The significance threshold of the German Act against unfair competition - both challenge and opportunity

1. The Background

With the Act to Strengthen Fair Competition (BGBl. I No. 56 p. 2568 et seq.), the legislator has restricted the right of competitors to take legal action in competition law with effect from 2 December 2020. According to Section 8 (3) No. 1 UWG as amended, only those competitors who sell or demand goods or services to a "not insignificant extent and not only occasionally" are entitled to claims for removal or injunctive relief under competition law. It is therefore required that the competitor actually participates in the market and that its business activities exceed a certain significance threshold. The competitor must demonstrate and, if necessary, prove this when pursuing the claim. Of course, this already applies to the warning letter:

The party issuing a warning letter can only demand reimbursement of its costs for the letter in accordance with Section 13 (3) UWG as amended if it clearly and comprehensibly sets out the conditions of its entitlement to the claim, i.e. in particular that it exceeds the new significance threshold of Section 8 (3) No. 1 UWG as amended. Therefore, the restriction on the right to take legal action also has an impact on the question whether or not the other party can be asked to reimburse the costs of the warning letter. If there is no information on the significance threshold being exceeded, there is no sufficient information on the conditions of the entitlement to the claim meaning that a reimbursement of costs cannot be demanded.

As was already widely expected when the new provision was introduced, in particular the interpretation of the undefined legal term "to a not insignificant extent" is causing difficulties.

The legislator's own explanations in the explanatory memorandum to the law (see BT-Drs. 19/12084, 26) provide some first guidance. Accordingly, no "excessively high thresholds shall be set for the scope and duration of the business activity", although it shall not be sufficient if the competitor "merely offers goods or services". Additionally, the competitor who issues "a larger number of warning letters" must also prove a correspondingly larger business activity. Evidence may be provided by "size categories of the number of sales or the like".

Voices in the commentary literature called for an assessment of all circumstances of the individual case with regard to the question of significance (see Harte-Bavendamm/Henning-Bodewig/Goldmann UWG, 5th ed. 2021, Section 8 para. 371; Köhler/Bornkamm/Feddersen UWG, 42nd ed. 2024, Section 8 para. 3.29b; BeckOK/Haertel UWG, 22nd ed. 2023, Section 8 para. 168; Ohly/Sosnitza UWG, 8th ed. 2023, Section 8 para. 95). This call has later been followed by the courts. Criteria that might be taken into account within this assessment could include the market and supplier structure, the degree of specialization, the number of customers, the usual economic size of competitors on the market in question, the purchase price for the goods concerned, their procurement interval and the profit margin per transaction (see Harte-Bavendamm/Henning-Bodewig/Goldmann UWG, 5th ed. 2021, Section 8 para. 371).

2. The Case-Law

There are now first examples of how the courts actually apply the new provision which allows to draw conclusions for one’s own litigation.

The German Federal Court of Justice (FCJ) has already confirmed both that no excessively high thresholds shall be set for the scope and duration of business activities and that the circumstances of the individual case must be taken into account when examining the significance of business activities (see FCJ, judgment of 24 February 2022, Ref. I ZR 128/21 – Zweitmarkt für Lebensversicherungen II). In doing so, it follows the explanatory memorandum to the law and the voices in the literature.

Of course, this does not set an exact minimum threshold for the required business activity. Such a conclusion cannot be drawn in view of the necessary case-by-case examination anyway. Yet, no business activity at all is of course insufficient.

Furthermore, the right to take legal action can also lapse in the course of proceedings, namely if an actually sufficient business activity is completely discontinued during the course of the proceedings (see FCJ, judgment of 23 March 2023, Ref. I ZR 17/22 – Aminosäurekapseln). This is because, according to established case-law, the claim for injunctive relief based on the risk of repetition and directed towards the future only exists if the contested conduct was unlawful both at the time it was carried out and is still unlawful at the time of the appeal decision (see FCJ, judgment of 24 February 2022, Ref. I ZR 128/21 – Zweitmarkt für Lebensversicherungen II; FCJ, judgment of 2 June 2022, Ref. I ZR 140/15 – YouTube II).

This means that it is in any case possible to lose the right to take legal action up to the time of the last oral hearing before the first court of appeal (Berufung). However, a discontinuation of business activity that only occurs in subsequent appeal proceedings before the FCJ (Revision) may also have to be taken into account, for example if the corresponding new factual submission remains undisputed by the original plaintiff (see FCJ, judgment of 23 March 2023, Ref. I ZR 17/22 – Aminosäurekapseln). Accordingly, it is strongly recommended not to leave new submissions by the opposing party regarding the entitlement to sue undisputed, even in appeal proceedings before the FCJ.

