On 30 September 2014, the German Federal Cartel Office (“Bundeskartellamt”) published its new finalized guidance to help companies determine whether a proposed merger has “domestic effects” within Germany and is therefore subject to notification. The guidance replaces an existing guidance which dates as of 1999.
According to the German Act Against Restraints of Competition (“ARC”), a merger is subject to German merger control if:
- the combined aggregate global turnover of the companies involved exceeds € 500m;
- the domestic (German) turnover of at least one company involved exceeds € 25m;
- that of another company involved exceeds € 5m per year; and
- the merger has a “significant effect” within Germany (the “effects doctrine” – “Auswirkungsprinzip”).
Generally, German competition law applies to all mergers having a “significant effect” within Germany, even if the merger itself happens abroad. The new guidance does not amend German statutory law, but specifies which effects on the German market are to be qualified as “significant effects” on the German market triggering a notification requirement.
In December 2013, the Bundeskartellamt had published a draft version of the guidance (see our Bulletin of January 2014 for further information) which was followed by a consultation process, during which several associations, institutions, consultants and academics, inter alia, the American Bar Association and the Federation of German Industry, submitted their comments. The consultation process led to some amendments of the draft. For instance, the Bundeskartellamt further specified the guidance on significant effects of joint venture companies with minor business activity in Germany. Also, the Bundeskartellamt indicated that spill-over effects between the parent companies of a joint venture with minor business activity in Germany, which are competitors in the same product market, are likely not to have significant effect in Germany if the combined market share of the parent companies does not exceed 20% (instead of 10% as indicated in the draft guidance). The new finalized guidance now also includes case examples in order to illustrate and facilitate the application of the guidance in practice.
The Bundeskartellamt stated that the new guidance aims to reduce unnecessary bureaucracy. The purpose is to avoid mergers which have no significant effect in Germany being notified to the Bundeskartellamt. However, if in doubt, the parties are still advised to notify the Bundeskartellamt. The Bundeskartellamt guidance is subject to judicial review by the Higher Regional Court (Oberlandesgericht) Düsseldorf and the German Federal Court of Justice (BHG) and is therefore not legally binding on the Courts.
An English language version of the guidance can be found using this link.