Concept and significance of the prohibition of discrimination in competition law
Das Prohibition of discrimination in competition law is a central principle aimed at ensuring equal treatment of market participants and preventing unfair competitive practices. It obliges companies and economic actors to maintain equal treatment of business partners and competitors and to avoid unjustified disadvantages. The prohibition of discrimination plays an important role both in German and European competition law. It applies to various areas of law, especially in antitrust law and the law against unfair competition.
Legal foundations of the prohibition of discrimination
Prohibition of discrimination in German antitrust law
The prohibition of discrimination is established particularly in the German Act Against Restraints of Competition (GWB) The relevant regulations are set out in Section 19(2) No. 1 GWB. It provides that a dominant or a company with superior market strength over non-consumers may not “set unequal conditions for equivalent performances towards individual companies, in particular retailers,” unless there is objective justification for this.
Protection of competitors and freedom of trade
The prohibition of discrimination primarily protects competitors by preventing individual companies from being disadvantaged by abusive market behavior. At the same time, the prohibition contributes to the structural openness of the market by ensuring freedom of trade and equal opportunities.
Prohibition of discrimination at the European level
European competition law also contains corresponding regulations. Particularly important here is Article 102 of the Treaty on the Functioning of the European Union (TFEU), which establishes the prohibition of abuse for dominant companies. According to Article 102(c) TFEU, it is prohibited “to apply dissimilar conditions to equivalent transactions with trading parties, thereby placing them at a competitive disadvantage.”
Areas of application of the prohibition of discrimination
Dominant companies
The prohibition of discrimination is primarily aimed at dominant companies as well as companies with relative or superior market power. These companies are obliged to treat their business partners on equal terms, unless there are objective reasons for differentiation.
Relationship to third parties and the end consumer
The prohibition of discrimination applies mainly in relation to other companies, particularly to direct or indirect market rivals. It does not protect mere consumer interests, but is primarily aimed at competitors and business partners in trade.
Requirements for impermissible discrimination
Elements of the offense
Prohibited discrimination presupposes that
- a company holds a dominant position or superior market power,
- similar contractual partners are treated unequally without objective reason,
- this unequal treatment has a detrimental effect on the companies concerned and potentially on competition.
Objective justification
There is no discrimination if an objective reason justifies the different treatment. Such reasons may include, for example, differing order volumes, creditworthiness, different cost structures, logistical requirements, or product-related differences. What matters in each case is an objective legal and economic assessment of the individual situation.
Legal consequences and sanctions for violations
Violations of the prohibition of discrimination lead to significant legal consequences:
- Invalidity of the discriminatory business terms,
- claims for injunctive relief and removal by the disadvantaged companies,
- claims for damages of the affected parties,
- sanctions and fines by competition authorities such as the Federal Cartel Office,
- Procedural measures, such as the obligation to change discriminatory practices.
Examples of application
Classic examples of violations of the prohibition of discrimination include:
- Selective supply of retailers with certain products without comprehensible objective reasons,
- Price differences for equivalent performances without objective justification,
- Exclusion of individual customers from bonus or rebate programs,
- Unequal treatment in access to distribution or transport services.
Relationship to the general principle of equal treatment
The prohibition of discrimination in competition law must be distinguished from the general constitutional principle of equal treatment While the latter is aimed at the relationship between state and citizen (Art. 3 GG), the prohibition of discrimination in competition law primarily concerns the exchange relationship at the private law level between companies. Both principles, however, pursue the goal of preventing arbitrary and objectively unjustified disadvantages.
Significance for public companies and network industries
The prohibition of discrimination plays an especially important role in so-called network industries (energy supply, telecommunications, railway infrastructure) and for formerly state-owned monopoly companies. Here, access conditions to important infrastructures are often designed to be non-discriminatory in order to prevent distortions of competition and to enable market access for new providers.
International aspects and harmonization
In the course of the internationalization of competition law harmonization and cross-border cooperation between competition authorities are gaining in importance. International organizations such as the Organisation for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO) set standards and norms for non-discrimination and transparency in competition.
