German News Flash. Competitors entitled to take action against flawed privacy policy statements. a newsletter from mannheimer swartling september 2014

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1 a newsletter from mannheimer swartling september 2014 German News Flash editor Oliver Cleblad editorial staff Dr Jens Engelmann-Pilger Helena Ramadori mannheimer swartling berlin Mauerstraße 83/ Telefon: Fax: frankfurt Bockenheimer Landstraße Frankfurt am Main Telefon: Fax: this newsletter is distributed solely for informational purposes and should not be regarded as legal advice. the newsletter may be quoted as long as the source is specified. Competitors entitled to take action against flawed privacy policy statements Your competitors may take an interest in your legal notices about data protection. In two recent judgments, German courts have awarded injunctions as a result of incomplete legal notices published on websites. According to German law, companies must publish legal notices on their German websites. The intention is to give visitors a complete overview regarding the handling of their data. Each company has to inform website users how it ensures data protection and which kind of data is collected and for which purposes. Furthermore, it has to provide information about individual rights to object to the use of personal data. For many years, it was unclear whether competitors could take action against violations of these obligations to inform users. And while this question still has not been authoritatively decided, two recent court rulings support the view that competitors do have a right to enforce compliance with data protection laws. To ensure a level playing field, German law entitles competitors to control each other s conduct and to intervene in cases of unfair competition. Violations can be prohibited through injunctive relief and a competitor may even claim damages. However, as a prerequisite, the statutory provision infringed must be intended to regulate market behaviour in the interest of market participants. The obligations mentioned above have mostly been interpreted as protecting individual rights only and not to regulate market conduct. It has thus been controversial whether a breach of such obligations could give rise to claims by competitors.

2 Hamburg Higher Regional Court (Oberlandesgericht) (judgment of 27 June 2013) and Frankfurt Regional Court (Landgericht) (judgment of 18 February 2014) have now ruled that a breach of information obligations does entitle competitors to step in. In the case decided by Hamburg Higher Regional Court, the defendant posted an advertisement not including any legal notice. In the case before Frankfurt Regional Court, the defendant used a tracking program with an anonymisation function without informing website users that they had the right to object to such tracking. In both cases, the defendants did not meet their information obligations. Departing from existing case law, the courts decided that rules governing market behaviour for the purposes of competition law were infringed. This followed from the fact that the information obligations implement the European Data Protection Directive (95/46/EC) which establishes both rights for individuals and development rights of competitors. For now, there is no decision of the Federal Court of Justice. But even if the decisions of Hamburg Higher Regional Court and Frankfurt Regional Court may not have finally clarified the relationship between data protection law and competition law, companies should be aware of the real risk that competitors will start checking their compliance with German data protection laws. Mistakes can lead to fines of up to EUR 50,000. rafael hertz rahe@msa.se The German legal system on the way to an export hit? If you think of German export hits, you will most likely think of cars, the Oktoberfest, and beer. Maybe soon, you will also think of German courts. Almost everywhere in the world, both the German legal profession and Germany s court system are highly valued. German lawyers and judges are educated to be generalists and not only experts in their own specific niche. Important pieces of legislation, such as the German Civil Code and the German Commercial Code are export hits, and German courts are regarded as fast, effective and cost- efficient. All the same, parties rarely choose German law or Germany as place of jurisdiction unless the subject matter clearly leans towards Germany. Arguably, the main reason for this is language, since German is mandatory in German court proceedings. Oral hearings, submissions, evidence, all must be in German (with the notable exception of a few international chambers for commercial litigation pioneered in the courts of two German Federal States which conduct court hearings in English). As a consequence, many parties agree on a place of jurisdiction where they can choose English as the language of the proceedings or opt for arbitration instead. For this reason, German legal practitioners and legal experts have long called for the introduction of English as a language for court proceedings with the initiative Law Made in Germany. A legislative proposal launched by the German Parliament (Bundesrat) aims to establish English-speaking chambers for international commercial matters. This all illustrates that the tendency among the legal profession and politicians is clearly leading towards a more internationalised court system, with it simply being a question of when it will be possible to choose English as the language of proceedings in German courts and not if. But will it all be plain sailing once parties can conduct proceedings in English or can at least introduce evidence in English without having to provide official translations? Well, not quite. Provided that German law is applicable, the parties are likely to receive a fair and just judgment within due time. But what if German conflict of law rules or the parties choice of law leads to the application of foreign law in certain respects and the German courts have to apply the laws of the foreign country? In a recent judgment, the German Federal Court of Justice (Bundesgerichtshof) clarified that where foreign law applies a domestic court is obliged to investigate the interpretation and actual application of that law before the foreign courts before deciding on the merits of a case. In the case at hand, the appellate court had requested a statement from the British Ministry of Justice as regards the application of certain insolvency statutes by British courts. When this statement proved insufficient, the court determined the merits of the case instead of requesting additional clarifications. The Federal Court of Justice rejected that approach, referring the case back to the appellate court, ordering it to further investigate the remaining ambiguities. Though not being totally new, the judgment is a welcome clarification of the approach to be taken when dealing with cross-border disputes. It ensures that German courts investigate the interpretation 2

