The "Act to Strengthen Fair Competition" is coming

Daniel Wuhrmann

The "Act to Strengthen Fair Competition" was adopted by Germany's Federal Parliament on 10 September 2020 and approved by the Federal Council [Bundesrat] in late October (see: press release (only in German) from the Federal Ministry of Justice and Consumer Protection).

The law includes a package of measures which serve to curb abuse of cease-and-desist letters and protect companies, especially small and mid-sized businesses, from the consequences of such abuse.

In particular, changes are made to several existing statutes  (e.g.: the Act against Unfair Competition, the Desistance Actions Act and the Court Fees Act) (only in German) in order to effect the following points:

  • The financial incentive for sending our cease-and-desist letters will be reduced because competitors will no longer have a right to be reimbursed in case of the violation of notification and labeling requirements online, or in case of violations of data protection law by companies with less than 250 employees.
  • The requirements with regard to standing will be increased by defining "competitor" more narrowly (distribution or consumption of goods or services to more than an insignificant extent, and not just on an occasional basis) and industry associations will only have standing to send out cease-and-desist letters if they meet certain requirements and have been included in a list of qualified industry associations kept by the Federal Office of Justice.
  • Standard examples are included in order to make it easier for future victims to furnish evidence of abusive cease-and-desist letters. These examples will include competitors sending out cease-and-desist letters en masse, as well as competitors demanding clearly excessive contractual penalties  or alleging unreasonably high values in dispute.

The new law also amends the Registered Design Act by adding a repair clause (§ 40a of the Registered Design Act) (PDF only in German), something which businesses have long been calling for and which has already been the subject of some discussion. In summary, the repair clause states that registered design protection is not afforded for elements of a complex product (see definition in § 1 No. 3 of the Registered Design Act, e.g. vehicles) which are used for the sole purpose of allowing the complex product to be repaired so as to restore its original appearance.

This is expected to have a substantial impact for various products, particularly for the spare parts market.

[November 2020]