Competition authority Antitrust Office targets Apple

As of: June 21, 2021 2:46 p.m.

The Federal Cartel Office is now also investigating Apple. Above all, the US group’s business conduct in the App Store wants to investigate. Similar proceedings are in progress against other large tech companies. The Federal Cartel Office initiates investigations against the technology group Apple. The authority wants to find out whether the US group with parts of its business a “cross-market importance” has in competition. Cartel Office President Andreas Mundt said: “We will now examine whether Apple has built a digital ecosystem across several markets around the iPhone with the proprietary iOS operating system.” After all, the US group also produces tablets, computers, headphones and watches and sells them at the same time “a range of device-related services and services”. The Group’s Services division includes the App Store, iCloud, technical support at AppleCare, the Apple Music music service, the range of games in front of Apple Arcade, the Apple TV + streaming service and other services.

EU sees unfair competition

During its investigation, the Cartel Office will also examine Apple’s technical and financial resources as well as access to data, according to Mundt. One focus of the investigation will be on the operation of the app store, as this enables the group in many cases to influence the business activities of third parties.

Apple’s app store system is already being investigated by the EU Commission, which accuses the group of unfair competition with other providers of music streaming services. Among other things, it is controversial that 15 to 30 percent of the digital revenues in the App Store go to Apple. “We look forward to discussing our approach with the Federal Cartel Office and engaging in an open dialogue about any concerns”it said in a response from Apple. The group is “proud to be an engine for innovation and jobs”. The iOS platform alone supports more than 250,000 workplaces in Germany.

Cartel office can intervene earlier

The background to the investigation is a reform of the Act against Restraints of Competition (GWB) in January. A central component is the modernization of abuse control. The supervisory authorities can now intervene earlier in the event of suspected violations by large digital corporations and prohibit anti-competitive practices.

This also makes it easier for the Cartel Office to take action against large digital companies that are important to competition across borders between different market areas. This has already had consequences: the last time the Bonn authority was against the online network Facebook and in May against the mail order company Amazon and against the internet company Google Investigation started.

According to the cartel office, an expansion of the investigation against Apple is imminent. The authority intends to “to take a closer look at Apple’s specific behavior in a possible further procedure”. The Office has received various complaints against potentially anti-competitive practices

Hearing before the BGH Are CumEx transactions a criminal offense?

Status: 15.06.2021 4:41 p.m.

The first proceedings on CumEx transactions have begun at the Federal Court of Justice. The judges must decide whether the deals are a criminal offense as tax evasion. The verdict will have far-reaching consequences. From Klaus Hempel, ARD legal editors They led to one of the biggest tax scandals in German history, in which the German tax authorities were duped and the state suffered billions in damage: the CumEx business. Investors used loopholes in legal regulations to make big money. They were supported by banks and top lawyers who work in large commercial law firms.

The state escapes taxes running into billions

Essentially, these CumEx deals were about stock dividends. These are profits from stock corporations that are distributed to shareholders. Taxes are deducted directly from this and transferred to the tax office. The shareholders can get the money back under certain conditions. In the CumEx business, investors have used an extremely sophisticated system and have taxes reimbursed that were never paid. At some point the dizziness was exposed. In March 2020, the first defendants were convicted by the Bonn District Court: two British stock traders involved in such transactions. Because they cooperated closely with the prosecutor, they were sentenced to relatively mild suspended sentences. Nevertheless, they appealed to the Federal Court of Justice. He must now clarify in a landmark judgment whether the CumEx business is actually a criminal tax evasion. “In the present proceedings, the Federal Court of Justice is dealing for the first time with so-called CumEx transactions from the point of view of tax evasion,” explains Chief Public Prosecutor Thomas Heise from the Federal Prosecutor’s Office. “He will decide whether the peculiarities of these transactions allow a tax that has not actually been paid to be reclaimed from the tax authorities.”

June 15, 2021

Warburg-Bank rejects responsibility

One of the two stock traders had earned 14 million euros from the deals, which he is supposed to repay. The private bank MM Warburg was also involved in the business. According to the judgment of the Bonn Regional Court, 176 million euros are to be collected from her. The bank is defending itself against this at the BGH. Your lawyer Ali Norouzi believes that the law does not justify skimming off the funds. “There were no representatives of the bank in the dock, but traders from other companies who traded for their own account and not for the bank,” argues Norouzi. “They made substantial profits and damaged the bank considerably. Their actions cannot be attributed to the bank.”

