Competition Authority
The competition authority is the totality of measures by which state authorities monitor and enforce competition law to prevent restrictions of competition, abuse of market power and the formation of monopolies. In Germany this is mainly carried out by the Bundeskartellamt.
Three pillars
Cartel prosecution
The Bundeskartellamt uncovers and prosecutes price-fixing, market sharing and other secret agreements between companies.
| Advantages | Disadvantages |
|---|---|
| Protects against price-fixing | Hard to gather evidence |
| Promotes fair markets | International differences |
Merger control
| Advantages | Disadvantages |
|---|---|
| Prevents monopolies from large mergers | Interferes with business freedom |
| Secures continued competition | International differences |
Abuse supervision
| Advantages | Disadvantages |
|---|---|
| Protects against abuse of power by large firms | Complex to evaluate |
| Risk of over-regulation |
Types of Abuse of Market Power
Market-dominant companies can abuse their position in two main ways:
- Exploitative abuse: A dominant company demands unjustifiably high prices or imposes unfair terms to exploit customers or suppliers.
- Exclusionary abuse: A dominant company hinders competitors, for example by denying them access to essential infrastructure. A classic example is a telecommunications company blocking rivals' access to its network to gain an unfair competitive advantage.
Effects
- Creates fair market conditions, no company gets unlawful advantages
- Increases transparency and trust in markets
- Firms have to compete on performance
- Deterrent effect: fines of up to 10% of annual turnover
- Consumers: lower prices, larger choice, better quality
Recent examples
Approved mergers:
- Lufthansa and ITA Airways (July 2024)
- Microsoft and Activision Blizzard (closed end of 2023, implemented 2024)
Rejected mergers:
- Amazon and iRobot (January 2024)
- Adobe and Figma (end of 2023)
Other actions:
- Google (2025): forced to remove restrictions on the Google Maps Platform
- Amazon (February 2026): Bundeskartellamt prohibited certain price-control mechanisms and confiscated €59 million in profits