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Antitrust in focus - June 2021

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Galle Rene
Dr René Galle



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28 June 2021

This newsletter is a summary of the antitrust developments we think are most interesting to your business. Dr René Galle, counsel based in Hamburg, is our editor this month (learn more about René in our Q&A feature at the end of our newsletter). He has selected:

Consumer & Retail

Digital & TMT

Life Sciences

Consumer & Retail

U.S. Second Circuit overturns Federal Trade Commission’s 1-800 Contacts online search term settlements ruling

In 2018, the U.S. Federal Trade Commission (FTC) ruled that the largest online retailer of contact lenses in the U.S., 1-800 Contacts, breached antitrust law by aggressively enforcing its trademarks against 14 online rivals. The starting point of the case was 1-800 Contacts’ concern that competing companies infringed its trademarks by buying “1-800 Contacts” as a keyword from search engines so that users would see ads for rival products when searching for the term. 1-800 Contacts then entered into subsequent bilateral settlements with search engines that prohibited 1-800 Contacts’ competitors from bidding for certain keywords in search advertising auctions. This, the FTC said, prevented consumers from seeing ads that would inform them that identical products were available at lower prices and reduced competition for keywords.

However, the U.S. Court of Appeals for the Second Circuit has now rejected the FTC’s case. While trademark settlement deals are not automatically immune from antitrust scrutiny and could breach antitrust law, the court said, they should not be viewed as “inherently suspect”. In this case, the court considered that there were strong pro-competitive justifications for protecting the trademarks; 1-800 Contracts had argued that the settlements were needed to protect investments made in establishing the trademark and to prevent consumer confusion. In accordance with the “rule of reason” approach, the FTC should have conducted a more thorough analysis. Ultimately, the court ruled that the settlement agreements did not violate U.S. antitrust laws.

The case has been sent back to the FTC with instructions to dismiss it. The acting director of the FTC’s Bureau of Competition has said that the FTC is disappointed by the ruling and is considering its options.

The case illustrates a persistent conflict between antitrust law (which seeks to eliminate restrictions on free competition) and intellectual property law (which grants monopolies over the covered product and permits exclusivity). The court’s decision indicates that, in contentious issues related to big tech companies and online advertising, the same general principles will still apply. Under this decision, the question of whether agreements in these areas affecting intellectual property are truly anti-competitive will require a close, case-by-case analysis under the rule of reason. This outcome calls into question the FTC’s claim that the case has broader implications for the regulation of online advertising.

Jury acquits rehabilitation aids company and individuals in Australia’s first contested criminal prosecution under criminal cartel law

A jury in Australia’s Federal Court has unanimously acquitted Country Care, its CEO and a former employee of eight charges of attempted price-fixing and bid-rigging involving the supply of assistive technology products used by people with disabilities and in rehabilitation and aged care. Country Care supplies products such as beds and walking frames to veterans under government contracts as well as directly to the general public.

Seven other cases have been prosecuted under Australia’s criminal cartel legislation, which has been in effect since 2009. However, this case is the first contested criminal prosecution and the first to proceed to trial by jury. The case is also the first criminal cartel prosecution of individuals.

The charges were brought by the Commonwealth Director of Public Prosecutions after an investigation by the Australian Competition & Consumer Commission (ACCC). The trial was significantly delayed by the Covid-19 pandemic; in the end, proceedings were before the courts for more than three years. The case reportedly fell apart after the cross-examination of the ACCC’s immunity witness highlighted inconsistencies in his testimony.

Despite the loss, the ACCC appears undeterred. In a press release issued following the jury’s decision, ACCC Chair Rod Sims stated that the ACCC would “remain vigilant and take enforcement action, as appropriate, in relation to anti-competitive behaviour during tendering for the supply of goods and services”. Certainly, the threat of potential criminal enforcement remains a real deterrence. Individuals face imprisonment of up to ten years.

The ACCC points out that it has successfully secured three guilty pleas in criminal cartel prosecutions. Most recently, in February, a criminal conviction and AUD24 million fine against Wallenius Wilhelmsen Ocean bolstered the country’s international shipping cartel fines to a total of AUD83.5m. In that case, the judge emphasised that the fine was intended to send a powerful message to multinational corporations that anti-competitive conduct will not be tolerated in Australia and will be dealt with harshly by the court.

