Effective 8 June 2017, the 9th Amendment to the German Act against Restraints of Competition delegated more competences and ways to investigate to the Bundeskartellamt (German Federal Cartel Office — FCO) with respect to consumer protection, affecting especially retail businesses and digital markets.

Since its founding in 1958, the FCO was called upon when talking mergers, cartels or competition regulation in general. Although its decisions could be challenged in court, it was the first arbiter to approve or prohibit mergers or certain conduct and to issue fines or regulatory requirements in the German market.

From now on, the FCO can also initiate sector inquiries upon reasonable suspicion with regards to serious or persistent violations of German consumer protection acts, such as the Act against Unfair Competition or the rules on general terms and conditions.

Such sector inquiries are not supposed to target a certain company in particular but to extensively inspect the conditions of a specific market. Henceforth, sector inquiries can be initiated provided that there is reason to suspect severe consumer law infringements affecting a large number of consumers. In the past, sector inquiries have proven to be an effective tool to detect unfair market restrictions in several sectors such as the petrol station market, the dairy industry and others. Now, this tool is meant to be put to use also in the field of consumer protection.

Although the FCO is not entitled to prosecute consumer law infringements by particular companies and impose respective fines, the sector inquiry is more than just the toothless tiger it may seem at first glance. The FCO has pledged that it will closely work with private consumer protection organisations, which are an important pillar of consumer law enforcement in Germany and every year bring a profound number of consumer law cases to German courts and initiate even more out-of-court proceedings to resolve consumer law violations. It is to be expected that consumer protection organisations will gladly use the expertise of the FCO in order to intensify the enforcement of compensation claims and injunctive reliefs against commercial goods and service providers.

As a result of the new competences of the FCO, retailers and online businesses should keep a closer eye on their compliance with German and EU consumer law.

[View source.]