The Monopolies Commission has submitted its Eighteenth Main Report (Biennial Report) to the Federal Minister for Economic Affairs and Technology in accordance with Section 44(1) of the Act against Restraints of Competition (GWB). The report is entitled ‘More Competition, Few Exceptions’.
In accordance with its statutory mandate, the Monopolies Commission has examined the current state and trends in business concentration (Chapters I to III) and has also assessed decision-making practice under competition law (Chapter IV).
In the introductory chapter, the Monopolies Commission also discusses current issues in competition policy. Here, it examines the regulatory framework for drinking water supply in Germany as well as competition between pharmacies. Furthermore, the Monopolies Commission comments on the planned amendment to the Telecommunications Act and on new avenues of cooperation with the Federal Statistical Office in compiling concentration statistics.
Furthermore, in a special chapter, the Monopolies Commission has examined the effects that the organisation of the labour market has on product markets (Chapter V). This concerns the issue of sector-specific minimum wages, as well as sectoral trade unions and collective bargaining unity within companies.
Finally, in Chapter VI, the Monopolies Commission puts forward proposals on the framework conditions for the statutory health insurance market.
Details of the content:
Amendment to the Telecommunications Act
In March 2010, the Federal Ministry of Economics and Technology presented initial proposals for an amendment to the Telecommunications Act (TKG). The amendment is intended to bring national law into line with the revised European legal framework for telecommunications networks and services, and to resolve problems that have arisen in the application of the Act. The proposed changes mainly concern the framework conditions for infrastructure investment and competition, the regulatory instruments, and procedural issues relating to the establishment of the Body of European Regulators for Electronic Communications (BEREC).
The Monopolies Commission opposes a fundamental reorientation of regulation in the telecommunications sector. The current legal framework has, for the most part, proved its worth; it is well-suited to further promoting competition in the telecommunications markets and to stimulating investment in new infrastructure. In order to avoid conflicts with the European Commission and the resulting legal uncertainty for market participants, it is recommended that the changes to the Telecommunications Act, which are absolutely necessary, be aligned as closely as possible with the requirements of EU law. Furthermore, the amendment to the Telecommunications Act should be carried out without delay, as the establishment of legal certainty is an important prerequisite for the rapid expansion of broadband networks in the Federal Republic of Germany – a goal pursued by the Federal Government and one that is desirable from an economic perspective.
Greater efficiency in the provision of drinking water
The German water sector currently lacks a uniform, consistent regulatory framework. The present coexistence of water pricing under private law on the one hand and the setting of charges under public law on the other is a serious problem of de facto unequal treatment of essentially identical circumstances: In every case, the same homogeneous commodity – water – is supplied to consumers by commercial enterprises, the water suppliers, in return for a fee. However, depending on the legal form chosen by the relevant local authority or special-purpose association, there are, according to current practice, considerable differences in supervisory responsibilities. The level of charges is approved by the relevant local authority supervisory body, whilst the prices charged by private water companies are subject to supervision to prevent abuse under competition law.
The structure of the German water supply sector, which is in some cases highly fragmented, should be subject to a fresh review in the near future. This must focus on explicitly aligning water supply with the costs of efficient service provision. Consequently, the de facto unequal treatment of public and private water suppliers across Germany must be rectified, economies of scale must be exploited, and the degression of non-specific overheads must be implemented as effectively as possible.
The Monopolies Commission recommends that the Federal Government and the federal states subsequently subject German drinking water suppliers to uniform, sector-specific regulation geared towards the efficient provision of drinking water.
The Monopolies Commission also takes the view that, during the phase of introducing a uniform regulatory framework for the German drinking water supply, full decision-making authority should initially be transferred to the Federal Network Agency. Technical regulation could then be limited to purely output-based targets, and consequently to water quality standards. In the short term, economic regulation should be implemented as incentive-based regulation for all German water suppliers in accordance with uniform standards. This could provide water suppliers with incentives to increase their scale by merging with another drinking water provider where overheads are inefficiently high, thereby improving the economies of scale in non-specific overheads. This does not necessarily require the physical merging of networks. Increased outsourcing of certain tasks to highly specialised external companies can also contribute to greater efficiency in the German water market.
