Antitrust law
The aim of antitrust law (respectively cartell law) is to protect unrestricted and undistorted competition.. To this end, antitrust law, which is strongly influenced by European law, is based on three major regulatory issues:
1. Prohibition of agreements restricting competition
Central provisions of antitrust law contain a ban on agreements restricting competition. The scope of the corresponding bans is large, greater than often assumed. In particular, restrictions or prohibitions apply not only to so-called “hardcore cartels”, which at first glance appear problematic and in which customer groups are divided between competitors or prices are agreed. Instead, agreements that have a much less direct impact on competition are also subject to antitrust regulations and therefore need to be carefully designed. These include vertical agreements such as authorised dealer agreements, which may give rise to antitrust concerns, for example as a result of provisions on the granting of territorial exclusivity. Similarly, licence agreements, for example, also need to be reviewed from an antitrust perspective, as restrictions on the licencee’s activities must often be agreed in order to protect the licenced rights. Contracts for research and development cooperation or for cooperation in production also regularly require antitrust review as to whether contracts which, for example, prescribe the exploitation of the research results or the produced goods by one party only restrict competition in an unlawful manner.
2. Prohibition of abuse of a dominant position
Antitrust law also covers rules restricting the abuse of a dominant market position. A company which holds a dominant position (and this is already obvious with a market share of 40%) may only make limited use of the freedom of contract. Rather, in principle, it must treat other companies equally, for example with regard to deliveries, or may only treat them differently for an objectively justified reason. Nor may the dominant market position be used to request fees or other terms and conditions (such as contract terms, links with other products) which could not be achieved without a dominant position.
3. Merger control
Finally, merger control is the subject of antitrust law. Above certain thresholds, acquisitions and mergers require the prior approval of the relevant cartel authorities.
While merger control requires that a company be a certain size (which may well be the case for small and medium-sized companies), the rules prohibiting agreements restricting competition and abusing a dominant market position apply irrespective of the (absolute) size of the company. They are therefore also relevant for small and medium-sized enterprises. In this respect, cartel law only ties in with market shares (subject to certain restrictions). It should be noted that specialised companies in particular can quickly achieve very high market shares, which can lead to the applicability of strict antitrust regulations.
Cartel law standards are of great importance in the practice of contract drafting and execution. This is not only due to the fact that in the event of a violation of cartel regulations in Germany significant fines (based on the company’s turnover) and additional fines against the responsible persons can be imposed, but also that agreements that violate cartel law are invalid and therefore contracts that contain cartel violations are subject to considerable uncertainty. In addition, there are financial risks from possible for damage claims by business partners injured by a cartel. In many foreign countries, violations of cartel law even constitute criminal offences. The resulting risk of criminal prosecution also affects domestic persons and companies, since the applicability of cartel regulations typically depends on the market in which an activity is carried out, i.e. an activity carried out from Germany in a foreign market must also be measured by local cartel standards.