Legislation and jurisdiction

Relevant legislation and regulators

What is the relevant legislation and who enforces it?

German merger control provisions are enforced by the Bundeskartellamt (Federal Cartel Office - BKartA) in Bonn. The current legislation can be found in Chapter VII of the Act against Restraints of Competition, of 1958 (GWB). An English translation of the GWB is available at www.bundeskartellamt.de.

The BKartA is a federal authority that is responsible to the Federal Ministry for Economic Affairs and Energy, but is independent in its decision making and does not receive political orders. The BKartA is subdivided into 13 decision divisions. The first to ninth decision divisions have jurisdiction for the full range of competition law enforcement areas in a specific economic sector, including merger control. The 10th to 12th decision divisions specialise in prosecuting hardcore cartels. The last decision division is in charge of consumer protection. The BKartA is supported by its Chief Economist Team. Andreas Mundt has been President of the BKartA since 2009.

Scope of legislation

What kinds of mergers are caught?

The GWB sets out a comprehensive list of events constituting a concentration, which includes not only the acquisition of control and the creation of joint ventures, but also the acquisition of minority shareholdings or of a material competitive influence below the level of control. The most important events constituting a concentration are:

  • the acquisition of (direct or indirect) control over another enterprise or parts thereof by one or several enterprises;
  • the acquisition of all or a substantial part of the assets of another enterprise;
  • the acquisition of a share in a company’s capital or voting rights resulting in an overall shareholding of 25 per cent (or more) or 50 per cent (or more); and
  • any other combination of companies enabling one or several companies to directly or indirectly exercise a material competitive influence on another company (this covers some acquisitions of minority shareholdings of below 25 per cent).

What types of joint ventures are caught?

The creation of a joint venture or the acquisition of a share in an existing joint venture qualifies as a concentration if it involves the acquisition of a share in a company’s capital or voting rights of 25 per cent (or more).

The acquisition of a share of 25 per cent or more is not only a concentration between the acquirer and the joint venture, but is also regarded as a concentration between the parent companies (ie, the acquirer and those parent companies that hold a share of at least 25 per cent in the joint venture). This means that the other parent companies’ consolidated turnover must also be taken into account - separately from the joint venture’s turnover - for the calculation of the turnover thresholds. However, the latter concentration is limited to the markets in which the joint venture is active.

The GWB does not differentiate between full-function and non-full-function joint ventures so that the creation of a joint venture that does not perform all the functions of an autonomous economic entity on a lasting basis may be notifiable in Germany.

In addition, joint ventures are not only subject to merger control, but may also fall under the provisions on restrictive practices (GWB, section 1 and article 101 of the Treaty on the Functioning of the European Union (TFEU)). This means that they require merger control clearance by the BKartA and may also be challenged under the restrictive practices provisions.

Is there a definition of ‘control’ and are minority and other interests less than control caught?

The concept of acquisition of control has largely been adopted from the European merger control regime. Although there is no definition of ‘acquisition of control’ under the GWB, the provisions describe how control can be acquired, namely by rights, contracts or any other means that, either separately or in combination, and having regard to the considerations of fact or law involved, confer the possibility of exercising decisive influence over another enterprise, in particular through ownership or the right to use all or part of the assets of the enterprise; or rights or contracts that confer decisive influence on the composition, voting or decisions of the organs of the enterprise. A change of control must occur on a lasting basis to be considered a ‘concentration’.