On the horizon next May is the criminal cartel prosecution of three major banks, as well as six senior banking executives, relating to a 2015 ANZ share placement. This case will also rely on the testimony of immunity witnesses. Other probes are reportedly in the pipeline.

Digital & TMT

European Commission publishes preliminary report in Internet of Things sector inquiry

This month the European Commission (Commission) published its preliminary findings in its competition sector inquiry into markets for consumer Internet of Things (IoT)-related products and services in the EU.

The findings identify four main and familiar potential competition concerns in this fairly new and “booming” sector:

  1. Restrictions on multi-homing: exclusivity and tying concerns in relation to voice assistants, as well as practices limiting use of different voice assistants on the same smart device.
  2. The use of default settings, pre-installation and prominent placement of consumer IoT services on smart devices or on voice assistants: concerns regarding the position of the leading providers of voice assistants and smart device operating systems as intermediaries sitting between users and smart devices or consumer IoT services. That role could allow voice assistant providers to control user relationships, allowing them to promote their own services or those of third parties of their choice.
  3. Data accumulation: concerns that providers of smart device operating systems and voice assistants have access to large amounts of data, allegedly enabling them to control the data flows and user relationships and also leverage into adjacent markets. The data they collect from players across the market could be used to develop or improve their own rival services.
  4. Lack of interoperability: concerns resulting from technology fragmentation, lack of common standards and the prevalence of proprietary technology, as well as the control over interoperability and integration processes by a few providers of voice assistants and operating systems. The limited interoperability could lock consumers into using devices and services of one or just a few providers.

The Commission’s press release, Q&As and Vestager’s statement provide examples.

The Commission also reports that a large number of respondents raised difficulties in competing with vertically integrated companies, such as Google, Amazon and Apple. These players provide the most common smart and mobile device operating systems as well as the leading voice assistants and are therefore, in the respondents’ view, able to determine the processes for integrating smart devices and services in a consumer IoT system.

These initial findings are largely based on qualitative information obtained from four consumer IoT segments: the manufacture of smart home devices; the provision of voice assistants; the provision of consumer IoT services; and the manufacture of wearable devices.

A public consultation on the Commission’s findings is open until 1 September and the Commission anticipates publishing a final report in the first half of 2022.

In order to maximise the potential benefits of the rapidly developing IoT markets to consumers, the Commission is intent on preventing tipping (where a large player in one market is able to expand into a new market thanks to its access to specific resources (eg data) and then ‘tip’ that new market in its favour) and the emergence of gatekeepers. We can therefore expect new competition enforcement cases should some of these practices be confirmed. In the meantime, the preliminary findings will undoubtedly feed into the debate on whether voice assistants should fall into the scope of the Digital Markets Act. This piece of legislation is set to tackle some of the inquiry’s preliminary concerns, with specific “do’s and don’ts” for “gatekeeper” digital platforms. Our alert on the proposed competition rules for ‘gatekeepers’ in the digital sector provides more detail on the draft regulation.

U.S. House lawmakers introduce package of bipartisan big tech antitrust bills

A bipartisan group of lawmakers has introduced a package of five bills in the U.S. House of Representatives aimed at curbing the power of large technology platforms and restoring competition and encouraging innovation in digital markets. The draft legislation was foreshadowed by an October 2020 U.S. House report on competition in digital markets (see this article on the subject in our October 2020 edition of Antitrust in focus).

The anti-monopoly agenda ‒ A Stronger Online Economy: Opportunity, Innovation, Choice ‒ includes bills to:

  1. Prohibit discriminatory conduct by dominant platforms, including a ban on self-preferencing and picking winners and losers online.
  2. Prohibit acquisitions of competitive threats by dominant platforms, as well as acquisitions that expand or entrench the market power of online platforms.
  3. Prohibit online platforms from owning other businesses that create a conflict of interest (for example by owning business lines which compete on the marketplace that is controlled by the platform).
  4. Promote competition online by requiring online platforms to make user data portable and interoperable with competitors’ services.
  5. Update merger filing fees to boost antitrust enforcement resources for the U.S. Department of Justice (DOJ) and Federal Trade Commission.

The bills, which include civil penalties for violations, all target dominant digital platforms. These are defined as those that have more than 50 million active U.S. users or 100,000 business users, or that are controlled by a company with a market capitalisation of USD600 billion or more.

