Term and general definition of Market
The term “Market” (German: “Markt”) refers in legal terms to an area of social exchange of goods, services, capital, or rights that is defined by spatial, temporal, material, and personal criteria. In business and private law, the term includes all locations and platforms where contracts for the exchange of services for remuneration or free of charge can be concluded. The legal perspective of a market relates both to traditional physical markets such as weekly markets or stock exchanges, as well as to digital and virtual trading platforms.
Legal foundations of the market concept
Market as a legal term
The concept of the market is of central importance in many areas of law and can be found in national and supranational statutes as well as in case law. In German and European law, it is particularly relevant in competition law, antitrust law, trade law, and public economic law.
C. Statutory foundations and definitions
In German law, the market concept is used, for example, in the Act against Restraints of Competition (GWB). According to § 18 GWB, the relevant market “describes the entirety of goods or services that are actually and potentially interchangeable, as well as the spatial and temporal dimension of competition.” This definition serves as the basis for antitrust assessment of economic conduct and market power.
Market and contract law
In contract law, the market constitutes the framework within which contractual relationships come into existence. The market is a prerequisite for contractual autonomy, enabling a free exchange of offers and demands. Market-related provisions can thus be found in the BGB, HGB, and in special commercial laws.
Markets in antitrust and competition law
Relevant market concept in antitrust law
Antitrust law regards the market as the reference for evaluating market power and competitive restraints. Determining the so-called “relevant market” is crucial for assessing whether companies hold a dominant market position or whether there are anti-competitive agreements.
Material, spatial and temporal market definition
Material market definition is based on the substitutability of products or services from the perspective of the customer and the provider. Spatial market definition depends on the geographic area in which competition takes place, while temporal market definition may take into account temporary or seasonal market structures.
European competition law
At the European level, the market concept is applied in the context of merger control, abuse control, and the application of Articles 101 and 102 TFEU. The European Commission, the European Court, and national competition authorities base their assessments on the definitions established for markets.
Markets in public law and trade law
Market within the meaning of trade regulations
According to § 68 GewO, so-called “markets” also include temporary events such as fairs, specialty markets, wholesale markets, and weekly markets. These markets are subject to special permit requirements, admission procedures, and conditions regarding implementation, authority supervision, and consumer protection.
Consumer protection at markets
Public law regulates various aspects of consumer protection, especially at temporary sales events; these include transparent pricing, cancellation rights, hygiene requirements, and the prohibition of misleading business practices.
Electronic and digital markets
Virtual marketplaces and their regulation
With increasing digitalization, electronic markets and digital platforms such as online marketplaces, e-commerce platforms, or social media markets are gaining in importance. In addition to civil law provisions, these markets are subject to special regulations, such as the Telemedia Act (TMG), the Digital Services Act (DDG), and consumer protection provisions in distance selling law.
Liability on digital markets
Operators of digital marketplaces are subject to special liability rules. For example, they can be held liable as so-called “service providers” for third-party content under certain conditions pursuant to § 7, 8 TMG. The European regulations on platform liability, including the provisions of the Digital Services Act (DSA), apply additionally.
Particularities of financial and commodity markets
Capital markets
Financial markets such as stock exchanges are considered highly regulated markets. The Securities Trading Act (WpHG) and other specialized provisions and European regulations (e.g., MiFID II, MAR) define requirements for how these markets operate, oversight, and market integrity. Participation in stock exchanges or financial markets may require official authorization or licensing.
Commodity markets
Commodity markets are subject to specific market regulations regarding transparency, commodity futures trading, and protection mechanisms against market manipulation and insider trading. Here too, national and European requirements, for example those by the European Securities and Markets Authority (ESMA), apply.
Market regulation and supervision
Market supervision by authorities
For both physical and digital markets, different regulatory authorities exist, e.g. the Federal Cartel Office, the German Federal Financial Supervisory Authority (BaFin), or local authorities in the context of trade law. These institutions monitor market rules, sanction violations, and implement measures to restore lawful market conditions.
Legal protection and enforcement
Claims arising from market violations are pursued in civil and administrative courts. In antitrust and competition law, injunctive relief, compensation, and removal claims are available. In the area of digital markets, suspensions and access bans may also be imposed.
International dimensions and supranational regulation
International markets and trade agreements
At the international level, markets are the subject of trade agreements and treaties under international law. Organizations such as the World Trade Organization (WTO) and free trade agreements regulate market access, competition rules, and protection against unfair market behavior in cross-border contexts.
Conflict-of-law issues
The regulation of supranational digital markets raises conflict-of-law issues, particularly regarding the applicable law, jurisdiction of courts, and enforcement of market rules across national borders.
Summary
The term “Market” legally refers to a central venue for economic activity. Its definition and scope depend on the relevant fields of law such as competition, trade, contract, finance, or consumer law. All these areas include specific provisions ensuring competition, consumer protection, market supervision, regulation, and enforcement of market rules. With digitalization, new legal challenges are emerging, resulting in increasing interplay and further development of national and international regulations.
Frequently Asked Questions
What legal requirements must be observed when operating an online marketplace in Germany?
