Mobility@McDermott: Monthly Update (11/2023) - McDermott Will & Emery

Mobility@McDermott: Monthly Update (11/2023)


1. Proposal for EU directive for right to repair no longer covering motor vehicles

The European Parliament’s Internal Market and Consumer Protection Committee has voted on a draft report on the proposed EU directive which is intended to promote a “right to repair” for consumers. Unlike the original draft proposed by MEP René Repasi, the final version agreed by the committee no longer covers motor vehicles and trailers. Industry associations had previously warned that applying the directive to motor vehicles would not be appropriate.

The committee urged EU member states to remove software restrictions and other barriers to repair by independent workshops.

Relevant for: Manufacturers.
Further details here (available in English)

2. German parliament introduces restrictions on payment protection insurances

On 17 November 2023, the German parliament (Bundestag) passed the much-anticipated Financing for the Future Act (Zukunftsfinanzierungsgesetz). While the legislation focuses on promoting start-ups and improving access to capital markets, it also included new restrictions on payment protection insurance (Restschuldversicherungen) that are likely to have a significant impact on banks and finance providers in Germany.

Under the new legislation, lenders cannot require consumers to take out a payment protection insurance when granting a general consumer loan. Equally relevant in practice will be the requirement that one week must elapse between the conclusion of a general consumer loan and the conclusion of a payment protection insurance. If less time has elapsed, the payment protection insurance contract will be null and void. Some associations have stated that the introduction of the cooling-off period is tantamount to a de facto ban on payment protection insurance, which is an important source of income for many consumer banks. In addition, they argue that such mechanism contradicts Directive (EU) 2023/2225 of the European Parliament and of the Council of 18 October 2023 on credit agreements for consumers.

Relevant for: Banks, finance providers, insurers.

Further details here (available only in German)

3. German Federal Court of Justice finds that manufacturer is liable for emission standard violation 

In a ruling issued on 27 November 2023, Germany’s highest civil court, the Federal Court of Justice (Bundesgerichtshof, “BGH”) reaffirmed its case law that an OEM can be liable for negligent violations of emissions standards caused by a vehicle’s engine, even if the engine is manufactured by a third party. In this case, the plaintiff had purchased an RV from a third party and then sued the RV’s manufacturer which in turn had purchased the RV’s engine from a cooperation partner.

The court’s decision is in line with other BGH rulings from a few months ago, when the BGH had to adjust its legal assessment of cases in connection with the so-called “diesel scandal” involving manipulated engine emission systems (BGH ruling VIa ZR 335/21 of 26 June 2023, BGH ruling III ZR 267/20 of 20 July 2023) following a court decision by the European Court of Justice (“ECJ”). Previously, the BGH had required proof of intentional wrongdoing by an OEM in order to find it liable. The ECJ then ruled that by issuing a certificate of conformity, often referred to as a CoC document, for an individual vehicle, the manufacturer confirms to the vehicle owner that the vehicle complies with all of the relevant European regulations (ECJ ruling C-100/21 of 21 March 2023). As a result, only negligent behaviour on the part of the OEM needs to be proven in order to establish liability.

According to the BGH, the legal possibility of a restriction of the use of a vehicle, e.g. caused by the implementation of an illegal emission system, is sufficient to give rise to a claim for damages, as it affects the monetary value that represents the availability of the motor vehicle at all times.

Relevant for: Manufacturers.

Further details here (available only in German)

4. EU parliament adopts EU Data Act

On 9 November 2023, the European Parliament passed the Data Act. As previously reported in our Monthly Update 06/2023, one of the main purposes of the Data Act is to create a framework that allows users of “connected devices” to gain access to data generated by their use including visual or audio recordings. Connected devices also cover a wide range of IoT devices, from health devices and virtual assistants to connected vehicles.

The EU wants to give both individuals and businesses more control over their data through a strengthened right to data portability, which allows data to be easily copied and transferred between different services. According to the EU, aftermarket service providers, for example, will be able to improve and innovate their services and compete on a level playing field with similar services offered by manufacturers. This could lead to users of connected products being able to choose a more affordable repair and maintenance provider.

The Data Act still needs to be confirmed by the EU member states before it can take effect, but this is expected to be a formality.

Relevant for: Manufacturers, service providers.