The Monopolies Commission recommends, in particular to local authorities and regional associations, that they organise more competitive tendering processes for water supply. To facilitate the tendering process, it is conceivable to separate the distribution network from the operational side of the business. Whilst the distribution network, whether under municipal or private ownership, would continue to be subject to incentive-based regulation, the operational side could be opened up to competitive tendering for market access. However, the Monopolies Commission also points out potential problems in implementing tendering schemes, noting that there is a mutual dependency, particularly where concession terms are long.
Competition shortcomings in the retail sale of medicines by pharmacies
As early as 2006, in its Sixteenth Main Report, the Monopolies Commission addressed competition between pharmacies and the regulation of the retail sale of medicines, and submitted comprehensive reform proposals to the Federal Government of the time. It has now updated its analysis and recommendations for action in light of developments over the past four years.
The Monopolies Commission deliberately refrains from advocating a complete deregulation of the retail sale of medicines. It recommends allowing ‘gentle’ price competition even for prescription medicines by (a) abolishing the mandatory co-payment for patients with statutory health insurance, as well as the current flat-rate packaging charge of EUR 8.10 (less a €2.30 discount for sales covered by statutory health insurance) whilst (b) patients simultaneously pay a fee for the pharmacy’s services, the amount of which is to be set by the pharmacy itself within certain limits.
This patient contribution towards the cost of the pharmacy service can stimulate effective price competition between pharmacies. Whilst the current co-payments made by patients with statutory health insurance do involve them in the cost of the medicine, they have little steering effect. It should be borne in mind that (a) whilst the patient has little influence over the choice of the prescribed medicine, as this is usually (and rightly so) made by the doctor, (b) the patient does, however, make the decision as to which pharmacy to visit independently. To provide an incentive to visit a lower-cost pharmacy, the patient should therefore contribute not to the total cost of the medicine, but only to the cost of the pharmacy service.
Furthermore, the ban on third-party ownership and multiple ownership of pharmacies should be lifted, and the operation of pharmacies by limited companies should be permitted, whilst at the same time temporarily tightening merger control for pharmacies to prevent the emergence of regional monopolies. Multiple ownership of pharmacies should also be permitted above the current limit of four pharmacies. This would allow non-pharmacists to hold equity stakes in pharmacy businesses, and pharmacy chains of essentially unlimited size could be formed.
The Commission does not share the concern, expressed by some, that mail-order pharmacies might select as partners collection points which do not ensure the proper storage of medicines or which engage in dubious business practices, are not shared by the Monopolies Commission, as this would run counter to the business interests of the mail-order pharmacies themselves. Should the legislator, however, share the concerns expressed, the Monopolies Commission considers that regulating collection points or setting minimum standards is preferable to a complete ban and is also more proportionate to the problem in terms of the extent of intervention. Regulation of collection points could, for example, relate to requirements concerning the storage of medicines and the training of staff.
Merger Statistics
The focus of current merger reporting lies in preparing for a fundamental modernisation, as the scope for economic policy interpretation of ‘traditional’ reporting remains severely limited. Two main problem areas are primarily responsible for this; these cannot be easily resolved simply by investing in more extensive data sets or more sophisticated calculation methods, but require a fundamental redesign. On the one hand, this is the internationalisation of many markets, which raises the question of the extent to which the compilation of ‘traditional’ concentration tables based purely on national data is still sufficiently justified. Secondly, the rapidly expanding supply of relevant public and private data sets already far exceeds the Monopolies Commission’s financial and human resources for analysis.
Both the aforementioned problems in adequately mapping markets empirically and the significantly increased analytical potential of public and private data sets in recent years argue in favour of a fundamental reorientation of merger statistics. The Federal Ministry of Economics and Technology has taken this situation as an opportunity to commission a report from the Centre for European Economic Research (ZEW), with the aim of developing a new conceptual framework for future concentration reporting. This has made it possible to secure the human and financial resources, as well as the necessary expert knowledge, required for such a comprehensive task. The initial findings of the ZEW report are to be taken into account, where possible, in the Monopolies Commission’s next main report.
