New court cases are cropping up on a daily basis in Federal Republic of Germany's gambling jungle, and many German and international law firms analyze the latest inscrutable verdicts.
Strong statements last week from the country's 16 states and 16 gambling monopoles followed a meeting in Bad Pyrmont, Lower Saxony, at which state prime ministers agreed that the gambling monopolies will stay in place for another four years. Further, gambling advertising for online gambling and for television will not be allowed. The agreement will likely be approved at a meeting of all 16 minister presidents of the states scheduled for Dec. 13, 2006.
Germany's Federal Constitutional Court decided in March 2006 that new betting legislation requiring warnings against gambling addiction, provoked by advertising and marketing, should be in place before the end of next year.
Shares of online gambling companies Tipp24 AG, Fluxx AG and bwin Interactive Entertainment AG were down, as were the managers of private foreign operators.
Days later the Higher Regional Court of Düsseldorf confirmed the enforcement of all key aspects of the Federal Cartel Office's ruling, starting at the end of August. The German state lottery organization's appeal against the immediate execution of this ruling has, therefore, been rejected.
The Higher District Court moreover reaffirmed that lottery companies may not terminate agreements without due cause for the sole reason that gaming transactions that are permitted by the regulatory authorities are being handled by terrestrial agencies. In particular, the Higher District Court ruled that the new state treaty on lotteries--to be passed by the prime ministers of the federal states in December--must meet the standards of European competition law.
The lottery companies are, with immediate effect, once more obliged to accept lottery tickets sold over the counter. Furthermore, with immediate effect, both the regionalism principle and components of the so-called Regionalization State Treaty may consequently no longer be applied in view of the competition authority's finding that they are incompatible with competition law.
German lottery companies, such as Fluxx AG (FXXN GY), soared nearly 45 percent on this news. The shareholders of German Tipp 24 AG, an online broker of state-owned lottery products, were very happy as well. Tipp24 has approximately 1.4 million registered customers. bwin, however, hit another historic close, at lower than 16.31.
The Federal Cartel Office
The Bundeskartellamt (Federal Cartel Office) is an independent higher federal authority assigned to the Federal Ministry of Economics. Its main task is apply the Act Against Restraints of Competition (ARC), which was enacted for the protection of competition and came into force on Jan. 1, 1958.
In accordance with EC Regulation 1/2003, the Bundeskartellamt has been obliged since May 1, 2004 to apply Art. 81 or Art. 82 of the EC Treaty, as well as national competition law, to agreements between companies, decisions of associations of companies, concerted practices and abusive conduct that is likely to affect trade between the member states. According to Art. 3 (2) of Regulation 1/2003, Article 81 of the EC Treaty takes precedence over national regulations. All EU members have their own national cartel offices, and they are closely cooperating together. This should be a new avenue for cartel procedures in other EU member states.