German merger control also catches acquisitions of interests below the level of control. An acquisition resulting in an interest of 25 per cent (or more) constitutes a concentration. In addition, the acquisition by one or several enterprises of a material competitive influence over another enterprise constitutes a concentration. This covers situations where a shareholding of below 25 per cent is acquired, provided additional factors that make the situation comparable to an acquisition of 25 per cent are present. Such factors can include any that may give the acquirer the possibility of influencing the target (such as the right to appoint members of the supervisory board, information rights as a shareholder, specific rights agreed in the shareholders’ agreement, etc, known as ‘plus factors’). For example, in a 2008 decision (A-TEC Industries AG/Norddeutsche Affinerie AG), confirmed by the Higher Regional Court of Düsseldorf, the BKartA determined that both (together or taken independently) the acquisition of 13.75 per cent of the target’s share capital (which amounted to a de facto blocking minority of 25 per cent because of consistently low shareholder attendance at the target’s annual shareholder meetings) and the right to appoint three of 12 members of the target’s supervisory board enabled the acquirer to exercise a material competitive influence over the target. Also decisive was the fact that the acquirer was the only shareholder in the target with market knowledge of the target’s business and had a proven strategic interest in the target’s competitive behaviour. The Higher Regional Court of Düsseldorf explicitly mentioned that for a material competitive influence to exist, the acquisition of the shares must confer an influence over the decision-making process and the market behaviour of the target, and that this is the case if the acquirer possesses an overwhelming market and industry knowledge that the other shareholders do not have. When assessing the existence of the ‘plus factors’, more weight will be given to qualitative considerations (representation and possibility of influence in the decision-making bodies, sector-specific knowledge of the minority acquirer) than to purely quantitative indicators (percentage of the shares acquired, distribution of the remaining shares). Another interesting case in that respect concerned the creation of a joint venture between EDEKA, the largest food retailer in Germany, and Budnikowsky, a drugstore company with 181 outlets in the Hamburg metropolitan area, which the BKartA cleared in May 2017. The two companies planned to hive off Budnikowsky’s procurement, IT, e-commerce, administrative and logistic activities into the joint venture in which EDEKA would hold 25.1 percent. However, while EDEKA did not acquire any shares in Budnikowsky or vice versa, the BKartA still considered that EDEKA’s shareholding in the joint venture allowed it to exert material competitive influence over Budnikowsky. The decision of the BKartA to even consider EDEKA’s supposed influence over Budnikowsky under merger control rules can be described as game-changing, as up to that point there had to be some kind of corporate influence for a transaction to result in the ability to exert ‘material competitive influence’, whereas here there was no such link between the parties. Thus, for legal certainty it may be advisable to notify cooperation agreements like this to the BKartA in the future. Some commentators have also described this case as a way of using merger control to obtain an individual exemption for cooperation agreements.

Thresholds, triggers and approvals

What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?

There are two alternative sets of thresholds.

According to the first set of thresholds, a concentration must be notified prior to its completion if in the last financial year:

  • the combined worldwide turnover of all participating enterprises exceeded €500 million;
  • one participating undertaking had a turnover exceeding €25 million within Germany; and
  • at least one further undertaking had a turnover in Germany exceeding €5 million.

The ninth reform of the GWB in 2017 added another set of thresholds, that catch concentrations that do not meet the thresholds in the first set, in an attempt to give the BKartA the power to review certain transactions, inter alia, in the fast-moving digital sector. According to this second set of thresholds, a concentration must be notified prior to its completion if, in the last financial year:

  • the combined worldwide turnover of all participating enterprises exceeded €500 million;
  • one participating undertaking had a turnover exceeding €25 million within Germany, but neither the target nor any other participating undertaking had a turnover in Germany exceeding €5 million;
  • the value of consideration for the transaction exceeds €400 million; and
  • the target is active in Germany to a significant extent (local nexus).

However, if the parties to a concentration fulfil the first set of thresholds, they will be exempted from the notification obligation if one party to the merger achieved less than €10 million worldwide turnover (in the case of the target including the seller and all its affiliates, provided that the seller controls the target and, in the case of the acquirer, including all its affiliates), or the concentration relates to the combination of public undertakings as a consequence of a ‘reform of communal territory’. These exemptions do not apply if the parties to a concentration fulfil the second set of thresholds.

Turnover figures must be calculated by reference to an undertaking’s last completed financial year, on a worldwide consolidated group basis excluding intra-group sales and VAT. In specific sectors, the calculation of turnover is a two-step process: for example, in the case of goods traded (ie, goods that are simply purchased and resold), only 75 per cent of the turnover achieved is to be taken into account. There are special rules for credit institutions and building societies, as well as insurance companies for the broadcasting sector and for producers and distributors of newspapers or magazines.

Merger control under the GWB is not applicable to any transaction that falls below the German turnover thresholds and the BKartA cannot investigate such cases. No such cases have been referred to the European Commission thus far. German merger control is also not applicable to any transaction that falls within the scope of the EUMR (with exceptions provided for in the EUMR, as set out in the European Union chapter).

Transactions that meet the above thresholds, but have no ‘appreciable [domestic] effects’ within the territory of Germany are exempt from the notification requirement (see question 7).

The question of whether the target is active in Germany to a significant extent (which is relevant for the application of the second set of thresholds) is different from the question of whether the transaction can have an ‘appreciable effect’ in Germany and should therefore be dealt separately. In July 2018, as explained in further detail in the ‘Update and trends’ section of this chapter in the 2019 edition of this publication, the BKartA, together with the Austrian competition authority, published a joint guidance paper. However, in case of doubts - given that the threshold is still relatively new, with little practical experience - it is advisable for the parties to seek informal guidance from the BKartA. Recent experience shows that the BKartA is open to such informal discussions and provides guidance quickly.

