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December 18, 2012 8:33 pm

German competition law reform delayed until next year

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This article is provided to FT.com readers by PaRR (Policy and Regulatory Report)— a newly launched product of The Mergermarket Group providing proprietary intelligence and research on competition law and sector-specific regulatory changes around the world. www.parr-global.com

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The Mediation Committee, a joint body of representatives from Germany’s legislature, the Bundestag and Bundesrat, have not been able to reach a compromise on the legislative initiative to revise the country’s competition law, sources close to the process told PaRR.

The amendments, originally scheduled to enter into force on 1 January 2013, will likely slip further into next year.

The German competition law reform, known as the ‘eighth amendment of the Act against Restraints of Competition’, has been in the pipeline since autumn 2011.

The reform, among other things, aims to align German competition rules with EU law and to seal a loophole on successor liability for cartels.

The Bundestag, the country’s Federal Assembly and lower chamber, approved the amendments, originally scheduled to come into force in 2013. But, the Bundesrat, the upper chamber representing Germany’s federal states at the national level, objected to the reform last month and referred the legislative draft to the special Mediation Committee between the two chambers, as previously reported by PaRR.

The German legislators failed to reach a compromise on the remaining controversial issues over the provisions of the draft law during a 12 December evening session.

The representatives of the two legislative bodies will continue negotiating a political compromise in 2013 when the Committee’s next session is scheduled, a Bundesrat official told PaRR.

The meeting will most likely take place during the third week of January. As part of the mediation process , the German legislators will need to agree on a new implementation timeline, according to the official. The Bundesrat could approve a final proposal “the earliest in its plenary on 1 February”.

Once the Mediation Committee’s decides on a compromise proposal, it will require approval from the Bundestag and subsequently from the Bundesrat. The reform is not expected to come into force before February 2013, as a result.

The Mediation Committee brings together 32 representatives, 16 from the German federal parliament Bundestag, and 16 from the Bundesrat. The body negotiates a political compromise when the Bundesrat objects to legislative proposals.

The Bundesrat objected to the initiative primarily because the upper chamber disagreed with the proposed changes on competition enforcement in the healthcare sector, as previously reported by PaRR.

The Bundesrat would like to see transactions between state-owned healthcare providers be exempted from merger control, as well as transactions between state-owned entities occurring within the context of regional reforms. The chamber also asked for further clarification concerning provisions applicable to the water supply sector. Fees for services provided by public authorities should not be considered an economic activity covered by antitrust scrutiny.

Several of the Bundesrat committees also criticised the fragmentation of court competencies in hearing antitrust damages claims, saying parties should be able to choose whether their case is to be heard by a Civil or Commercial Court. The original proposal provides for a Civil Court to hear damages claims due to the complexity of the procedure.

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