06/01/2021

Judgment expected at the end of July with far-reaching consequences

Nevertheless, the public prosecutor said that the millions in profits would have to be collected. The Bonn Regional Court followed this legal opinion. The Federal Court of Justice now has the final say. He plans to announce his verdict at the end of July. His decision is very significant for the lower level of justice. Hundreds of suspects are being investigated for tax evasion nationwide. If the BGH evaluates the CumEx transactions as criminal tax evasion, there will probably be further convictions in which those primarily responsible must expect long prison sentences. File number: 1 StR 519/20

Because of the Karlsruhe ECB judgment EU initiates proceedings against Germany

As of: June 9th, 2021 2:58 p.m.

The EU Commission considers the judgment of the Federal Constitutional Court on bond purchases by the ECB to be a “dangerous precedent”. That is why she is now initiating infringement proceedings against Germany. From Klaus Hempel, ARD legal editors The Brussels Commission believes that the Federal Constitutional Court violated the primacy of EU law with its controversial ruling on the ECB’s bond purchases last year. In doing so, Germany violated the basic principles of EU law. With the initiation of the infringement proceedings, the federal government now has two months to respond to the allegations in writing.

A judgment with explosive political power

In May 2020 the The Federal Constitutional Court ruled that the multi-billion dollar bond purchase program “PSPP” of the ECB was partially unconstitutional . The European Court of Justice (ECJ) had previously ruled that at the request of the Constitutional Court the program is legally in order and there is no violation of EU law . The Karlsruhe judges did not accept this, however, and thus opposed the ECJ – for the first time ever. They called his judgment “objectively arbitrary” and “methodologically no longer justifiable”. Your main criticism of the bond purchase program: The ECB had not justified why the program was proportionate and the significant economic impact on all citizens should be justified. The ECB and, through the ruling, also the ECJ had exceeded competences. The Bundestag and the Federal Government would have to work towards ensuring that the ECB subsequently provides this reason. In June 2020 the Governing Council looked again at the PSPP program and its proportionality. A little later, the Bundestag decided in a resolution that the proportionality test carried out by the Governing Council met the requirements resulting from the judgment. In a decision from the end of April 2021, the Federal Constitutional Court finally found that the Bundestag and the Federal Government had implemented the ruling. For the Federal Constitutional Court, the case was closed. But not for the EU Commission.

EU Commission sees dangerous precedent

The Commission sees a need for further clarification. In their view, the judgment represents “a serious precedent both for the future practice of the court itself and for the constitutional courts of other Member States”. The Brussels authority fears that the German example could set a precedent. The fear: EU states such as Poland or Hungary, which the Commission accuses of violating the rule of law, could no longer follow judgments of the European Court of Justice and refer to Germany. A year ago, shortly after the verdict was announced, had Commission President Ursula von der Leyen made it clear that infringement proceedings could be initiated against Germany . Judgments by the European Court of Justice are binding on all national courts, she explains. “The last word on EU law is always spoken in Luxembourg. Nowhere else.” It is about holding the EU together as a community of values ​​and rights. The reaction of the Polish Prime Minister Mateusz Morawiecki shortly after the ruling from Karlsruhe showed that the fears in Brussels are not entirely unjustified. He spoke of one of the most important judgments in the history of the European Union. The judgment makes it clear that the individual member states determine where the competency limits lie for the EU institutions. In Poland, the national-conservative PiS government has been restructuring the judiciary for years. The ECJ has already intervened several times and found that parts of the reforms violated EU law.