Summary and outlook
The prohibition of discrimination in competition law is a fundamental regulatory instrument that secures competition freedom and equal opportunities in the markets. It prevents abusive disadvantages caused by powerful companies and contributes to ensuring effective competition. In view of increasing digitalization, platform economies, and sector-specific characteristics, the differentiated application and interpretation of the prohibition of discrimination is becoming ever more important, pointing to ongoing developments in legislation and case law.
Frequently asked questions
What role does the prohibition of discrimination play in European competition law?
The prohibition of discrimination is a fundamental principle of European competition law and is found in particular in Article 102 TFEU (Treaty on the Functioning of the European Union). It is primarily directed at dominant companies and prohibits them from treating their business partners unequally in comparable situations. The goal is to ensure that companies with superior market power do not use their position to unjustifiably disadvantage competitors or other market participants. The prohibition of discrimination serves to ensure effective and undistorted competition by preventing companies from treating their customers or suppliers differently for non-objective reasons—such as through different prices, conditions, or restrictions on access. The European Commission and national competition authorities are responsible for enforcing the prohibition of discrimination and can impose fines or take measures to end discrimination in the event of violations.
What types of discrimination are distinguished in competition law?
In competition law, a distinction is made between direct and indirect discrimination. Direct discrimination occurs when a company treats its contractual partners explicitly differently, for example in the form of different prices, discounts, or delivery conditions, without objective reasons for doing so. Indirect discrimination, on the other hand, arises when ostensibly neutral measures result in certain market participants being disadvantaged in practice, for example through criteria that appear neutral at first glance but are designed to specifically exclude certain competitors. In both cases, it must be examined whether there is an objective reason justifying the unequal treatment, which can be derived from business necessities.
When is differential treatment still permissible in competition?
Not every differential treatment constitutes impermissible discrimination in the legal sense. European competition law allows differentiations if they are based on objective reasons. Such reasons may include different order quantities, payment conditions, credit risks, or other relevant circumstances that are understandable and objectively verifiable. What is decisive is that the unequal treatment is proportional and appropriate. Under Article 102 TFEU, it is up to the dominant company to present and prove that the differential treatment is covered by objective justification.
Who can invoke the prohibition of discrimination?
The prohibition of discrimination basically protects all market participants who are disadvantaged by the conduct of a dominant company. These include in particular competitors, but also suppliers and customers. They may contact the competent antitrust authorities or the courts to have the situation reviewed. In the field of European competition law, both individual complaints and class actions are conceivable, whereby the Commission and national authorities can act independently as soon as there are indications of discriminatory behavior.
Are there sector-specific particularities in the prohibition of discrimination?
Yes, competition law provides for specific discrimination prohibitions and enforcement mechanisms in some regulated sectors, such as energy, postal, telecommunications, or rail transport. These are intended in particular to ensure that network access is granted without discrimination and that new market participants have a fair chance. In such sectors, special regulatory authorities are often responsible for monitoring and enforcing the prohibition of discrimination, and in addition to the general antitrust regulations, there are further transparency and equal treatment obligations.
What legal consequences can result from a violation of the prohibition of discrimination?
Violations of the prohibition of discrimination can have far-reaching consequences. On the one hand, the competent competition authorities can impose substantial fines. In addition, the authorities can issue orders to cease the discriminatory practice and, if necessary, also order structural measures. Injured companies may also assert civil claims for damages and file injunctions. In serious cases, anticompetitive behavior may even result in antitrust divestiture.
How is the prohibition of discrimination enforced?
The enforcement of the prohibition of discrimination is carried out both by the European Commission and by national competition authorities. They may initiate investigations based on their own knowledge or following a complaint. In the course of investigations, they have far-reaching powers, such as searching business premises (dawn raids), requesting documents, and interviewing employees and management. Furthermore, affected companies and individuals can seek judicial assistance to enforce individual injunctive relief or claims for damages. In certain areas, alternative dispute resolution mechanisms are also available.