When operating an online marketplace in Germany, operators must comply with a wide range of legal requirements. Firstly, the provisions of the German Civil Code (BGB), in particular those regarding distance contracts (§§ 312 et seq. BGB), which set out information duties towards consumers, apply. In addition, the Telemedia Act (TMG) obliges operators to provide an imprint and comply with data protection requirements, which have been further strengthened since the General Data Protection Regulation (GDPR) came into force. Marketplace operators must also comply with VAT regulations under § 22f and § 25e of the Value Added Tax Act (UStG): They are required to collect and retain certain tax information from vendors operating on their marketplace and, in cases of suspicion, report it to the tax authorities. Furthermore, the Packaging Act (VerpackG) requires that marketplace operators ensure that traders with packaging subject to system participation are registered with the Central Packaging Register. Finally, as of July 1, 2021, new obligations apply under marketplace liability in Europe (E-Commerce Directive and Implementing Regulation) regarding the verification and disclosure of seller data as well as cooperation with law enforcement authorities.
What liability regulations apply to marketplace operators with respect to products offered on the marketplace?
Marketplace operators are primarily intermediaries for contracts between sellers and buyers under German law, but they can be liable for legal violations by merchants under certain circumstances. According to § 7 and § 10 TMG, they are not liable for third-party content unless they have knowledge of unlawful activities and fail to act immediately upon gaining such knowledge (notice-and-take-down principle). However, they may be liable as so-called “disturbers” if they breach reasonable monitoring obligations, for example, if they ignore indications of legal violations (trademark, copyright infringements, breaches of product safety regulations). Additionally, there is tax liability under § 25e UStG if marketplace operators do not keep proper records of the tax registration of suppliers. In the field of product safety (ProdSG, GPSG), marketplace operators can also be held liable for obvious violations of safety regulations.
What information obligations exist towards customers and sellers on the marketplace?
According to the European Consumer Rights Directive and §§ 312d and Art. 246a EGBGB, marketplace operators are required to provide comprehensive information to both customers and sellers. This includes clearly indicating whether the provider is a business or a consumer, disclosing essential product characteristics, showing prices including all associated costs (such as shipping or taxes), as well as information about existing cancellation and return rights. In addition, the General Terms and Conditions (GTC) and privacy policy must be transparent and accessible at all times. For sellers, there is also an information obligation regarding the conditions under which they can operate on the marketplace, including any fee structures, exclusion criteria, or ranking algorithms for their offers.
What data protection requirements must marketplace operators observe?
The GDPR and the Federal Data Protection Act (BDSG) require marketplace operators to implement comprehensive data protection measures. They must provide an understandable and transparent privacy policy that informs about the type, scope, and purpose of data processing. A legal basis for processing personal data (e.g., consent, performance of a contract) is mandatory. In addition, there are obligations to uphold data subject rights such as access, rectification, erasure, and data portability. If processors, such as IT service providers, are used, corresponding agreements must be concluded under Art. 28 GDPR. The transfer of customer data to third parties such as sellers is particularly sensitive; here, transparency and a legal basis (often performance of a contract) must be ensured. Furthermore, there is an obligation to notify data protection breaches to the competent authorities within 72 hours.
What product safety regulations apply to marketplaces?
Marketplace operators are subject to the provisions of the Product Safety Act (ProdSG) and other sector-specific norms (e.g., Medical Devices Act, Toy Directive). They must ensure that no products are offered on their marketplace that violate applicable safety regulations. This applies particularly to toys, electrical devices, and food. If there are indications of unsafe products, marketplace operators are obliged to conduct appropriate checks and, if confirmed, to remove the offers. As part of their monitoring obligations, they must also cooperate with market surveillance authorities and ensure that relevant trader documents are provided when needed.
What tax documentation and reporting obligations do marketplace operators have?
According to § 22f UStG, marketplace operators are required to electronically record and retain comprehensive tax information—such as name, address, tax number, or VAT ID—for all entrepreneurs active on their platform. The retention period is generally 10 years. Additionally, they must transmit the data to tax authorities upon request (§ 22f para. 2 UStG). In cases of suspected tax fraud (e.g., with traders from third countries), marketplace operators may block access to the portal to avoid tax liability (§ 25e UStG). They are required to obtain and store so-called “certificates of tax registration” (according to the official template).
What regulations regarding dispute resolution and customer protection must marketplace operators comply with?
According to the EU Regulation on Online Dispute Resolution for Consumer Disputes (ODR Regulation) and the Consumer Dispute Resolution Act (VSBG), marketplace operators must inform consumers about the possibility of the online dispute resolution platform (https://ec.europa.eu/consumers/odr/) and provide an easily accessible link on their website. If a marketplace itself is considered a business and participates in dispute resolution proceedings, it must also inform users accordingly. Furthermore, internal complaint mechanisms must be established for business users in accordance with the P2B Regulation to ensure transparent and effective handling of complaints. In terms of customer protection, operators must refrain from unfair business practices and strictly observe consumer rights, particularly regarding withdrawal and warranty.