3 and application of foreign laws based on the case law of that country, instead of deciding the matter solely from a German law perspective. As a consequence, the recent judgment could reduce the reluctance of foreign parties to agree on Germany as the place of jurisdiction. It ensures that parties are not disadvantaged should an international dispute end up in a German court. Since it seems only a matter of time before parties can agree on English as the language of proceedings, German courts might soon be as attractive for foreign parties as a beer at the Oktoberfest is for tourists. Cheers! clemens vidal clv@msa.se Reform of the German Renewable Energy Act (EEG) enacted Today, renewable energy sources account for around 25% of German electricity supply. One major factor has been the generous funding under the Renewable Energy Act (EEG). However, the costs for the promotion of renewable technologies have steadily increased over recent years. Electricity consumers end up paying the bill for the promotion of renewables through the EEG surcharge (EEG Umlage). Since these costs have been steadily rising over recent years, the current reform now aims to slow down the increase in the cost to consumers. Further objectives concern the adjustment of feed-in tariffs in order to reduce excessive subsidies and improving the market integration of renewables. Therefore, the German Parliament decided on a far-reaching reform of the EEG which came into force on 1 August The EEG reform package includes the following changes: For each renewable energy technology (such as solar or wind power), a specific volume target for the annual capacity additions will be established. If these volume targets are exceeded, the respective feed-in tariffs for additional plants will be reduced. Operators of larger plants will be obliged to market directly the electricity produced. They will no longer receive a fixed feed-in payment from the network operator but instead have to sell the electricity directly on the market. Where the operator of a larger plant directly markets the electricity, the plant operator will receive a market premium from the network operator. From 2017, the funding for all plants governed by the EEG will be determined through a tendering process. In relation to groundmounted photovoltaic plants, as a pilot project, a tender procedure will be introduced in 2014 in order to gain experience with the procedure. Details concerning the tender procedure will be determined in a separate regulation. The exception whereby electricity producers which consume the electricity they produce can be exempted from the EEG surcharge will no longer apply. In the case of own supply with electricity generated by renewable energy plants or from new combined heat and power plants, only a reduced EEG surcharge must be paid ( until the end of %, until the end of %, and from 2017 onwards 40%). The exemption from the EEG surcharge for energyintensive companies will largely remain as it currently stands. The German Government and the European Commission have agreed on a compromise in this respect. Moreover, the German Government and Brussels have settled a dispute with respect to imported electricity. The European Commission regarded it as discrimination against foreign companies to impose the EEG surcharge on electricity imports from other EU countries. Foreign companies had to pay the surcharge but were not allowed to benefit from EEG funding. Now, and Brussels have agreed that from 2017 a total of 200 megawatts of imported electricity from renewable sources will be publicly funded under the EEG. This corresponds to the amount of electricity currently imported to Germany from other EU countries. annika von la chevallerie avc@msa.se German Cartel Office: restrictions on online sales are anti-competitive In July 2014, the German Cartel Office closed its proceedings on grounds of anti-competitive behaviour against Adidas AG, but only after the company had amended its conditions for online sales. The German Cartel Office initiated the proceedings after it had received numerous complaints by sports retailers. Parallel proceedings are still pending against Asics. Adidas operates a selective distribution system which only allows authorised retailers to sell Adidas products to consumers. The conditions for online sales included a prohibition on retailers to sell via online market places, such as ebay and Amazon Marketplace, as well as other platforms, such as Rakuten.de, Yatego.de, Hitmeister. de and meinpaket.de. As can be seen from these proceedings, the German Cartel Office considers such restrictions of online sales clearly prohibited by competition law. German case law, however, does not take such a clear approach. There have been several judgments from German Higher Regional Courts over recent years that have come to different results. A judgment by the Federal Court of Justice does not yet exist. With this clear approach of the German Cartel Office, it will be difficult in the future for companies to maintain similar online sales restrictions in their distribution systems. Retailers can report such restrictions to the German Cartel Office, which may then initiate proceedings with a relatively predictable outcome. An alternative could be to risk a decision by the German Cartel Office, which can be challenged later in the course of court proceedings. meike johnsen mej@msa.se 3