Each of the bills has been sponsored and co-sponsored by Democrats and Republicans in the House and will now be referred to the House Judiciary Committee.

Consumer groups have welcomed the news; the bills have largely been formulated to improve opportunities for small businesses, workers and consumers. But, given their radical and aggressive scope, the proposals are already facing opposition from pro-business organisations. In addition, another alternative reform bill has already been introduced by Republican Senators to consolidate federal enforcement of antitrust laws at the DOJ, increase enforcement funding and strengthen antitrust remedies. These bills are the latest in a number of sweeping antitrust legislative proposals advanced at both the federal and state level. For more information, please see our alert which provides a fuller picture .

Big tech under intense scrutiny from European competition authorities

There has been a flurry of activity in relation to big tech companies in Europe this month. In addition to the European Commission’s preliminary Internet of Things report detailed above, European competition authorities have opened six new investigations, one new market study, and reached the commitment stage in three current investigations. These are described briefly below.


The UK’s Competition and Markets Authority (CMA) and the European Commission (Commission) have opened parallel but separate investigations into Facebook’s advertising practices. The investigations will assess whether Facebook has gained an unfair advantage over competitors (particularly in the classified ads market) through data that it gathers about users from its digital advertising services. In the UK, the CMA will also look at the online dating market and Facebook’s use of its single sign-on service. The UK and EU authorities have said that they will work together closely during their investigations.


The Commission has opened an investigation into Google’s ad tech practices following concerns that Google could be self-preferencing its own online display advertising technology services to the detriment of competing providers, advertisers and online publishers. Notably, one of the practices identified by the Commission as a focus of its investigation is Google’s plan to prohibit third party cookies on the Chrome browser through its “Privacy Sandbox” proposal. As with the CMA’s separate investigation into the proposal (described below), the interaction between competition law and data protection law is a key consideration, with the Commission stressing that the two “must work hand in hand to ensure that display advertising markets operate on a level playing field in which all market participants protect user privacy in the same manner”.


Google has offered commitments in relation to the CMA’s ongoing investigation into its proposed “Privacy Sandbox” browser changes. Google has offered to give the CMA and the UK’s national data protection authority a role in the design and development of the proposal. It has also offered commitments related to transparency, non-discrimination and limits on how Google will use data for its own digital advertising after the proposal is implemented. The CMA is currently consulting on the proposed commitments. Google has announced that it will apply the commitments globally if they are accepted by the CMA.

The CMA has also launched a market study into Apple and Google’s mobile ecosystems following concerns that their “effective duopoly” over the supply of operating systems, app stores, and web browsers could result in consumer harm. The CMA is concerned about reduced innovation across the sector, as well as consumers potentially paying higher prices. The study will also examine the effects of the firms’ market power over other businesses which rely on them to market their products to customers (such as app developers). The CMA has 12 months to conclude the study.


The French Competition Authority (FCA) has fined Google EUR220 million for abuse of dominance in the online advertising sector following a two-year investigation. The FCA found that Google granted preferential treatment to its own proprietary technologies under the Google Ad Manager brand, resulting in Google strengthening its position. Google did not dispute the FCA’s findings, offered to settle, and proposed commitments to end provisions that favoured Google by improving the interoperability of Google Ad Manager services with third party ad servers and ad-space sales platforms. The president of the FCA, Isabelle de Silva, welcomed the outcome, noting that “it is the first decision in the world to look into complex algorithmic auctions processes through which online display advertising works.” In a statement, Google has confirmed that it will roll out the changes resulting from the commitments more broadly, and that some will be implemented globally.

The FCA has also opened a public consultation into commitments offered by Facebook in relation to the FCA’s ongoing investigation into Facebook’s conduct in the online advertising sector. The investigation has notably found that Facebook’s practices are likely to impair access to advertising inventories and data concerning ad campaigns on Facebook. The FCA has raised concerns that Facebook’s conduct has not been transparent or objective and that this has resulted in difficulties for members of the Facebook Marketing Partners scheme. Facebook has offered commitments to run the scheme in a more transparent and objective manner, in particular while assessing its partners’ performance, and to offer compliance training for its sales teams. The consultation will run until 5 July 2021.


