Legal Framework

Before going into depth with answering the research questions, one needs to define the applicable legal framework of competition. As the setting of the thesis evolves around the Federal Republic of Germany, the legal framework of consideration for this thesis consists of the domestic level as well as the hierarchically superior supranational European Union law.

The upcoming section will provide the general overview of the legislation and applicable guidelines and regulations on how to apply the legislation. This will deliver the definition of the tools of competition law and merger control in particular.

4.1.1 European Level Framework

Starting with the hierarchically higher, supranational framework, the primary sources to consider are the articles of the treaties of the European Union – ‘Treaty on the European Union’ (henceforth TEU) and the ‘Treaty on the Functioning of the European Union’ (henceforth TFEU). The article of consideration from the TEU is Article 3(3) TEU, which discusses the creation of an internal market characterised by competition and promotion of advances. It highlights the necessity of competition on the internal market of the Union and the concurrent importance of innovations and their fostering. Article 3(1)(b) TFEU is in line with this description and spells out the “establishing of the competition rules necessary for the functioning of the internal market” (TFEU, 2007)4_{. Those provide the general} provisions defining the importance of competition within the internal market. The more specific regulations concerning the preservation and impediments of competition are laid out in Articles 101 and 102 TFEU. While Article 101 deliberates the influence of cartel offences, 102 TFEU considers the abuse of dominant market positions. The latter will be the main focus of this thesis, as it delineates distinctive actions incompatible with the internal market due to market powers deemed too high.

The more defined approaches of the Union against such actions and to prevent them in the first place are laid out in the regulations of the European Council. The first regulation to consider is Council Regulation (EC) No 1/2003 of December 16, 2002, defining the approaches towards the abuse of dominant positions. The other regulation of consideration is Council Regulation (EC) 139/2004 of January 20, 2004, which discusses the control of concentration within the Union and how the obtainment of dominant positions can be prevented in the first place. Both regulations were implemented before the signing of the Lisbon treaty and therefore refer to Articles 81 and 82 EC, which are direct predecessors of Articles 101 and 102 TFEU and therefore continued in their applicability. These articles and regulations mentioned define the four types of tools applicable by the Union – merger control, behavioural remedies structural remedies and fines. As laid out in the third chapter, the control of concentration will be the focus of this thesis.

Given this limitation, Commission Regulation (EC) No 802/2004 of April 2004 also on the implementation of the Merger Regulation, and the Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings of 2004 are of importance. Those guidelines and notices define the impacts of mergers and how merger control can prevent market dominance or comparable harmful effects on competition. In doing so, they define the tools of merger control, being the prevention of a merger primarily and commitments to remedies harms preventing a merger clearance.

4.1.2 German Level Framework

Having defined the legal framework regarding competition law within the European Union, the same is necessary for the Federal Republic of Germany. The German competition law can be found in the ‘Gesetz gegen Wettbewerbsbeschränkungen’ (henceforce GWB)5_{. Paragraphs 18-20 GWB discuss} dominant positions and prohibited practices concerning such undertakings. The general tools to terminate such practices are laid out in Paragraph 32, allowing for any “necessary conduct-related or structural remedies” considered appropriate (GWB, P. 32). These are comparable to the behavioural and structural remedies identified in the European framework. The further application of those remedies are discussed in Paragraphs 32a to 34 GWB. The German Act against Restraints on Competition also considers merger control and administrative fines as appropriate tools to prevent or hinder abuses of dominance. Merger control is discussed in detail in the seventh chapter of the legislation, especially in Paragraphs 36 and 37 GWB, and the according fines in Paragraph 81 GWB. The Bundeskartellamt, as an independent federal agency for competition issues, is responsible for investigations and the implementation of guidelines on how to asses any impediments or concentrations in the market.

The mentioned focus on merger control also has the Leitfaden zur Marktbeherrschung in der Fusionskontrolle6 _{of March, 2012 as well as the Guidance of Remedies in Merger Control of May, 2017}

as part of the legal framework in question. Both documents discuss the possible influences that concentrations can have on the domestic market, and how those can be targeted. Again, the same tools of merger control can be identified as for the European Framework, however a more detailed guideline on the commitments is available on this level of legislation.

All mentioned articles, paragraphs, and regulations provide the legal framework for and define the tools of competition law. They will be investigated in the following analysis.