Competition law reform: IDO may not initiate regulatory proceedings

Background

The matter is based on a warning issued in 2018 by IDO (IDO Interessenverband für das Rechts- und Finanzconsulting deutscher Online-Unternehmen e.V.). At that time, the warned party was accused of advertising a guarantee in an inadequate manner because information on the content and design of the guarantee was missing.

Since the warned party did not issue a cease-and-desist declaration, the IDO obtained an interim injunction before the Essen Regional Court to enforce its cease-and-desist claim pursuant to Section 8 (1) UWG (Act against Unfair Competition). In this injunction, the warned party was prohibited from repeating the alleged inadequate advertising under threat of an order. After being served with this order, the person warned issued a so-called final declaration. In doing so, it recognised the interim injunction, which in principle only serves to temporarily settle a dispute until the final decision in the main proceedings, as the final settlement of the legal dispute.

The current dispute before the Higher Regional (OLG Hamm) arose because the then warning party and current debtor probably again advertised with insufficient guarantee information. The IDO then wanted to enforce the cease-and-desist order (contained in the injunction obtained) by initiating summary proceedings. As a creditor, the association applied to the Essen Regional Court for the imposition of an administrative fine on the debtor. When the Regional Court of Essen (LG Essen) rejected this application on the grounds that the IDO lacked the authority to bring proceedings, the association filed an immediate appeal before the Higher Regional Court of Hamm (OLG Hamm).

Decision

The OLG Hamm dismissed the IDO’s immediate appeal as unfounded. The court upheld the LG Essen and found that the association lacked standing to file an application. According to the court, since 1.12.2021, in order to have the right to file an application, it was necessary under §§ 8(3)(2) and (3) that the association be entered in one of the lists maintained by the Federal Office of Justice.

In this regard, the court states:

The creditor lacks standing to file an application for an order pursuant to § 890 (1) sentence 1 ZPO here at the latest since the entry into force of the new version of § 8 (3) UWG due to the Act to Strengthen Fair Competition of 26 November 2020 on 1 December 2021, because the creditor has not been entered in the list of qualified trade associations pursuant to § 8b UWG or in the list of qualified institutions pursuant to § 4 UKlaG until today. The new version of Section 8(3) of the Unfair Competition Act (UWG) in particular proves the correctness of the view that the power of trade associations and qualified entities to bring proceedings (power to file an application) must continue to exist even in administrative remedy proceedings: The contrary view, which is represented by the creditor in the present proceedings, would lead to the fact that in the case of a restriction of the power of associations and institutions to bring proceedings ordered by the legislator, as was undertaken by the Act to Strengthen Fair Competition, associations and institutions affected by this amendment to the law, which are no longer entitled to issue warnings, to make claims and to bring actions, could still lead a hardly meaningful “residual and shadowy existence” as “administrators” of old enforcement orders. This undoubtedly does not correspond to the intention of the legislator and certainly not to the legislative purpose of the Act to Strengthen Fair Competition of 26.11.2020.

With regard to the transitional rule in Sec. 15a UWG, the court stated that it applies directly to the cognisance proceedings and not to proceedings in the context of enforcement. However, the consequence of this interpretation is that injunctions exist which would not be enforceable. In this regard, the court stated:

There is also no contradiction in substance between the transitional provision in § 15a (1) UWG created for the cognizance proceedings and the view held here that the title creditor must be authorised to conduct proceedings (authorised to file an application) at the time of the decision on an application to set an order pursuant to § 890 (1) sentence 1 ZPO in the case of the enforcement of the titled injunctive relief by way of compulsory enforcement following the cognizance proceedings in accordance with the provisions applicable at that time. This is because the transitional provision in Section 15a (1) UWG, when interpreted sensibly and taking into account the purpose of the Act to Strengthen Fair Competition, obviously serves to give associations within the meaning of Section 8 (3) No. 2 UWG the opportunity to take all necessary steps during the duration of the preliminary proceedings in order to comply with the new statutory requirements for their further activities – namely the now required registration on the list.

Conclusion

According to the court, companies that have lost injunction actions brought by the IDO or have “cashed in” on interim injunctions can bring an enforcement defence action because the association is not registered in the lists of the Federal Office of Justice. An enforcement defence action does not annul the title, but it removes their enforceability. In this sense, it would also be conceivable to file an action for a declaratory judgement requesting that the IDO not enforce the injunction as long as it is not registered in the lists of the Federal Office of Justice.

The appeal on points of law before the Federal Supreme Court (Bundesgerichtshof, BGH) was admitted. It remains exciting how the BGH will decide. After all, the higher courts interpret the transitional provision § 15a UWG differently.

In our opinion, trade associations such as the IDO may only assert the claims under the UWG at issue here if they are on the list of qualified trade associations. Without a corresponding registration, the warning associations are threatened with the end, see our article on the topic.