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German Gaming Law updated No. 40 |
Newsletter on Betting and Gambling Law
No. 40 of 31 August 2006
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The irresistible End of a Cartel –
A Commentary to the Federal Cartel Office’s decision regarding the Deutscher Lotto- und Totoblock
by Attorney-at-Law Martin Arendts, M.B.L.-HSG
The Federal Cartel Office (which more or less corresponds to the British Monopolies and Mergers Commission) finally affirmed what we have been submitting to the courts for years. The association of the state gaming operators, the Deutscher Lotto- und Totoblock (DTLB) is a cartel. This association founded as a partnership under the Civil Code basically had two objects: market allocation and market foreclosure. Both are illegal of course and are neither compatible, with German nor with European Anti-Trust Law.
The Federal Cartel Office’s decision concerns the first aspect, that is market allocation. The members of the DLTB cartel have been trying to partition the German gaming market and to obstruct and gag the remaining or drudgingly developing private competition for years. The Federal Cartel Office’s decision finally puts an end to this practise. Competition rules do apply for gaming services as well; private operators may not be restricted unduly.
I am convinced that the Federal Cartel Office’s founded decision will be affirmed by the courts. The Federal Constitutional Court rightly held, that gaming services may be marketed as regular leisure activity. Accordingly, general competition rules apply to this regular commercial activity. The DTLB will not be able to argue this away anymore.
The second aspect has yet to be clarified. As a matter of fact, the market foreclosure pursued by the DTLB with regards to competitors form EU Member States and those from Member States of the European Economic Area are illegal. It has to be noted, that, in the past, members of the DTLB cartel such as Westlotto for example succeeded in applying instruments of the Unfair Competition Act (UWG) against British, Austrian and Maltesian bookmakers in order to obstruct competition – from my point of view this constitutes a clear perversion of competition law (a fact the courts will have to consider in the course of the proceedings against foreign operators). This market foreclosure strategy, which has received strong political support due to personal and economic interdependence of the DTLB members, will soon be reviewed in the course of the Treaty Violation Proceedings brought forward by the Commission against Germany. In view of Germany’s unconvincing response, which seems to have been penned by the states directly affected by these proceedings, the ECJ should soon have to resolve this dispute.
In view of the finally perceived importance of the competition law, the gaming market should function in a fundamentally different way in two to three years from now. The DTLB will not be allowed to pursue its goals and has outlived itself. Market sharing agreements are illegal. This leads to substantially higher competition not only between private operators, who will eventually “repack” state gaming products and state operators but also between the current cartel members.
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