by Roman Zagrosek
German Federal Cartel Office launches consumer protection sector inquiry into user reviews on the Internet (press release of 23.5.2019) (see here).
Online user reviews can refer to products such as sewing machines brand XY or service providers such as retailers and doctors. User reviews on online platforms distinguish between open and closed review systems. A characteristic feature of an open system is that users can also provide an online review if they have not purchased the product or service via the platform. A closed review system, on the other hand, requires a transaction on the platform.
With the sector inquiry, the FCO is using an instrument for consumer protection that has been available to the authority since mid-2017. After the areas Smart TVs (see here) and comparison portals (see here) it is the FCO’s third sector inquiry based on its new consumer protection competence.
In contrast to the sector inquiry based on competition law, the FCO’s measures on consumer protection are limited to the publication of a final report. It does not initiate any procedures, but merely identifies abusive practices.
The FCO is not the only European competition authority looking into the subject of online user reviews. As early as 2015, the Competition & Markets Authority (CMA) published a report on “Online Reviews and Endorsements” (see here). The CMA dealt extensively with the subject of “fake reviews” and described examples of abusive practices. The authority also stressed the importance of user reviews for consumers’ purchasing decisions. More than half of UK citizens would actively consider user reviews.
The issue of online user reviews is also discussed at EU level. With a new directive, the EU wants to strengthen the rights of consumers in the area of online commerce and ensure greater transparency in connection with online user reviews (see here). English version is available: https://www.consilium.europa.eu/media/38907/st08021-en19.pdf
In addition, the FCO is currently investigating in administrative proceedings whether Amazon is abusing is dominant position regarding product reviews on a possible market for marketplace services for online sales to consumers. (see here). Moreover, the FCO stated in its final report on the consumer protection sector inquiry in the area of comparison portals that user reviews regularly only came from users who successfully completed a transaction via the comparison portal (see here and see here) , exclusively in German). The FCO concluded that this restriction would make fake reviews more difficult, but it would also limit the “spectrum of reviews” of online user reviews.
The initiation of the sector inquiry on the subject of user reviews on the Internet is a further step which illustrates the FCO’s focus on the Internet industry and a topic which has relevance both in terms of competition law and consumer protection law. It would therefore be desirable for the investigation to also deal – like the CMA – with competition law aspects of user reviews (e.g., the pro-competitive effect), which can then be used in competition law proceedings where the authority has more extensive powers.
The next measures are likely that the FCO is going to send questionnaires to market participants and consumer protection organizations. The presentation of the results will be followed by a consultation phase during which interested market participants and other interested parties will have the opportunity to comment on the consultation paper. Subsequently, the FCO will publish a final report. Further measures, such as the remedying of any legal infringements by official measures, are not provided for by law.
There is no dedicated time frame for carrying out consumer protection sector inquiries. In comparison portals, the FCO needed approx. 19 months for the entire sector inquiry. In SmartTVs, the sector inquiry was initiated about 19 months ago and its conclusion is announced for 2019. Results in the form of a final report on the sector inquiry on user reviews on the Internet are therefore not expected before the end of 2020 or rather mid-2021.
by Silke Heinz
On June 4, 2019, the Düsseldorf Court of Appeals lifted the Bundeskartellamt’s prohibition decision of Booking.com’s “narrow” best price (or most favored nations, MFN) clauses in Germany. The court found that these clauses were necessary to ensure a “fair and balanced exchange of services between portal and hotels”. The decision may have a significant impact on the assessment of best price clauses by digital platforms in Germany. Silke Heinz wrote a post on Kluwer Competition Law Blog on the decision, see here.
by Silke Heinz
The German business magazine Wirtschaftswoche has published its 2019 ranking for top law firms Germany in the areasof white collar crime and of compliance. We are pleased that Heinz & Zagrosek is listed among the top compliance law firms, see here.
by Silke Heinz
On February 8, 2019, the BKartA decided that Facebook’s practice to collect and combine user data from third-party websites/apps, including from Facebook-owned services What’sApp and Instagram, without requesting user consent is an abuse of dominance. It ordered Facebook to terminate the infringement, as well as to suggest solutions for an opt-out system, so that users refusing consent can continue using Facebook (and can only be subject to very restricted data collection and combination). This is a far-reaching decision and aims right at Facebook’s business model. Silke Heinz comments on the decision in Global Competition Review, see here.
