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What are the potential outcomes of the merger investigation? Please include reference to potential remedies, conditions and undertakings.
The potential outcomes of the merger investigation are:
- an informal clearance letter at the end of Phase I;
- a de facto clearance at the end of Phase I;
- a formal clearance decision at the end of Phase II;
- a de facto clearance at the end of Phase II;
- a formal clearance decision with commitments at the end of Phase II;
- a formal prohibition decision at the end of Phase II; or
- withdrawal of the merger notification by the parties at any time.
Initial proceedings (Phase I) are concluded by an informal clearance letter or initiation of the main proceedings. If the Federal Cartel Office (FCO) takes no action within one month of receipt of a complete notification, the transaction is deemed to be cleared by the FCO.
Main proceedings (Phase II) are concluded by a formal clearance or prohibition decision. The formal decision contains detailed reasoning and will subsequently be published in a non-confidential version on the FCO's website. Again, if the FCO takes no action within the prescribed period, the transaction is deemed to be cleared by the FCO.
The FCO may issue clearance decisions which are subject to commitments. Parties can propose commitments at any time during the procedure. However, commitments may not be used as a tool to avoid Phase II proceedings, as the FCO cannot issue a decision containing commitments in Phase I. Considering commitments is the logical next step when the FCO has sent a statement of objections. The FCO is usually open to discuss the substantive scope of the commitments, but dislikes extensive bargaining. If the parties propose remedies which are suitable to address and remove the competition concerns, the FCO will clear the merger. The remedies are nearly always of a structural nature (eg, the divestment of a business), as permanent behavioural remedies are not provided by law.
A remedy may take the legal form of a suspensive or dissolving condition or obligation. The FCO prefers to impose a structural measure as a suspensive condition to the clearance decision. This means that the transaction is not cleared – and thus may not be implemented – until the parties comply with the condition. In contrast, where the FCO imposes dissolving conditions or obligations, the merger may be implemented and a time limit (eg, six months) will be set within which the conditions and requirements must be fulfilled. If the parties fail to do so, the clearance decision becomes invalid or may be revoked, respectively. In the meantime, divestment commitments should be accompanied by a proposal on how to safeguard the business. A monitoring trustee will usually be appointed to oversee management and to preserve the competitive potential of the divested business.
Failure to comply with conditions or undertakings ordered by the FCO constitutes an administrative offense.
Where the FCO has already expressed substantial competition concerns, the parties may consider withdrawing their merger notification. A withdrawal has the benefit of avoiding a formal prohibition decision, thereby also avoiding a detailed publication of the case and the creation of an unwanted precedent.
If a prohibition decision is served, the parties may apply for authorisation of the transaction by the federal minister of economics and technology within one month (Section 42 of the Act against Restraints of Competition). These applications are rare and successful applications are even rarer (only nine since 1973). The minister may overrule the FCO because of an overriding public interest in the transaction or because of its advantages to the economy as a whole. The minister has wide discretion in making these assessments and will exercise this right only in exceptional cases.
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