Germany’s New Competition Rules Risk Fragmenting the Digital Single Market, Says ITIF

January 14, 2021

BRUSSELS—In response to the German Bundestag adopting the 10th Amendment to the German Competition Act, Senior Policy Analyst Christophe Carugati of ITIF's Center for Data Innovation, released the following statement:

Unfortunately, this initiative ignores both the need for European-wide regulations adopted in a concerted manner and the need to address Europe’s innovation gap. 

First, whereas the European Commission aims at regulating digital markets with the Digital Services Act and the Digital Markets Act, the German legislative initiative further fragments the Digital Single Market that the European Commission legitimately wants to further consolidate. Consequently, the initiative not only runs the risks of soon becoming obsolete once these acts are adopted in early 2022, but it also constitutes a considerable political pressure on the Commission to regulate digital markets in a way consistent with the German perspective, irrespective of other national viewpoints.

Second, the German legislative initiative embodies the prevalence of precaution over innovation in regulating digital markets. Indeed, absent any evidence and abuse of a dominant position, the German competition rules preventively enable the German competition authority to regulate and prohibit conduct which could ultimately be innovation driven. Also, the treatment of some digital companies under the regime of essential facilities doctrine further illustrates the precautionary approach. 

It is crucial for EU competitiveness and innovation to design European-wide regulations that enhance the responsibilities of digital players while taking into consideration the costs to innovation associated with such regulations.