In order to avoid, as far as possible, negative spillover effects that manifest themselves in a loss of incentives for investment and innovation, the Monopolies Commission proposes that the divested company be granted compensation from public funds in addition to the proceeds from the sale. The amount of this state compensation should generally be half the difference between the value of the assets earmarked for sale, as determined by an expert valuation, and the proceeds realised from the sale. In the Monopolies Commission’s view, the fact that companies cannot quantify this difference precisely at the time the investment decision is taken is not a problem, as companies will, on average, assume a suitable figure. The Monopolies Commission is, however, aware that the proposed, generalised 50 per cent rule will, in individual cases, sometimes lead to over-compensation and sometimes to under-compensation of the investment and innovation rents lost as a result of unbundling. For practical reasons, it nevertheless advocates against a requirement to determine the exact level of compensation and in favour of a generalised rule.
In the event that an affected undertaking can demonstrate that it has made higher levels of investment and innovation, it should be able to seek further compensation through civil proceedings. Owing to the fiscal implications of the proposed compensation solution, the Monopolies Commission recommends granting the Federal Government a right of veto over unbundling measures or the option to apply for a ministerial exemption procedure.
Given the close factual link between an objective unbundling regime, on the one hand, and the planned 8th Amendment to the Act against Restraints of Competition (GWB), on the other, the Monopolies Commission strongly urges the legislature to implement the intended legislative amendments through a single legislative process. This is the only way to avoid friction, contradictions and the need for subsequent adjustment processes. In the Monopolies Commission’s view, there is also no particular urgency for the introduction of an unbundling regime that would conflict with a legislative process linked in terms of timing and content.
The Monopolies Commission views the intention to implement, alongside the objective unbundling mechanism, a power for the Federal Cartel Office to order unbundling in the GWB in the event of a proven breach of competition law, as entirely positive. This provision ensures that breaches of competition law can be reliably and effectively remedied. In addition, the deterrent effect is enhanced, as dominant firms must now also expect structural interventions should the authorities uncover abuses or cartels. As there is evidence of a breach of competition law by the divested company, the Monopolies Commission considers that no state compensation is appropriate in this regard.
The Monopolies Commission also welcomes the planned general right of the Federal Cartel Office to submit comments in legislative proceedings relating to competition. Within the European context, a number of national competition authorities already possess similar powers. In the Monopolies Commission’s view, a statement based exclusively on the principle of competition will strengthen the competitive ethos in the legislative process and significantly improve the basis on which the legislature makes its decisions.
Commission member Peter-Michael Preusker does not endorse the special report and has drafted a separate statement on the matter.
