Germany's independent higher federal authority responsible to the Federal Ministry of Economics decided on Monday that the lotto and totoblock--and its 16 state operators--have infringed German and European Union competition laws.
According to the Bundeskartellamt (Federal German Cartel Office), consumers should be allowed to have a choice between the monopolies and other "free" operators, and the office holds the opinion that decision must be carried out immediately.
The Competition Act against Restraints of Competition contains the general antitrust provisions in German law. It entered into force in 1958 and has been amended seven times since then.
In accordance with EC Regulation 1/2003 the Bundeskartellamt is obliged (and has been 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 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. Through the seventh amendment to the ARC, which came into force on July 1, 2005, national provisions have been adapted to European antitrust law.
The Federal German Cartel Office forbids competition-adverse behavior. Violations of the State Lotto organizations and the Lotto and Totoblock include: preventing commercial point-of-sales of tickets for lotteries in supermarkets and gas stations; making a division of the market between the 16 German Lotto companies; and collecting the inlays of the wagers via intermediaries and dividing the gaming yields afterwards between the 16 state lotteries.
The Bundeskartellamt has concluded that is no more a monopoly and that, therefore competition may be introduced.
With an annual turnover of approximately 8.5 billion euro, the German lottery branch is underdeveloped. Germany is by far the biggest European market, with 82.4 million inhabitants.
The German members of the European Lotteries (EL) can be expected to attack the verdict, but this could be a tough battle.
The Big Picture in Europe
Is it be a coincidence that liberal Neelie Kroes, the European commissioner for competition, in July visited the Federal German Cartel Office?
Ulf Böge, president of the Bundeskartellamt, and Kroes discussed the need for close interlinking among competition authorities in EU countries.
The European Community has formed a network of competition authorities, the so-called European Competition Network (ECN), which is unique for its intra-institutional cooperation. According to Böge, the Bundeskartellamt is particularly keen on enforcing competition rules in the European Union in close cooperation with the EU Commission. He greatly appreciated the support which his authority received from the Commission. And both agree that severe financial penalties may be given.
Now the industry waits to see whether other EU cartel offices follow the German lead.