiting the posting of product reviews from third-party services and the retroactive deletion of already posted reviews, which also formed part of complaint and concerns legitimate investments made by dealers in this area. The BKartA did obviously not want to hold up the overall informal “settlement” package and therefore refrained from reviewing these aspects in depth. Instead, it will await the results of the currently ongoing user review sector inquiry (see our blog here), which also touches upon the subject. The topic is still very important for online dealers. The devil may well be in the details in this respect, and the BKartA is willing to reopen proceedings should Amazon fall short of properly implementing the changes.
It is not unusual that the national competition agencies and the European Commission coordinate the scope and timing of their proceedings – given that there are parallel competences in applying EU competition law, while the Commission may ultimately take over a case. Here it was efficient to coordinate the substance, so as to avoid the agencies reviewing the same questions in substance.