4 A Spaniard who wants to be forgotten Google now offers a form by which the removal of search results can be requested. The company was obliged to introduce this after having lost a legal dispute against the Spanish Data Protection Agency at the European Court of Justice (ECJ). This judgment significantly improves the protection of personal data within Europe. The case was lodged by a Spanish national whose name appeared in the online edition of a Spanish newspaper in relation to a foreclosure sale of his property in As the newspaper was listed in Google s search index the information continued to remain accessible. Some 16 years later, the now debt-free man requested Google to delete the link to the article from its search results, arguing that it infringed his personal rights, and subsequently filed a complaint with the Spanish Data Protection Agency. The agency required Google to delete the link to the article from the search results. Google challenged that decision. Eventually, the dispute ended up at the ECJ which had to decide two important questions, first, the applicability of European data protection law to non-eu companies and, second, Google s responsibility for contents in its search index. First, the ECJ held that the European directive on data protection is applicable to US-based Google since it has subsidiaries in the EU. This decision will have a huge impact on the processing of data in general. All non-eu businesses with a subsidiary in the EU which process data are likely to be affected by this ruling and must comply with the data protection laws of the EU Member State concerned. Second, the ECJ ruled that Google is obliged to remove a link to a specific website from its European search results where the search result infringes personal rights. This obligation applies even if the information is still accessible on the original website. At first sight, this may be surprising. However, if that website processes data for journalistic purposes, it is protected by the freedom of the press, which does not apply to a search engine. This may lead to the consequence that Google has to delete information which is still accessible on the original website. When assessing whether a search result has to be deleted the ECJ weighed the personal right to privacy against the interest of the general public in having access to that information. The interest of the general public may in certain cases override the right to privacy, for instance, if the individual plays an important role in public life. Critics point out that this right to be forgotten may lead to misuse. Celebrities and persons in public life may try to suppress criticism and any undesirable information. Currently, applicants have to establish the grounds for each request and have to upload a copy of their ID in order to prevent misuse of the function. However, it seems that Google has not yet established a suitable mechanism to properly examine all applications filed, which may be explained by the sheer amount of the requests for deletion. By the beginning of July, more than 70,000 requests had been filed to delete 267,000 search results. However, in contrast, the Spaniard s name is now known worldwide. dr nils gruske niru@msa.se 4

5 Inside MSA msa at human resources day on 19 september 2014 Dr Christian Bloth, head of our German employment law practice group, will speak about legal aspects of bonus arrangements at the Human Resources Day organised by the Swedish Chamber of Commerce in Germany taking place on 19 September 2014 in Frankfurt. For further information, please see kammer.de/front_content.php?lang=1&idcat=4&idart=2440 workshop practical tips for commercial leases in berlin on 3 september 2014 Mannheimer Swartling s Real Estate Group will hold a workshop: Practical tips for commercial leases (Praxistipps rund um die Geschäftsraummiete). The workshop will take place in our office on 3 September 2014 at 4.30 pm. We will discuss pitfalls when drafting contractual clauses and cover specific issues such as the insolvency of a commercial lessee. Further topics include real property financing in the context of commercial leases as well as current developments in case law and legislation. We look forward to welcoming you to our workshop. For invitations, please contact us at invitation@msa.se. msa at expo real in munich Mannheimer Swartling s real estate practice group will take part in the Expo Real 2014 trade fair for commercial real estate in Munich from 6 to 8 October 2014 with lawyers from our Swedish and German offices. 5

6 editorial staff oliver cleblad Partner Frankfurt am Main dr jens engelmannpilger Senior Associate helena ramadori Associate authors rafael hertz Associate Frankfurt am Main clemens vidal Associate Frankfurt am Main annika von la chevallerie Counsel meike johnsen Senior Associate dr nils gruske Senior Associate Mannheimer Swartling is the leading Nordic commercial law firm. Our clients range from many of Sweden s and the world s leading companies to medium-sized businesses and organisations. Common to all our clients is that the law plays an integral role in their commercial success. This drives us to continuously maintain our position at the forefront of our industry and attuned to the needs of our clients. We are a full-service firm with approximately 400 lawyers who are specialized in different practice areas of commercial law. Our teams are also organised by industry groups to ensure that we are fully knowledgeable about industry-specific needs and challenges. By combining the highest quality legal skills with industry knowledge, we offer our clients commercial legal advice with added value. Mannheimer Swartling has offices in Stockholm, Göteborg, Malmö, Helsingborg, Frankfurt,, Moscow, Shanghai, Hong Kong, Brussels and New York.