Further details here

5. Non-compete restrictions impact potential competition and can infringe antitrust rules

On 26 October 2023, the European Court of Justice (“ECJ”) issued a preliminary ruling on a cooperation agreement between a Portuguese energy supplier and a supermarket chain. Under the cooperation, customers who were members of the supermarket chain’s loyalty program were eligible for discounted energy supply contracts. The parties also entered into a non-compete agreement for the duration of the cooperation and for one year thereafter.

The Portuguese competition authority had imposed a fine of EUR 34.5 million on the parties having found that the non-compete infringed antitrust rules as it amounted to market sharing.

Although the parties’ products and markets were very different, the ECJ confirmed the authorities’ interpretation of potential competition and held that the need to agree a non-compete in itself provides a strong indication that there is a real and concrete possibility (as opposed to hypothetical) that the parties may potentially compete. Alongside the restriction, the ECJ suggested that subjective evidence, the market environment as well as any activities of a wider group are particularly relevant in assessing whether  a company would realistically (re)enter the market. Importantly, the fact that there were no preparatory steps undertaken should not play into the assessment, i.e. a restriction that purely restricts potential competition is suffi-cient to infringe antitrust rules.

Helpfully, the ECJ highlighted that the non-compete in question may be considered to exceed the scope of the cooperation and would therefore be unlikely to constitute an ancillary restraint (which permits non-compete restrictions if necessary and proportionate to the objectives sought under a neutral cooperation).

Relevant for: All business with cooperation partners in the mobility sector.

Further details here

6. The German competition authority has new powers to enforce the outcome of a market sector investigation

On 7 November 2023, the 11th amendment to the German antitrust laws entered into force.

The amendment provides the German regulator, the Federal Cartel Office (“FCO”), with more power to enforce competition and make outcomes “fairer”:

1. following a sector investigation, the FCO will now be able to (a) require companies to adopt measures to remedy a “distortion” of competition, even when the distortion results from conduct that complies with all laws, and (b) force a company active in the sector to notify all transactions where the acquirer generated EUR 50 million and the target EUR 1 million in Germany;

2. the FCO can now presume that a company benefitted from anti-competitive conduct and require the company to disgorge at least 1 % of turnover as part of the FCO’s decision on such conduct; and

3. the FCO will be able to use its investigatory powers (including the right to conduct dawn raids) to assist the Commission in enforce the EU Digital Markets Act (DMA).

In addition, the Amendment also opens up the possibility for private enforcement under the DMA. Individuals will in future be able to turn to the German courts to bring actions against “gatekeepers” that infringe the DMA.

Relevant for: All companies in the mobility sector (and beyond).

Further details here and here

7. German court finds price adjustment clauses used by streaming providers to be invalid

The Court of Appeal in Berlin (Kammergericht Berlin) has rejected clauses used by two streaming providers in their general terms and conditions that gave them a unilateral right to raise prices.

The terms and conditions allowed the companies to increase prices under certain conditions without the consent of their customers, for example if the costs of providing their service increased. However, the terms and conditions did not provide that subscription prices may also decrease. As the rulings can still be appealed, they are not yet legally binding.

The price adjustment mechanisms of several streaming providers have been found invalid in recent months. Some of them have now changed their policy and now require explicit consent from their customers in case of price increases.

Relevant for: Mobility providers.

Further details here (available only in German)

8. German Ministry launches public consultation on modernisation of competition law

On the 6th November, the German Federal Ministry for Economics and Climate Action (Bundeswirtschaftsministerium) launched a public consultation on modernizing competition law. Companies, organizations, associations and citizens have until 4 December 2023 to submit ideas on how the ministry could improve the regulatory framework.

The aim is to further develop the competition policy agenda for the second half of the legislative period in Germany. Key issues are, amongst others:

1. Merger control. Whether all “relevant” transactions are currently caught by the merger control regime, and if so, whether the substantive assessment reflects modern business practices (particularly digital interactions). Similarly, in relation to merger control, the Ministry wants feedback on the exception for ministerial approval.

2. Sustainability. The Ministry wants to better understand what tools or guidance should be provided to allow companies to better cooperate on and facilitate sustainable goals. In particular, what factors should be considered to exempt a restrictive agreement on the basis of efficiency gains.

3. Private enforcement. The Ministry would like to understand how to streamline private antitrust damage claims and make them more effective.

Relevant for: All companies in the mobility sector (and beyond).

Further details here (available only in German)