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Under what circumstances is a transaction caught by the legislation?
The following types of transaction are considered to be concentrations and are subject to German merger control (Section 37 of the Act against Restraints of Competition):
- the acquisition of all or a substantial part of the assets of another undertaking;
- the acquisition of (direct or indirect) control over another undertaking or parts thereof by one or several undertakings;
- the acquisition of shares in another undertaking leading to a situation where the purchaser holds 25% (or more) or 50% (or more) of the shares or voting rights; and
- any other combination of undertakings that enables one or several of them to exercise (directly or indirectly) a competitively significant influence on another undertaking.
The notion of a ‘substantial part’ of the assets is broad and determined more by the assets' importance to the seller's market position than by the mere quantity.
The concept of ‘control’ resembles its counterpart in the EU merger control regime. It encompasses rights, contracts or any other means which, either separately or in combination and with regard to the considerations of fact or law involved, confer the possibility of exercising decisive influence on the activities of an undertaking – particularly on its assets or managing bodies.
Share acquisitions exceeding the relevant thresholds are subject to merger control, irrespective of whether the purchaser gains control. This means that acquisitions of minority shareholdings can be subject to merger control in Germany.
‘Any other combination’ covers acquisitions of minority shareholdings below the 25% threshold where additional factors de facto grant the purchaser influence over the undertaking's activities in a manner which is comparable to someone holding 25% or more of the shares. Examples of additional factors are the right to nominate members of the board of directors and certain veto rights.
Do thresholds apply to determine when a transaction is caught by the legislation?
Under Section 35 of the Act against Restraints of Competition, German merger control applies where:
- the combined aggregate worldwide turnover of all participating undertakings exceeds €500 million;
- at least one participating undertaking has a turnover in Germany exceeding €25 million; and
- at least one further participating undertaking has a turnover in Germany exceeding €5 million; or, alternatively to this third threshold, the transaction value amounts to more than €400 million and the target undertaking has significant activities in Germany.
In contrast, German merger control does not apply where:
- the above thresholds are not satisfied;
- the transaction falls within the scope of the EU merger control regime;
- the transaction meets the conditions of the de minimis clause: a transaction is considered to be de minimis where one party to the transaction – which is not a controlled undertaking – has a worldwide turnover of less than €10 million; or
- all participating undertakings are members of a saving or cooperative banks association and primarily provide services for members of that association.
Turnover is calculated by reference to the net consolidated group sales of the participating undertakings in the financial year before the transaction. Value added tax and intra-group sales are excluded. Special rules for turnover calculation apply for:
- trading in goods – the turnover is multiplied by 0.75;
- print media, radio and television broadcasting – the turnover is multiplied by eight;
- financial institutions – the financial income is relevant; and
- insurers – the premium income is relevant.
Transaction value includes the purchase price and any liabilities assumed by the purchaser.
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