Law aimed at promoting fair competition passed

The Bundestag and Bundesrat – Germany’s lower and upper houses of parliament respectively – have passed a law designed to promote fair competition, with the legislation expected to curb misuse of warning notices significantly.

The German government hopes that the law will ensure fair competition and curtail misuse of warning notices. To this end, the legislation provides for a reduction in financial incentives for parties seeking to obtain a warning notice, and at the same time raises the requirements for bringing such an action in the first place. It also sets out provisions that make it easier for the party on the receiving end of a warning notice to assert counterclaims. In addition, the choice of legal venue (variable place of jurisdiction) is to be restricted. We at the commercial law firm MTR Rechtsanwälte can also report that German design law will be expanded to include a repair clause.

The plans to promote fair competition include a reduction in financial incentives associated with warning notices. The legislation stipulates that competitors are not entitled to reimbursement of costs in connection with warning notices issued in response to violations of information and labeling requirements online, or violations of data protection law committed by businesses with less than 250 employees. Moreover, the extent of any contractual penalty in the case of a first warning is limited in these instances.

These changes are informed by the notion that warning notices should not be a business model. That is why only qualifying industry associations that meet certain conditions are now eligible to seek this form of redress. The legislation thus seeks to deprive disreputable or dubious industry associations of the commercial basis for misusing warning notices.

While this entails raising barriers for parties seeking to obtain written notices, it will be easier for those on the receiving end to defend themselves and expose misuse of written notices by referencing presumptive examples, including sending out mass warning notices or demanding excessive contractual penalties. Those who wrongfully receive a warning notice will also be entitled to reimbursement of the costs incurred in connection with legal representation. Parties seeking to obtain a written notice should therefore carefully examine whether their claim is justified lest it come back to bite them.

Furthermore, jurisdiction variability is to be limited. In cases involving legal infringements online and in e-commerce, the place of jurisdiction shall be the defendant’s legal venue.

An amendment has also been made to the German Act on the Legal Protection of Designs (Designgesetz, DesignG), which now features a repair clause. This opens up competition for visible replacements parts, something that may be of importance, for instance, in relation to automotive spare parts.

Lawyers with experience in the fields of antitrust and competition law can offer advice.

https://www.mtrlegal.com/en/legal-advice/competition-law.html