The German competition authority, the Bundeskartellamt, has opened an investigation into the Google News Showcase service through which Google repackages articles licensed from publishers. Google has recently announced that it intends to integrate this service with its general search function. The Bundeskartellamt will investigate whether this could lead to self-preferencing or impede services offered by third parties. It will also consider whether the relevant contractual clauses include unreasonable conditions for participating publishers. The investigation is being carried out using the authority’s new competition powers, which allow it to intervene earlier and more effectively against the practices of large digital companies. These new powers are described in more detail below. 

The Bundeskartellamt has also opened a separate investigation into Apple which will assess whether the iPhone’s proprietary iOS operating system has created a digital ecosystem extending to several markets including tablets, computers, wearables and device-related services such as the App Store, iCloud and AppleCare. The Bundeskartellamt will consider Apple’s position in these markets as well as the level of integration which is present across several market levels. It will also assess Apple’s technological and financial resources and its use of data. The Bundeskartellamt has flagged that these initial proceedings could result in further proceedings in which specific practices are assessed in more detail. Practices related to the App Store are a particular focus, with the authority stating that it is willing to establish contact with the Commission in relation to its separate investigation into the App Store’s rules.


The Hungarian Competition Authority has opened an investigation into Google’s song lyrics service. This displays lyrics cards when users search for song titles. The authority will investigate whether Google is self-preferencing by displaying its own lyrics service above organic search results. The authority is concerned that this might obscure third party offerings while promoting Google’s own YouTube product, especially on mobile devices. The authority has six months to complete its investigation (extendable twice for further six-month periods).

German competition authority making the most of new abuse control tool to intervene in conduct of large digital companies

In January 2021, German competition law was amended to give Germany’s competition authority, the Bundeskartellamt, a powerful new enforcement tool. The new power enables the Bundeskartellamt to prohibit companies which are of paramount significance for competition across markets from engaging in anti-competitive practices. It will be able to intervene against companies with market power below the level of market dominance at an early stage to take preventative measures quickly.

Within just a few months, the authority has opened proceedings against four large digital companies: Facebook, Amazon, Google and, most recently, Apple.

As a first step, the Bundeskartellamt must determine whether the companies are subject to the new rules: in other words whether they are undertakings of “paramount significance for competition across markets”. The analysis mainly focuses on five aspects, namely a potential dominant position on one or more markets of the undertaking concerned, its financial resources, its vertical integration, its access to data and its role as a gatekeeper. In the words of the Bundeskartellamt’s President, “an ecosystem which extends across various markets ‒ an almost unchallengeable position of economic power ‒ is particularly characteristic in this respect”.

As the second step, the Bundeskartellamt will then consider whether to prohibit conduct such as self-preferencing, using data to impede access by third party players and tying and bundling strategies.

Notably, the Bundeskartellamt can combine both steps in one proceeding, ie render a decision which finds that the company comes under the new rules and at the same time prohibit certain anti-competitive conduct. Further, judicial review is curtailed, as a decision under the new enforcement tool can only be appealed to the German Supreme Court (ie a prior appeal to the Higher Regional Court of Düsseldorf is not possible).

It would seem that the Bundeskartellamt is trying to steal a march on the European Commission’s own enforcement agenda. The latter is partly reliant on the adoption of the Digital Markets Act. This draft legislation, detailed in our alert on proposed competition rules for ‘gatekeepers’ in the digital sector, is unlikely to give national EU competition authorities much of an enforcement role. The Bundeskartellamt appears keen to get ahead of the game and avoid a clash of competences. Indicative of the fact that the Bundeskartellamt will likely maintain an aggressive approach to enforcement in the digital sector is a recent internal restructuring. This restructuring has shifted resources which will allow the second decision board to bring more cases against online marketplaces and online retailers that market consumer electronics or related products.

The January legislative amendments also brought about other significant changes, including a lowering of the requirements for interim measures, substantially increased fines for procedural breaches, implementation of the ECN+ Directive and a scaling back of the merger control thresholds. Our alert summarises the key new features and practical implications.

German court imposes first interim ban under new anti-tipping law

In a private enforcement action, a German court has granted real estate trading portal Immowelt’s request for an interim ban on rival Immoscout’s discount policy. Under the scheme, Immoscout paid brokers a discount of at least 95% if available properties were displayed only on the Immoscout portal or the broker’s own website for seven days.