The Monopolies Commission’s reporting on the assessment of the state and development of aggregate concentration and on the interdependence of large enterprises is based on the identification of the 100 largest enterprises across all economic sectors, ranked by domestic value added. Overall, the trend over time regarding the share of large enterprises in total value added suggests a general decline in concentration, which was temporarily interrupted in the 2006 reporting year. In 2008, the share of the overall economic benchmark stood at 15.8 per cent, well below the long-term average of 18.4 per cent. Similarly, the proportion of employees accounted for by the ‘100 largest’ companies relative to the economy as a whole has fallen steadily since 1994 to 13.3 per cent. With regard to the various size criteria examined in individual economic sectors, an increase in concentration compared with the previous period was observed only in the insurance sector.
Furthermore, since 1996, a gradual dissolution of the network of cross-shareholdings and personnel links among the ‘100 Largest’ has been observed. Similarly, the number of interconnections via joint ventures decreased during the reporting period.
As part of its reporting on concentration, the Monopolies Commission has, for the first time, assessed the extent and significance of personnel links between companies in OECD member states, in addition to its analysis of concentration and interlinkages among large German companies. As a result of advancing globalisation and the convergence of markets, corporate interconnections across national borders are steadily gaining in importance. On the basis of a sample of over 18,000 companies from selected OECD member states, the intensity of personnel links within and between individual OECD countries was determined in order to illustrate the international significance of such links. Secondly, international and national linkages were analysed at sector level to highlight their relevance across different economic sectors.
The descriptive findings for the companies surveyed suggest that personnel linkages have a positive effect on the competitive position of the companies involved. In 24 of the 29 sectors covered, the companies with personnel links show a higher return on sales, measured against the median, than their non-linked counterparts in the same sector. As corporate returns are influenced by a number of other factors and the direction of causality remains unclear within the scope of this study, the comparison of returns carried out here can only be interpreted to a limited extent as an indication of competition-relevant effects of personnel linkages.
The descriptive analysis of international personnel linkages has also shown that personnel linkages between companies are not a phenomenon unique to Germany. Although personnel links in the majority of sectors are strongly characterised by national connections, an increase in international links is to be expected in the wake of the ongoing globalisation of the economy. The findings therefore provide grounds for continuing to address personnel links in an international context in the future.
Supervision of abuse of a dominant position and merger control
Of significance in terms of competition policy during the reporting period was the creation of a competitive exemption under Section 17 of the Financial Market Stabilisation Acceleration Act in October 2008. However, this exemption from general competition law provisions cannot extend beyond its intended purpose and therefore covers only acquisitions made by the Financial Market Stabilisation Fund. For this reason, the reprivatisation of state-owned assets acquired during the crisis for stabilisation purposes is subject to the provisions of the Act against Restraints of Competition.
To date, no crisis-related cartels or abuses of market power have come to light. Nor has the Federal Cartel Office yet had to approve any restructuring mergers, although the parties to such mergers are increasingly invoking this legal concept. Although the approval of the mergers between Deutsche Bank and Postbank, Commerzbank and Dresdner Bank, and WGZ Bank and DZ Bank has further increased concentration in the German banking sector, significant competition still exists in the relevant markets in the narrower economic sense.
Overall, against the backdrop of the crisis, the Monopolies Commission points out that functioning competitive structures are the best guarantee of a swift and smooth adaptation of economic structures to changing conditions. Even during the crisis, the preservation of sustainable, self-sustaining and competitive structures must remain at the heart of competition policy. Particularly in difficult times, the alignment of ownership, responsibility and liability must be upheld as a fundamental principle of regulatory policy in order to ensure the long-term functioning of social and economic exchange.
