Digital transformation in the company is a holistic process that is usually triggered by management to ensure continued competitiveness. Implementing the relevant transformation tasks is frequently outsourced to the relevant departments, such as the integration of modern working time concepts to HR. There are, however, always strategically important transformation tasks, for which Management alone must be responsible.
These are in particular competitive transactions (Antitrust), corporate transactions (Corporate), and technology-based corporate transactions (M&A).
CompetitionDigital platformsPrice monitoring and settingM2M communication ("Machine to Machine")Data sharingCorporate Digital trade registerOnline shareholder meetingsDigital business formationTechnology-based transactions TransaktionsDigital Due Diligence Big Data
The new business models arising from the digital transformation have created the need for revising competition law and antitrust law.
This requirement is largely triggered by globally operating digital corporations (such as Google, Amazon, Facebook, or Apple) with their all-encompassing platforms. These digital platforms (referred to as “gatekeepers”) create the risk of power positions through access to data, associated competitive advantages, and the improper restriction of consumers’ freedom of choice. Companies are forced to enter into cooperation agreements that do not only entail advantages while further strengthening the platform operators. When entering into such cooperation agreements, businesses should always observe requirements under antitrust law. We advise and support clients on using digital platforms for their own e-commerce and on drafting and negotiating such cooperation agreements.
Price monitoring and setting
Antitrust authorities have been observing the increasing use of price monitoring software and algorithms for fully automated pricing and their restrictive effect on competition for quite some time now. The risk of price coordination in the horizontal relationship (between competitors) and/or fixed prices in the vertical relationship (between manufacturer and wholesaler or between wholesaler and retailer) due to the availability and comparability of market prices at any time poses challenges for businesses and authorities alike in terms of competition law. As we point out to our clients in our advisory services, companies should therefore always be aware of pitfalls in antitrust law when using such software.
M2M communication („Machine to Machine“)
To optimize production processes, corporate data has already been exchanged electronically and fully automatically via the Internet for years internationally to gain better knowledge, such as about production quantities or capacities. The mutual exchange of this M2M data enables businesses to achieve greater transparency about third-party manufacturing processes. After the M2M data has been exchanged, the company’s own commercial behavior will in many cases automatically be adapted to the existing and changing conditions. M2M communication thus harbors the risk of anticompetitive, horizontal agreements. Taking into account the requirements of the antitrust authorities and case law, we develop concepts for our clients for legally compliant implementation to exploit the advantages of M2M communication within a legally permissible framework.
Even outside of fully automated data exchange (M2M), businesses are increasingly using the option of mutual access to their databases (“data sharing”). Where the data allows conclusions to be drawn about the cooperating database operator’s plans, such data sharing may become problematic not only under data protection law, but also under antitrust law. Such conduct could also be classified as anti-competitive behavior by the antitrust authorities and/or courts and businesses may face risks of incurring considerable fines. We draft data sharing agreements for our clients that ensure that any such legal risks are minimized.
From a perspective of corporate law, the use of new technologies also offers the opportunity to significantly optimize business processes. Companies that frequently need to establish subsidiaries (such as investment management firms) or want to simplify regular shareholder meetings will be given the opportunity to improve their business processes with the support of new legislative initiatives.
Digital trade register
Since the Commercial Register entails a publicity effect, it serves to secure and facilitate commercial transactions. Previously, publication was legally required in addition to registration, which gave rise to the principles of negative register publicity (Section 15(1) German Commercial Code) and positive register publicity (Section 15(3) Commercial Code). With the new EU Digitalization Directive that entered into force in 2019, the registration has now become the only mandatory means of publicity, since it is hardly possible to differentiate between register and announcement after the move to electronic register management. We support our clients in implementing these new statutory provisions and show ways to optimize register-specific processes.
Online shareholder meetings
Online shareholder meetings also needs to observe the protection of legitimate expectations in commercial transactions. Where governed by the articles of association, corporations may hold online shareholder meetings. For stock corporations, pure online meetings may only be held under strict conditions (seamless video/audio transmission, exercise of voting rights and rights to ask questions via digital media, etc.) due to rigid statutory provisions (in particular Section 118 German Stock Corporation Act). Partnerships may also hold meetings without including provisions in their articles of association but should create an appropriate framework to ensure legal certainty. We develop legal protection concepts for our clients to hold online shareholder meetings to minimize the risk of contested corporate resolutions.
Digital business formation
The EU Digitalization Directive also created the option of forming a company online. Under previous Section 12 Commercial Code, applications for entry in the Commercial Register are to be submitted electronically in publicly certified form. The civil law notary is therefore filing the application, so that founders still have to physically visit a notary’s office to this day. The new Act Transposing the Digitalization Directive will offer a choice between online and face-to-face procedures, so that the notary may also be contacted by video. We assist in drafting the documents required to form a company and advise on the most effective corporate form.
In some instances, it turns out to be a good way to implement digital strategies when smaller companies with a high degree of specialization in the relevant technology field are acquired. Even without a technology connection, however, it makes sense from a strategic perspective to acquire new companies and integrate them into the own group.
Digital due diligence
M&A transactions are complex processes requiring the prior, detailed examination of the company to be acquired for financial and legal risks (“due diligence”), during which frequent thousands of documents have to be viewed. There is a wide range of software offerings available to optimize these diligence processes with centralized data rooms and algorithm-driven analyses reducing effort and costs considerably. We support our clients in acquiring such software systems and ensure highly effective support in implementing transactions by using these systems at the law firm.
As part of transactions, it is not uncommon for large databases (“Big Data”) to be evaluated, which are used by the company to be acquired. Where a database has been fed from different data sources over time, there is regularly a question of the necessary rights of use (copyrights) because databases that only partially contain data with sufficient rights of use entail a considerable legal risk for the acquiring company (claims for injunctive relief/damages by the author and/or database owner). In addition, the statutory retention obligations of such databases must be observed. Which (personal) data must be deleted within which time and for which data is there a legal obligation to retain it? We support our clients in dealing with such legal issues, in particular where large databases are a material asset of the transaction.