Federal government now on the train

With the initiation of infringement proceedings, the federal government now has two months to take a position. If the Brussels Commission is satisfied with the answer, the procedure would be ended relatively quickly. In the most extreme case, however, the EU Commission could ultimately sue Germany before the European Court of Justice. In this case, the conflict between the ECJ and the Federal Constitutional Court would most likely escalate for good. Shortly after the Karlsruhe ruling, Luxembourg had already expressed its displeasure and officially declared that its rulings would be binding on a national court like the Federal Constitutional Court if it had appealed to the ECJ. Regardless of how the Federal Government will express itself: It cannot impose any requirements on the completely independently acting Federal Constitutional Court, let alone prescribe not to oppose judgments of the ECJ in the future. In previous rulings on Europe, Karlsruhe had always reserved a kind of “emergency brake”, the right to the “last word” in certain cases, as it were. At the moment it cannot be assumed that the Federal Constitutional Court will move away from this line of jurisdiction. The EU Commission is obviously interested in exactly that. She wants to ensure that the court grants the ECJ the final decision-making right with regard to European law issues – with the big, actual goal in mind that other constitutional courts of problem countries such as Poland will then also permanently bow to the ECJ rulings. But how it should succeed in persuading the very self-confident Federal Constitutional Court to give up its previous dogmatics, no one currently has a conclusive answer. As expected, the Constitutional Court did not comment on today’s decision by the EU Commission in Brussels.

Infringement Procedure How EU law is enforced

As of: 06/09/2021 4:21 p.m.

In order to enforce the law of the European Union in the EU states, there is the infringement procedure. It can lead to heavy fines. By Christoph Kehlbach, ARD legal editors The law of the European Union is to be implemented in the EU member states. There is a formal procedure to enforce this: the infringement procedure. In extreme cases, the European Court of Justice can impose very considerable penalties as a means of pressure.

Reason: breach of obligation under the EU treaties

As a rule, infringement proceedings are initiated by the EU Commission. And then when it comes to the conclusion that a member state of the European Union is not complying with EU law. This is where the EU Commission’s designation as the “guardian of the EU treaties” comes from. Specifically, it can mean that the respective state does not transpose an EU directive into national law. Such directives regulate, for example, EU-wide consumer protection. All member states are obliged to implement them. Or that a state enacts laws that run counter to an obligation under the EU treaties. For example, because they impermissibly restrict the free movement of goods and services. The commission then first contacts the state directly. If that doesn’t help, she can ultimately bring the case to the European Court of Justice (ECJ).

As a rule, the EU Commission initiates infringement proceedings. Image: picture alliance / dpa / XinHua It is also possible that it is not the Commission but another EU country that initiates infringement proceedings. However, he must first contact the Commission. Only if this remains inactive can this state take legal action directly at the ECJ. That happens very rarely. A prominent example of such an exceptional case was the dispute over the car toll planned by the federal government for cars that are not registered in Germany: Austria saw this as discrimination and became active after the EU Commission had not acted. Ultimately, this is how the toll came before the ECJ. This overturned her in a spectacular decision in the summer of 2019 : The court came to the judgment that the toll discriminates against citizens and companies from other EU countries and thus restricts the freedom of goods and services.

Three-step process

In the vast majority of cases, however, it is the commission itself that takes action on its own initiative. The “normal” procedure is clearly regulated: If the EU Commission sees a violation, it demands one first step write to the state concerned to comment. The country must then respond within a specified period. Usually this period is two months. Now it is at least conceivable that Brussels will be persuaded by this response letter, i.e. that it will understand that there is no violation of EU law. Then the process ends at this point. However, if the Commission comes to the conclusion after an answer that there is indeed a violation of EU law, then it gives in one second step issued an official statement. In this, the Commission justifies its view and calls on the state to ensure that the situation that is contrary to EU law is ended. Within a further period (again it is usually two months) the state must then provide information about what it has done for this purpose. If the state does not meet its duty within this period, or does so insufficiently, the commission may in a third step bring the case to the European Court of Justice (ECJ). The judges in Luxembourg then give a judgment on the matter. Such a judgment against Germany there was, for example, the beginning of June 2021 : It was about the years Exceeding limit values ​​for nitrogen dioxide . If the ECJ is right to the Commission, i.e. if, as in this case, there has been a violation of the EU treaties, the state concerned must then take action to remedy this situation. Or prove that the illegal situation has already been eliminated.

