German Competition Authority Suffers Defeat In Landmark Facebook Case
In a judgment dated 26 August 2019, a German court has suspended a landmark decision by the German competition authority, the Bundeskartellamt, against Facebook. In this decision dated 6 February 2019, regarded by some as controversial, the Bundeskartellamt prohibited Facebook to continue to combine user data of Facebook with user data of other Facebook-owned services (such as WhatsApp and Instagram) and of third party websites without the users’ voluntary consent.
According to the Bundeskartellamt, Facebook’s practices of combining data would constitute an abuse of a dominant position. The Bundeskartellamt concluded that the manner in which and the extent to which Facebook collects and uses data is in violation of the European data protection rules (as laid down in the General Data Protection Regulation; GDPR) to the detriment of users. According to the Bundeskartellamt, the fact that there was an infringement of the GDPR implied that there was also an abuse of dominance.
The Oberlandesgericht Düsseldorf did not agree with this line of reasoning. In its judgment, the court utters serious doubts about the legality of the decision even on the basis of only a high level assessment. The court specifies that even if the contested combining of data would indeed be in breach of data protection rules, that would not imply that there would automatically be an infringement of competition law (more in particular, an abuse of a dominant position) at the same time.
The suspension of the Bundeskartellamt’s decision by the Oberlandesgericht means that Facebook does not have to implement the decision of the Bundeskartellamt for the time being.
However, it seems certain that the final word in these proceedings has not yet been said. To begin with, the substantive proceedings before the Oberlandesgericht are still pending. In addition, according to various media, the Bundeskartellamt is determined to appeal against the suspensory decision before the Supreme Court (Bundesgerichtshof). Chairman Andreas Mundt is quoted thus: “We are convinced that with the available antitrust laws we can take regulatory action (…). To clarify these questions we will file an appeal (…)”.
Still, the judgment is likely to be a major blow for the Bundeskartellamt’s ambitions, at a time when the level of competition law enforcement in the digital sector is taking a serious flight (see our recent post). The judgment demonstrates that this process of increased enforcement inevitably requires trial and error on the part of both competition authorities and the courts that decide on the legality of those authorities’ enforcement actions. To stay on top of all these rapid developments, Loyens & Loeff has set up its Digital Competition Team. As members of the Digital Competition Team, we are proud to announce our book Digital Competition Law in Europe: A Concise Guide (Kluwer), which will appear in September 2019 and provides an overview of where European digital competition law currently stands and where it is likely to head in the future. We will officially present the book at the Annual Meeting of the International Bar Association in Seoul.
Should you have any questions with regard to the above, please contact Marc Wiggers, Robin Struijlaart, Joost Dibbits or your regular Loyens & Loeff adviser.