The court concluded that the discount created a serious risk that competition would be restricted to a significant extent. The seven-day exclusivity could result in market foreclosure in the relevant property markets. There was also a quantifiable effect, with an increase in listings on Immoscout and a corresponding decline in listings on Immowelt after the discount’s introduction.

The court was able to impose the prohibition under a new anti-tipping law that has been in force since January 2021 and is now applied for the first time. The law allows courts and the German competition authority, the Bundeskartellamt, to intervene when they consider that a digital firm is exploiting its cross-market power to achieve network effects and distort competition.

The judgment is not final. Since the proceeding relates to a preliminary injunction, the court did not look at many of the complex and novel issues in detail. Accordingly, it remains to be seen whether the current ruling will ultimately stand. It is certain, however, that the new anti-tipping provision has gained attention and we expect more private enforcement actions to follow. This will allow the Bundeskartellamt to focus its enforcement on the new abuse control tool described in more detail above. 

Norwegian online marketplace merger blocked

Last November, the Norwegian Competition Authority (NCA) concluded that Schibsted’s acquisition of Nettbil would weaken competition in the market for online sales of used cars and result in poorer services for consumers. Schibsted had acquired a 67% stake in Nettbil in December 2019. The NCA noted that there are few players in the Norwegian market for online sales of second-hand cars. While Schibsted’s Finn is the clear market leader, Nettbil is a newcomer that has experienced strong growth in recent years and is exerting increasing competitive pressure on Finn.

On appeal, the Competition Tribunal has agreed with the authority’s prohibition assessment. Schibsted must now sell its shares in Nettbil to an independent and suitable buyer, approved by the NCA.

As with other competition authorities around the world, the NCA is keen that merger control plays its part in ensuring healthy competition between online marketplaces and other digital platforms. The acquisition did not meet Norway’s notification thresholds and could complete without authority clearance. But the authority decided to use its power to review transactions that fall below the thresholds to launch an investigation nonetheless. We discuss how some antitrust authorities plan to preserve innovation and deal with killer ‘tech’ acquisitions in our latest global trends in merger control enforcement report. View our April publication to see how the European Commission is targeting killer acquisitions through its Member State merger referral system.

Life Sciences

Czech competition authority opens sector inquiry into distribution of medicinal products

The Czech Republic’s Office for the Protection of Competition has launched a sector inquiry that will review the state of competition in markets for the distribution of prescription-only medicinal products covered by public health insurance. The investigation will also cover rapidly developing direct forms of distribution: Direct to Pharmacy and Direct to Hospital models. The authority’s aim is to identify market dysfunctions and resolve any competition problems with recommendations and, if necessary, subsequent antitrust enforcement.

The authority is keen to stress that the investigation was commenced on its own initiative; the inquiry follows prolonged monitoring of the pharmaceutical sector, and perceived changes at both the local and European level. However, it also comes after an uptick in complaints from businesses and the public. It is only the fourth sector inquiry to be carried out by the Czech authority under the Competition Act; the others covered fuel, telecommunication and soft beverage markets. The inquiry is set to take 24 months to complete.

Spotlight on René

A typical working day in Hamburg involves….

doing complex work for great clients in an outstanding team.

If I hadn’t become an antitrust lawyer, I would be….

unemployed as there is nothing else worthwhile to do.

The best career advice I’ve been given is….

to “show up”. There are manifold opportunities in life but it is up to you to go out and capture them.

The most interesting case I’ve worked on is….

the “sausages cartel” (true name….) which involved some corporate restructuring that resulted in an order imposing a EUR100 million fine being revoked.

For me, being a good lawyer/advisor means….

listening, as clients want to be understood.

Something I’d like to do but haven’t yet done is….

a hiking trip in Tierra del Fuego.

My ideal weekend in two sentences….

I get up late, the sun is shining, breakfast is ready, the kids are playing peacefully in the garden, we have a nice bicycle trip in the afternoon and there is a romantic dinner with my wife.

My typical weekend in two sentences….

I get up early, it’s raining, I have to do the breakfast, the kids are having a fight in the living room, we stay at home the entire afternoon and order some pizza and French fries for a family dinner.

Something that might surprise you about me is….

that I have been a taxi driver for elderly and disabled people for almost a year.

My top tip for visitors to Hamburg (when we can travel again) is….

enjoy the nightlife! It is one of Europe’s finest.

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