The assessment and evaluation of buyer power was the subject of several proceedings during the reporting period and is currently gaining in importance both in the practice of other competition authorities and in academic discourse. The Monopolies Commission examines buyer power both conceptually and through several case studies: The merger in the EDEKA/Tengelmann case was approved only subject to the condition precedent or obligation that the two retail companies refrain from implementing their planned purchasing cooperation, in order to prevent the emergence of buyer power. The buyer power of the automotive industry was examined in detail in the context of the clearance of the merger between the convertible roof manufacturers Webasto and Edscha. Furthermore, as part of the sector inquiry into the dairy sector, the distribution of market power across the various stages of the value chain is analysed in detail. In summary, it can be stated that the – abstract – assessment of buyer power depends heavily on the basic assumptions underlying an analysis. Against this background, the Monopolies Commission points out that, whilst the Act against Restraints of Competition (GWB) fundamentally protects against exploitation irrespective of whether any benefits gained are passed on, it cannot, on the other hand, be intended to protect inefficient structures.
The number of merger notifications submitted to the Federal Cartel Office has fallen significantly; for the entire reporting period, it amounts to little more than half that of the previous period, and in a direct comparison of 2009 with 2007, it is even less than half. However, this decline is only partly attributable to the economic situation; the introduction of a second domestic turnover threshold for merger control obligations has also had a significant impact.
The application of merger control regulations to public-sector undertakings is once again the subject of an investigation by the Monopolies Commission. State-owned undertakings are expressly subject to competition law. Given the potential impact on competition, the fact that the merging entities operate under public or private law cannot be the decisive factor in determining whether the transaction is subject to merger control. Otherwise, state actors would have the possibility of removing enterprises they own from competition law scrutiny at will. In this respect, it must be noted that corporate restructuring measures are subject to the Act against Restraints of Competition (GWB), whilst only restructuring measures that are genuinely governed by public administrative law – as measures of a sovereign nature – are exempt from merger control.
The de minimis market clause, which has already been discussed on numerous occasions by the Monopolies Commission, has once again given rise to considerable uncertainty during this reporting period. It is not uncommon for the application of merger control provisions to depend on the question of whether to aggregate the turnover generated by the parties to a merger in separate but neighbouring markets, which has led in several cases to legal disputes, some of which have been very extensive. The Monopolies Commission analyses the recognised categories of cases involving such aggregation and, in agreement with the Federal Court of Justice, notes that, even after decades, the conditions for such aggregation have not been sufficiently clarified either in the practice of the Federal Cartel Office or in academic discourse. In order to reduce these uncertainties and avoid unnecessary and costly legal disputes on this matter in future, the Monopolkommission recommends the introduction of a statutory provision on the aggregation of turnover.
In the energy sector, rather than the integration of municipal utilities by the major suppliers, there is an increasing trend towards mergers and cooperation between smaller suppliers, in particular purchasing and sales cooperatives. In the Monopolies Commission’s view, when assessing these, a distinction should be made between the competitive effects of purchasing and distribution partnerships: whilst purchasing partnerships appear largely unproblematic, distribution partnerships may lead to a restriction of potential competition. The Monopolies Commission therefore recommends that a very detailed assessment of the motives and effects of such cooperation be carried out.
European merger control faced particular challenges during the 2008/2009 reporting period due to the global financial crisis. Fortunately, the European Commission rejected calls for a lowering of merger control review standards at an early stage. However, it responded flexibly when investigating individual cases, for example with regard to exemptions from the prohibition on implementation. In the practice of European merger control, only few direct effects of the financial crisis have been felt – at least so far. Firstly, the number of notifications in 2008/2009 (606) fell by around 20 per cent compared with the previous reporting period (758). Secondly, significantly more notifications were withdrawn compared with the previous reporting period (21 instead of 14). Furthermore, in some cases the European Commission reached decisions very swiftly, primarily during the first phase of proceedings.
The Monopolies Commission rejects the European Commission’s efforts to harmonise national merger control laws. In order to achieve the objective of a ‘level playing field’, the European Commission proposes aligning the various national rules with one another and with the Merger Regulation. This proposal relates primarily to procedural matters, but also encompasses substantive legal aspects. In the Monopolies Commission’s view, harmonisation by the individual Member States is preferable instead. In this context, it is worth recalling the planned eighth amendment to the Act against Restraints of Competition (GWB), in which the German legislature will, amongst other things, decide on a readjustment of the thresholds for intervention and an adaptation of the substantive criteria of German merger control.