In infringement proceedings, the European Court of Justice decides whether EU law has been violated – and can ultimately even impose high fines. Image: picture alliance / dpa

Financial sanctions possible after judgment

If a state still does not meet its obligations after such a ruling by the ECJ, the EU Commission can appeal to the ECJ again. This second court case is about financial sanctions. At the proposal of the Commission, the ECJ can then set a regular penalty payment against the state, or levy a lump sum – or combine both. The longer a state allows a violation of the EU treaties to persist, the more expensive it becomes. For example, due to data protection violations, lump-sum payments in the double-digit million range do occur – often combined with a daily penalty rate of tens of thousands of euros. Such penalties are always only the very last step.

Particularly delicate situation

The infringement procedure regarding the ECB judgment from Karlsruhe is particularly tricky: Because this is not simply a matter of Germany failing to transpose an EU legal norm into national law or failing to achieve certain benchmarks. Rather, the subject of the specific infringement proceedings is for the first time a judgment by the highest German court. To be more precise: A judgment in which the Federal Constitutional Court found that the European Central Bank (ECB) and also the ECJ have exceeded their competences . Ultimately, if the proceedings are not terminated beforehand, a curious situation could arise: the ECJ could decide whether a ruling by the Federal Constitutional Court, which certifies that the ECJ has made a massive error, violates EU law.

Dispute over ECB bond purchases Get together!

As of: June 9th, 2021 6:05 p.m.

It is understandable that the EU Commission is reacting to the Karlsruhe ECB ruling with proceedings against Germany. But that won’t resolve the dispute. Only the courts themselves can do that. A comment from Frank Bräutigam, ARD legal editors If anyone at Karlsruhe’s Schlossplatz had hoped that the high waves after the Karlsruhe ECB judgment of May 2020 would fizzle out silently, they were disappointed today. The EU Commission is initiating infringement proceedings against Germany because of a ruling by the Federal Constitutional Court. ´ That has never happened before. The relationship between Karlsruhe and Luxembourg has always been somewhat tense. But this is now a unique escalation.

Do not lose sight of questions of democracy

The starting point of the Federal Constitutional Court on EU issues is absolutely correct and important. To see that the legal limits remain an important currency at the EU level. Because one must not lose sight of the individual voter, i.e. questions of democracy. Because the individual states have not given up all their competences to the EU. With its “yes, but” approach, the court has achieved a lot in several rulings since the financial crisis in 2012 at the latest. In this specific case of the ECB bond purchase, pulling the emergency brake, accusing the ECB and ECJ of arbitrary action, went too far.

The EU Commission had to react

That was not proportionate: in terms of content, but also with a view to the possible role model effect for other states such as Poland or Hungary. What happens there in terms of content within the judiciary is of course not comparable to Germany. Nevertheless, there is this bare result: The German court does not adhere to what the ECJ says. Then why should we do this? The fact that, from its point of view, the EU Commission must therefore react and initiate a procedure – which is understandable.

Dilemma for several actors at the same time

But you also have to be aware that if you think through the process started today, it will lead several actors into a real dilemma. First of all, the federal government, which now has to take a position as a first step. What is she supposed to do? Somehow signal an independent court to correct its judgment or take other action? And in the last step, the ECJ would decide on a breach of contract. Who? Yes exactly. One of the arguing actors. He would be a kind of judge in his own case. Would that lead to a good solution?

Take “cooperation relationship” at its word

Arguing over who “has the last word” is almost always devastating. In private life, in politics and also within a network of national and European courts. It is the last thing the citizens of the EU need in these times. If the “cooperation relationship” between the courts can be heard in many speeches, this must be taken literally. Mind you: the courts cooperate with each other. Not the courts with the state and the EU. They are supposed to strictly control these two. The fact that there is often still room for improvement at the ECJ on this point has expressly contributed to this conflict.

It is the courts’ turn

An example from the two companies at issue here shows that cooperation is fundamentally possible. Because the First Senate of the Federal Constitutional Court (the Second Senate acts in the ECB conflict) has shown with important rulings from 2019 that Karlsruhe and Luxembourg can achieve control of national and European fundamental rights in the interests of the citizens together. That means: the current situation can only be defused by the courts themselves. Not from the Federal Government or the EU Commission. The actors from the judiciary know each other. Well, actually. You have to pull yourself together. It is unclear what the one solution to the specific dispute should look like, but there has been no lack of creative ideas in Karlsruhe or Luxembourg for many decades.

Editorial note Comments generally reflect the opinion of the respective author and not that of the editors.