She has also published a blog on the decision on Kluwer Competition Law Blog, see here.
by Silke Heinz
Based on media reports, the Bundeskartellamt sent a letter to the European Commission opposing the planned merger, including with respect to the commitments the parties have offered. Silke Heinz is quoted on this in Global Competition Review, inter alia on the national competition authorities only having an advisory role in European Commission’s merger control proceedings. While they are heard, they cannot veto any Commission merger decisions. You can find the article here.
by Silke Heinz
Juve, the renowned German handbook for commercial law firms, lists Silke Heinz and Dr. Roman Zagrosek in the category leading names in antitrust law in 2019.
Heinz & Zagrosek ranks among Juve’s top 50 law firms in the field of antitrust law in Germany.
“We are pleased about the recognition and visibility of our antitrust practice” (Zagrosek).
by Silke Heinz
We have already featured the release of this report of September 4, 2018, dealing with the digital economy in our news section, see here [Link zur früheren Meldung auf unserer Webseite). In the meantime, Silke Heinz has summarized the 187 page report and analyzed some of the key messages it provides in a Kluwer Competition Law Blog, see here.
She comments on some of the proposed legislative changes, including the prohibition of unjustified prevention of multihoming and platform switching absent dominance and relative market power in markets characterized by high network effects and prone to tipping, and the changes to merger control rules to allow to prohibit large digital companies systematically buying start-ups as potential future rivals at an early stage of their development.
by Silke Heinz
On September 18, 2018, the European Commission has opened formal antitrust proceedings against German car manufacturers BMW, Daimler and VW, including VW, Porsche and Audi, for possible collusion to avoid competition on the development and roll-out of technology to clean the emissions of petrol and diesel passenger cars in the EEA (see press release here.
The Commission dropped other discussions among these manufacturers on technical cooperation from the scope of its investigation. Originally, in 2017 both the FCO and the European Commission reviewed information on the allegations, before the European Commission carried out inspections. Silke Heinz is quoted on the opening of proceedings in Global Competition Review, see here.
by Silke Heinz
The Ministry has published the study on September 4, 2018, see here.
The study deals with the question whether there are gaps in the current antitrust rules on unilateral conduct of dominant companies or companies with market power in the digital industry, and if yes, how to close these in Germany. The study provides a comprehensive overview and excellent analysis of a very up-to-date discussion among antitrust lawyers and economists, as well as some interesting recommendations. One focus is whether the already existing possibility for the authority in Germany to intervene even below the level of dominance should be expanded, for example in order to prevent the tipping of a digital market. Silke Heinz is quoted on the study in the Global Competition Review, including on recommended changes to merger control rules, see here.
by Silke Heinz
On May 14, 2018, the competition authorities of Germany and Austria have published joint draft guidelines on the new transaction value merger thresholds for public consultation, see here.
Comments can be submitted by June 8, 2018. The draft concerns the new merger control thresholds introduced in 2017. These provide that a transaction may be notifiable if the value of the consideration for a transaction exceeds € 400 million in Germany or € 200 million in Austria, respectively, and the target has significant domestic activities, even if the other turnover-related thresholds are not met. The draft guidelines deal with interesting issues, such as determining the consideration value (including which point in time is relevant and how to determine the value in case of earn-out clauses or other conditional or future payments), when domestic activity is considered as significant, including in digital markets and concerning R&D activities, as well as other questions. Silke Heinz has published a blog on the draft guidelines on Kluwer Competition Law Blog, see here.
