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Giving the German Cartel Office the Power of Divestiture - The Conformity of the Reform with Constitutional Law

80 Pages Posted: 17 Dec 2007  

Christoph Engel

Max Planck Institute for Research on Collective Goods; University of Bonn - Faculty of Law & Economics; Universität Osnabrück - Faculty of Law

Date Written: December 2007

Abstract

Triggered by the concentration process in the electricity and gas markets, the land of Hesse proposes to give the German cartel office power to divest dominant firms or oligopolies if this is necessary to restore competition. The paper shows that the reform would be in line with constitutional law, and with freedom of property in particular. Depending on how divestiture is brought about, it would interfere with this basic freedom. It would however not amount to taking. In practice, the main effect would be through bargaining between the divested company and the cartel office. This poses problems under rule of law, but these problems are not insurmountable. The main justification for the reform is the almost total failure of interventions to combat the abuse of dominant positions. In the US, divestiture has not always been successful. But close scrutiny of the American experiences demonstrates that the tool is sufficiently effective to meet the constitutional standard. If divestiture is brought about by forcing the firm to sell entities or assets, the necessary compensation comes from the price it receives from the buyer.

Notes: Downloadable document is in German.

Keywords: divestiture, freedom of property

JEL Classification: D42, D43, K21, L12, L13, L41, L44

Suggested Citation

Engel, Christoph, Giving the German Cartel Office the Power of Divestiture - The Conformity of the Reform with Constitutional Law (December 2007). MPI Collective Goods Preprint Paper No. 2007/22. Available at SSRN: https://ssrn.com/abstract=1075046 or http://dx.doi.org/10.2139/ssrn.1075046

Christoph Engel (Contact Author)

Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany
+049 228 914160 (Phone)
+049 228 9141655 (Fax)

HOME PAGE: http://www.coll.mpg.de/engel.html

University of Bonn - Faculty of Law & Economics

Postfach 2220
D-53012 Bonn
Germany

Universität Osnabrück - Faculty of Law

c/o Prof. Dr. Schneider
Osnabruck, D-49069
Germany

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