The labour market and competition in product markets
The Monopolies Commission has examined the competitive effects of the German collective bargaining system on downstream product markets. On the one hand, it investigated the effects on product markets resulting from declarations of general applicability and the setting of minimum wages. Secondly, the Monopolies Commission analysed the phenomenon of sectoral trade unions.
The Monopolies Commission views the ever-increasing political influence on wage setting with concern. In this regard, the Monopolkommission points out that the declaration of universal applicability under the Collective Agreements Act and the Posting of Workers Act constitutes significant state regulatory competition for the collective bargaining parties and may therefore lead to a weakening of collective bargaining autonomy. The Monopolies Commission opposes the idea that existing collective agreements may be superseded by statutory order, particularly on the grounds of the potential for a significant restriction of competition in the product market, as well as constitutional concerns. However, minimum wages are also economically problematic because they can have significant negative effects on the downstream product market. The Monopolies Commission considers the application of universal applicability to be particularly problematic where competition in the relevant product markets is limited or non-existent, where demand elasticity is low, and where there are differing levels of productivity amongst firms in a relevant product market. The declaration of universal applicability is such that more productive firms may strategically use high collective agreements to hinder the competitiveness of less productive firms by means of an industry-wide minimum wage. Declarations of universal applicability may thus lead to greater concentration of firms in the relevant product market.
Given the significant risk of competitive abuse associated with this instrument, the Monopolies Commission advocates, from a regulatory perspective, a strict limitation on the extension of collective agreements to all employers. In any event, an investigation into the foreseeable competitive consequences of declarations of general applicability should take place before such a declaration is issued. In this respect, the Monopolies Commission advocates, as it has already done in its two special reports on postal services from 2007 and 2009, as well as in its special report on corporate unbundling published in 2010, the planned implementation of a general right for the Federal Cartel Office to submit comments during the legislative process. The exercise of such a right by an authority that is professionally independent and committed exclusively to the protection of competition would make the potential effects on the product market more transparent and significantly improve the basis for decision-making. The Monopolies Commission assumes that taking competition aspects into account in the legislative process will have a positive effect. In this context, it points out that a whole range of national competition authorities (e.g. in France, the United Kingdom, Italy and Spain) are already legally mandated to carry out competition impact assessments.
Another issue, against the backdrop of collective bargaining autonomy, is the potential for regulatory overlap for the parties to collective agreements when minimum wages are set under the Minimum Working Conditions Act. The fact that there is a low rate of collective agreement coverage in a particular sector is merely a manifestation of freedom of association and does not necessarily require reform. The intervention is intensified by the fact that not only is the lower limit of pay in a sector set, but distinctions can also be made according to the nature of the work, the qualifications of the employees and the regions. In this respect, the minimum wage does not function as a general, uniform means of securing a livelihood, but rather as a ‘reasonable wage’ for the activity in question. A minimum wage based on the Minimum Working Conditions Act leads to an increase in labour costs within the relevant sector. This results, particularly for new entrants, in a weakening of their competitiveness in the product market. In this respect, this instrument – just like the instrument of universal application – aims to restrict wage and product competition and must be rejected from a competition law perspective.
The Monopolies Commission sees no need whatsoever for such a competitive mechanism that interferes with the regulatory autonomy of the parties to collective agreements. In particular, the displacement of existing collective agreements must be rejected in light of the constitutionally guaranteed positive and negative freedom of association. The Monopolies Commission therefore advocates abolishing the possibility of setting minimum wages under the Act on the Determination of Minimum Working Conditions.
Successful sectoral trade unions often possess greater bargaining power than a large, heterogeneous general trade union. In this respect, it is rational for professional groups with strong bargaining power to conduct separate wage negotiations with the employer or the employers’ association. It seems no coincidence that sectoral trade unions are primarily concentrated in the transport and healthcare sectors – that is, in markets where monopoly-like structures have long prevailed. Furthermore, in markets with subsidised companies (such as regional rail operators) or where insurance is compulsory across the board – such as compulsory health insurance in the healthcare sector – the problem arises that higher wages can easily be passed on via demands for higher subsidies or higher health insurance contributions. In such sectors providing essential public services, higher wages can therefore, as it were, be automatically passed on to defenceless third parties. Furthermore, there are concerns that collective bargaining pluralism may lead to a race to the top amongst various competing trade unions during negotiations, a domino effect on other trade union-represented occupational groups, and—in the event of increased trade union competition—a possible rise in strikes.
