16.11.2020

Federal Cartel Office launches sector inquiry on messenger services - the next step to a "Super Consumer Protection Authority" in the digital world?

The use of messenger services is part of the everyday life of many consumers. Almost everyone sends messages, photos and videos or makes phone calls via mobile phone and the internet on a daily basis. As physical contacts are being reduced during the corona pandemic, the use of messenger services continues to increase. However, it remains unclear how the data transmitted via messenger services is protected. The Federal Cartel Office (“FCO”) addresses this topic in its new sector inquiry, launched on 12 November, as well as the question if interoperability of different messenger services could influence the choice of data protection-friendly services. Once again the FCO is acting not only as a competition authority but also as a consumer protection authority.

Background

The FCO is authorized to conduct so-called "sector inquiries". If, for example, rigid prices or other circumstances indicate that competition in Germany may be restricted or distorted, the FCO may investigate a specific economic sector (Section 32e (1) of the Act against Restraints of Competition ("GWB")). During these investigations, the authority has extensive rights to information (Section 32e Paragraph 2 GWB). Usually, experts and companies in the industry are interviewed in order to investigate market conditions, identify competition restrictions and develop recommendations for action.

The 9th amendment to the GWB which came into force in 2017 extended the FCO’s toolbox to consumer protection. The authority is now also allowed to conduct sector inquiries in order to protect consumer law regulations. As prerequisite the FCO must have a well-founded suspicion of substantial, permanent or repeated violations of consumer law provisions which, by their nature or scope, affect the interests of a large number of consumers (Section 32e (5) GWB). The FCO has such suspicion concerning messenger services, especially with regard to possible violations of data protection law. In addition to that, the FCO also investigates the need for interoperability between different messenger services which are typically not interoperable with each other. Usually, consumer can only communicate with users of the same service. Therefore, consumers often prefer messenger services with the most contacts and seldom switch to offers with better data protection standards – despite the right to data portability as ensured in Article 20 of the EU-General Data Protection Regulation (GDPR).

From competition authority to consumer protection authority

In just two and a half years the FCO has already used its new powers four times and conducted sector inquiries in the field of online comparison portals, on the data use of smart TV manufacturers and on the function of online user reviews against the background of so-called "fake ratings" (for further information see here).

Case law also seems to support the FCO in its "consumer protection efforts". This June, for example, the German Federal Supreme Court ("BGH") confirmed in summary proceedings that Facebook could not only violate data protection law through extensive data collection via various services even outside its own platform, but could also abuse a dominant market position. Thus, the BGH confirmed the FCO’s view which had initiated proceedings against Facebook for this reason (the authority claimed to have cooperated closely with data protection authorities at the time). For the court’s Facebook decision see here.

As the international comparison shows, the FCO is not the only competition authority also protecting consumer law issues. The De Autoriteit Consument & Markt ("ACM")in the Netherlands is in charge for the enforcement of consumer protection law in addition to the enforcement of competition law and sector-specific regulation. The Autorité de la Concurrence in France, in turn, promotes competitiveness and consumers rights. The Competition and Markets Authority ("CMA") in the United Kingdom is responsible for consumer protection and competition law and both the Australian Competition & Consumer Commission ("ACCC") in Australia and the Competition and Consumer Commission of Singapore ("CCCS") already indicate by their names their respective competence for ensuring consumer protection and competitiveness.

Conclusion

The outcome of the current sector inquiry remains to be expected. However, the developments of the last years have already shown that the FCO is increasingly becoming a consumer protection authority, even if the legal powers are still far too limited to speak of a "super consumer protection authority". Since the economic value of data in the digital age of Facebook, Google, Amazon & Co. will even further grow in its importance, economic and competitive aspects will also in the future be closely linked to consumer law issues and, as the case may be, under the FCO’s scrutiny. Therefore, as well as in view of the increasingly exercised investigative powers, companies acting in digital fields are well advised to check internally whether they are actually in a legally compliant position, especially in the business-to-consumer ("B2C") area.

The FCO’s press release can be found here.

Author
Dr Stefanie Hellmich, LL.M.

Dr Stefanie Hellmich, LL.M.
Partner
Frankfurt a.M.
stefanie.hellmich@luther-lawfirm.com
+49 69 27229 24118

Dr Sebastian Felix Janka, LL.M. (Stellenbosch)

Dr Sebastian Felix Janka, LL.M. (Stellenbosch)
Partner
Munich
sebastian.janka@luther-lawfirm.com
+49 89 23714 10915

Samira Altdorf

Samira Altdorf
Associate
Dusseldorf
samira.altdorf@luther-lawfirm.com
+49 211 5660 11176

Roland Schiller

Roland Schiller
Associate
Munich
roland.schiller@luther-lawfirm.com
+49 89 23714 20967