Agency Report –
Karlsruhe, Germany – Tech major Apple holds major significance across markets and is rightly subject to stricter monitoring over competition concerns, Germany’s Federal Court of Justice (BGH) ruled on Tuesday.
This clears the way for the country’s Federal Cartel Office to take the next step of prohibiting certain Apple business practices if it believes they jeopardize competition.
Since a 2021 law change, the competition authority has been able to take action more easily against large digital companies that threaten competition across the boundaries of different market areas.
The law provides for a two-stage procedure. In the first step, the authority determines, independently of a specific violation, that a company has an overwhelming significance across markets. In the second step, specific action is taken.
For example, the cartel office can prohibit the company from favouring its own offers over those of competitors on its website, or from making the use of one of its offers dependent on the use of another of its own products.
Apple was appealing the competition authority’s decision and the BGH ruling is the first and only instance in the case.
Whether there is a specific threat to competition is irrelevant for the cartel office’s classification, presiding judge Wolfgang Kirchhoff said.
What is important is the existence of an “abstract potential threat,” Kirchhoff added. The competition regulator had rightly decided that Apple has the potential for such a strategic and competitive advantage, he added.
The Federal Cartel Office welcomed the decision of the Karlsruhe judges.
“This confirms at the highest judicial level that Apple is subject to tightened control,” explained president Andreas Mundt.
“Our ongoing investigation of Apple’s tracking policy for third-party apps is thus on a solid footing. We are working at full speed on this and other cases against the big internet companies.”
The probe in question concerns the fact that Apple users have to give their express consent to the collection of their usage data through tracking when using third-party apps – but not when using Apple’s own apps.
According to the preliminary opinion of the cartel office, this could constitute a violation of competition. The question is whether Apple’s regulation favours Apple or hinders other companies. If necessary, the authority could prohibit the company from proceeding in this way.
Apple criticized the decision of the court.
“Apple faces fierce competition in Germany,” the company announced.
“We disagree with today’s decision by the Federal Court of Justice to uphold the Federal Cartel Office’s classification. It neglects the value of a business model that prioritizes the privacy and security of users.”
The cartel office has so far classified five digital giants as companies with outstanding significance across multiple markets: Google owner Alphabet, Facebook, WhatsApp and Instagram owner Meta, Apple, Amazon and Microsoft.
With Tuesday’s decision, all of the decisions are legally binding. Amazon had also filed an appeal against the competition regulator’s decision – but the Federal Court of Justice also sided with the cartel office in April 2024.