Although the resulting plurality of collective agreements is associated with problems, from a constitutional perspective the application of the principle of collective bargaining unity constitutes a highly problematic encroachment on the freedom of association protected by Article 9(3) of the Basic Law. Owing to this constitutional requirement, the judicial principle of ‘one workplace – one collective agreement’ could not be upheld, and the highest court moved away from this approach. An urgent task for the legislature and the labour courts is to develop instruments to contain the plurality of collective agreements that is already effectively in place. The fundamental right to freedom of association must be brought into an appropriate balance with the constitutionally protected interests of third parties. The Monopolies Commission cannot foresee the extent to which the issue of sectoral trade unions will become increasingly acute in the future. It is therefore cautious in its recommendations for action and has discussed five different proposals regarding the issue of sectoral trade unions.
Prospects for greater competition and efficiency in statutory health insurance
The Monopolies Commission has examined the statutory health insurance (GKV) system and the conditions for competition between statutory health insurance funds. It should be noted that, on the one hand, the foundations for active competition have already been laid in recent years; on the other hand, however, serious obstacles to such competition have remained in place in various areas. However, these obstacles significantly restrict the development of active competition within the statutory health insurance system and its efficiency-enhancing effects.
Through collective agreements in outpatient care, the health insurance funds primarily procure services from registered doctors. The Monopolies Commission recommends transferring the billing of services rendered from the associations of panel doctors to the health insurance funds. The health insurance funds should also be given the right to inform patients about the services billed. In this way, the health insurance funds would be provided with important tools to ensure, themselves, that the billing is factually correct.
The key to greater competition in medical care lies in the service areas covered by selective contracts. Through selective contracts, health insurance funds can enter into agreements with individual service providers or groups of such providers. Selective contracts give health insurance funds far-reaching freedom to organise both the provision of services and the remuneration for those services efficiently. The resulting diversity in the organisation of the public healthcare mandate means that those health insurance funds which develop the best ideas in this regard will be able to establish themselves in the market. Selective contracts also create incentives for service providers, as they are no longer remunerated on a uniform basis but instead compete for lucrative contracts. One particularly promising area is that of integrated care. Here, the health insurance fund enters into contracts with regional networks of doctors, hospitals and other service providers who collaborate either to treat specific conditions or to provide comprehensive care for a patient. The flat-rate remuneration for care services provides service providers with strong incentives to ensure optimally coordinated care for the patient. The potential for innovation in integrated care contracts presents a promising opportunity to improve the quality of care and/or reduce costs.
However, two major obstacles currently stand in the way of developing various areas of selective contracting. One problem concerns the permitted contractual structure. In many forms of care, for example in GP-centred care, cooperation between the contracting parties on both sides is expressly provided for. Whilst limited cooperation – for example, in the field of integrated care – can certainly be beneficial, uncontrolled collaboration, on the other hand, can lead to a monopoly on both sides of the market. In this way, competition can be undermined by both health insurance funds and service providers, thereby losing its effectiveness. Cooperation in areas covered by selective contracts should therefore not be permitted across the board, but only insofar as it does not conflict with the objectives of competition in healthcare provision. The Monopolies Commission therefore calls for the statutory provision allowing cooperation between contracting parties to be removed, thereby making it clear that – as in other sectors – any form of cooperation between contracting parties is permissible only within the framework of the applicable competition law regulations.
A second, fundamental problem for competition arising from selective contracts is that of budget balancing. The Monopoly Commission proposes standardising the conditions for budget balancing in order to provide health insurance funds with predictable conditions for concluding selective contracts in medical care.