If the competitor's submission on its business activities remains uncommented or is not substantially disputed, the courts usually content themselves, as expected, with assuming in a few words that the significance threshold has been exceeded (see FCJ, judgment of 13 January 2022, Ref. I ZR 25/19 – Inbox-Werbung II; Berlin Court of Appeal (KG), order of 12 May 2022, Ref. 5 U 139/19 – KING 01 und QUEEN 01).

In some cases, the courts also still assume the entitlement to the claim by confirming the status of the plaintiff as a competitor (see Higher Regional Court of Frankfurt, judgment of 18 August 2022, Ref. 6 U 56/22 – Prelaunch-Activities; Higher Regional Court of Frankfurt, judgment of 16 February 2023, Ref. 6 U 157/22 – Klimaneutrale Hygiene; Regional Court of Munich I, judgment of 5 May 2021, Ref. 37 O 2254/21 – Pauschaler Fälschungsvorwurf). This is inaccurate as it ignores the new restriction. It is no longer only the position as a competitor that matters.

The deduction of the required right to take action of a furniture manufacturer solely from its status as a manufacturer must also be rejected (different opinion: Higher Regional Court of Düsseldorf, judgment of 2 June 2022, Ref. 20 U 259/20 – Modulares Möbelbausystem), as it does not say anything about the scope of distribution of the goods in question.

The submission of screenshots of a rapid test provider's own website, on which he offers several Corona rapid tests for sale, is likely to be equally inadequate (different opinion: Higher Regional Court of Brandenburg, order of 17 January 2023, Ref. 6 U 26/22 – Corona-Schnelltest für Fachpersonal). After all, in this case a purely pro forma activity of the competitor in order to assert competition law claims cannot be excluded. The reference to such screenshots also contradicts the explanatory memorandum to the law, according to which the mere offering of goods or services should not be sufficient (see BT-Drs. 19/12084, 26).

However, the courts were likely right in affirming that the significance threshold was exceeded in the case of a sworn sale of 175,00 bottles of sparkling wine with a turnover in the seven-digit euro range (see Higher Regional Court of Munich, order of 12 July 2022, Ref. 29 W 739/22 – Premium Spritz) and in the case of an annual turnover of between EUR 298,178.00 and EUR 449,156.00 achieved with a Halal turkey salami (see Regional Court of Cologne, judgment of 24 November 2022, Ref. 33 O 82/22 – Truthahnsalami).

In case sales figures are disputed between the parties, the court must take evidence in accordance with the evidence offered by the competitor. In the context of witness evidence, witnesses who cannot confirm the accuracy of the claimed sales figures from their own perception may still be taken into consideration as "hearsay" witnesses. However, it is rather questionable whether the submission of an e-mail from the accounting department in order to prove the sales figures of a prostate preparation manufacturer (EUR 4,866,071.00 over the last 10 years), by a witness working in the scientific department of the company and without any access to the accounting software, is sufficient evidence for the assumption of the required commercial activity (different opinion: Regional Court of Hamburg, judgment of 26 October 2023, Ref. 312 O 13/22 – Prostata-Zäpfchen).

Nevertheless, there is a clear tendency on the part of the courts to apply an extremely generous standard when determining the necessary commercial activity.

3. Conclusions for your company

Depending on whether your company wants to pursue an infringement of competition law or to defend itself against the accusation of an infringement of competition law, we therefore recommend:

a) From the perspective of the warning party/plaintiff

1. Completeness of the warning letter: The requirements for the entitlement to the claim must be set out completely, clearly and comprehensibly in your warning letter. In particular, you should not forget to comment on the scope of your commercial activities. Otherwise you could be left with the costs incurred for the warning letter.
2. Complete statement of claim: In the case of litigation, this also applies to the statement of claim. Failure to present and provide evidence of the required commercial activity may result in the claim being dismissed.
3. Be careful what evidence you offer: Think carefully about what evidence you offer to prove the required commercial activity. Witness evidence can turn out differently than initially thought. Submit excerpts from databases or comparable documents so that the other party can only dispute your submission in a substantiated manner.

b) From the perspective of the warned party/defendant

1. Examine warning letters from competitors: Carefully examine warning letters from competitors. If the information on the scope of the commercial activity is missing, you may avoid the reimbursement of warning costs.
2. Contest in legal proceedings: Criticize any missing submissions on the commercial activity of the plaintiff in legal proceedings and point out to the court that the claim is ready for dismissal in this case. Contest the plaintiff's submission on his commercial activities and get the court to take evidence. This also applies in later instances. This is because the right to take legal action can also lapse in the further course of the proceedings.

We are of course happy to assist you every step of the way. Please feel free to contact us at any time.