In the Monopolies Commission’s view, effective competition between health insurance funds requires that members of the statutory health insurance scheme be able to recognise the relative cost-effectiveness of health insurance funds and care tariffs from the premium paid for insurance cover. The Monopolies Commission therefore takes the view that price is an indispensable competitive parameter which must be fully available to health insurance funds when offering their insurance services. The contribution rate must therefore provide insured persons with as transparent and straightforward an overview as possible of the cost of insurance across different health insurance funds and different tariffs. However, the current contribution system is only partially suited to this purpose.
The Monopoly Commission sees economic advantages in the collection of income-independent contributions. However, the switch to fully income-independent contributions would, on the one hand, require substantial tax transfers for social equalisation and, on the other hand, the administrative burden involved must be taken into account. The Monopolies Commission therefore proposes focusing initially on the competitive advantages of an income-independent contribution component. The current supplementary contribution can also generate the competitive advantages of flat-rate contributions. To achieve this, however, the obstacles arising from the current regulation of contribution collection must be removed.
The Monopoly Commission proposes structuring the supplementary contributions in such a way that members of the statutory health insurance scheme need only compare a single price – in the form of the supplementary contribution – when choosing their health insurance fund and a care tariff. To this end, the additional employee’s share of 0.9 percentage points of the general contribution rate should be abolished, thereby stimulating competition via supplementary contributions and eliminating the lack of transparency in price differentiation between different premiums, supplementary contributions and the absence of premiums or contributions. The ‘excessive burden’ clause, under which a supplementary contribution may not exceed 2 per cent of a member’s income subject to contributions, should be replaced by a solidarity-based compensation system in line with competition rules, featuring reduced contributions. For every member of a health insurance fund who is insured at the reduced contribution rate, the difference between this rate and the full contribution rate should be topped up from tax revenue.
Furthermore, as a framework for a new competitive order in statutory health insurance, competitive processes must be protected from restrictions. In other markets, this protection is guaranteed by competition law. In the statutory health insurance sector, however, comparable protection of competition is not sufficiently in place. Three factors in particular are responsible for this. Firstly, there is a lack of clarity – both in European and German case law – as to the extent to which health insurance funds operate as businesses in the market. Yet the status of health insurance funds as undertakings is a prerequisite for the application of competition law. A second problem concerns the sectoral exemption under Section 69 of Book V of the Social Code (SGB V), under which parts of the legal relationships between health insurance funds and service providers are exempt from the application of German competition law. Thirdly, Book V of the Social Code contains various obligations to cooperate which run counter to the competitive activities of health insurance funds. Of particular note is the obligation to cooperate closely under Section 4(3) of SGB V. The supervisory authorities interpret these obligations in such a way that health insurance funds are, for example, prohibited from authorising third parties to issue notices of termination on their behalf. Competitors are therefore not permitted to handle the formalities of switching providers on behalf of the health insurance funds’ members, as is the case in other markets. The Monopolies Commission proposes aligning the requirements with a guiding principle whereby a competitive relationship between health insurance funds is the norm, provided that the funds’ special mandate to provide healthcare does not necessitate specific exceptions.
The Monopolies Commission also considers it desirable to supplement the healthcare system with a mechanism requiring patients to contribute to the costs they incur. This appears necessary to enable patients to make cost-oriented decisions in line with market principles. By contrast, patients today make their decisions regarding the use of treatment services largely independently of cost considerations. If the aim is to exert an appropriate steering effect on patients’ demand behaviour, generally mandatory co-payments, in the form of a relative share of the doctor’s bill, are a suitable instrument. The health insurance funds should be responsible for invoicing. The Monopolies Commission expressly points out that, should mandatory co-payments be introduced, social compensation schemes will also be necessary to ensure that the requirements of the principle of solidarity are met in this instance.
On a personal note
Commission member Peter-Michael Preusker stepped down from the Monopolies Commission on 30 June 2010 upon the expiry of his second term of office. The Federal President, on the recommendation of the Federal Government, has appointed Dr Thomas Nöcker to replace him. The term of office of Commission member Prof. Dr Justus Haucap also ended on 30 June 2010; he was appointed by the Federal President for a second term of office on the recommendation of the Federal Government. The terms of office of Commission members Christiane zu Salm, Dr Angelika Westerwelle and Prof. Dr Daniel Zimmer will end on 30 June 2012.