The ninth reform in 2017 of the law has excluded the application of merger control to transactions in which all undertakings concerned: are members of a banking industry association according to the German Corporation Tax Law; are principally active in the provision of back-office services for companies of the banking industry association of which they are a member; and do not have any own end-customer relationships in the services mentioned above.

Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?

Filing is mandatory if the jurisdictional thresholds described above are met and if the requirements of the appreciable (domestic) effects clause are met (see question 7).

Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?

Foreign-to-foreign mergers are subject to German merger control only if they have an ‘appreciable effect’ within the territory of Germany. The BKartA has always applied the concept of ‘appreciable effect’ broadly. In practice, it is likely that almost all foreign-to-foreign concentrations caught by the first set of thresholds will have an ‘appreciable effect’ within the territory of Germany, even if the parties have no subsidiaries or other assets within Germany.

The only exception where the local effects test still plays a role relates to foreign joint ventures, as the turnover thresholds may, in these cases, be met by the parent companies alone and through activities that are not (directly) related to the joint venture. To ensure greater clarity, the BKartA updated its guidance in 2014 ‘to relieve concentrations that do not affect Germany of unnecessary bureaucracy’. The new guidance provides concrete examples as well as a flowchart to illustrate how to apply the concept of ‘appreciable effects’.

Are there also rules on foreign investment, special sectors or other relevant approvals?

Yes, there are two different tests under which the Ministry for Economic Affairs and Energy (Ministry) assesses foreign investments: the ‘cross-sectoral examination’ and the ‘sector-specific examination’. Both regimes have been amended in recent years, leading to a tighter control over acquisitions of domestic companies.

The cross-sectoral examination is applicable in cases where investors from outside the EU or EFTA who - directly or indirectly - wish to acquire 25 per cent or more (and in certain cases 10 per cent) of the voting rights in a German enterprise, if the acquisition could pose a threat to Germany’s public order or security. Under certain conditions, the Ministry may also examine acquisitions by investors from within the EU or EFTA if one of their shareholders comes from a non-EU or non-EFTA member state and holds 25 (or 10) per cent or more of the shares. This right of scrutiny applies to all sectors and enterprises and allows the Ministry to initiate a review of the investment. The regulation lists a number of strategic industry sectors where transactions will be scrutinised more carefully. In particular, this applies to ‘critical infrastructure’: energy, information technology and telecommunications, transport and traffic, health, water supply, food, finance and insurance. Other strategic sectors include software for critical infrastructure, cloud-computing services and the media. If the Ministry concludes that the acquisition poses a threat to Germany’s public order or security, it may either restrict the acquisition or prohibit it altogether, rendering the purchase contract invalid. Filings are mandatory for acquisitions in the sectors listed above (if certain materiality thresholds are met). For all other acquisitions, filings are voluntary, but may be advisable as they lead to shorter review periods for the Ministry. If no filing is made, the Ministry has up to five years from signing to open an investigation (and ultimately unwind the transaction). This period is reduced to two months (in case of a full filing) or three months (in case of a short notice), starting from the day of the submission of the complete filing or the short notice, respectively. If an investigation is opened and the parties have complied with all requests for information (which can in some cases take a few months), the Ministry has four months to clear the case (unconditionally or with orders) or to prohibit the transaction.

The sector-specific test is somewhat stricter and also applies to purchasers from within the EU or EFTA. The test focuses on acquisitions falling within certain strategic sectors: acquisitions of 10 per cent or more of the voting rights in corporations that produce or develop goods listed in the War Weapons Control Act, specific items mentioned in export control lists, certain cryptographic systems or specially designed motors or gears or transmissions to drive battle tanks or other armoured military tracked vehicles must be notified to the Ministry, which may prohibit or restrict the acquisition to safeguard Germany’s essential security interests. The transaction may not be closed without the approval of the Ministry, which is obliged to issue a written statement of clearance if there are no objections to the notified investment. The statement of clearance is deemed to be issued if the Ministry does not initiate a formal examination of the acquisition within two months of its notification.

Violations of enforceable orders by the Ministry prohibiting or restricting an acquisition may give rise to fines of up to €500,000 per infringement.

Other specific procedures and restrictions apply to investments by or in banks, air carriers and satellite technology operators and insurance companies.

The German government and various political parties have recently said that they are considering a further review of the current foreign investment regime.

Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

There are no legal deadlines for a notification of a concentration, but notifiable concentrations must not be completed before clearance. It is possible to file a pre-merger notification even prior to the signing of the transactional documents. Parties should also not forget to submit a mandatory post-completion notice to the BKartA, which needs to be filed without ‘undue delay’ following completion of the transaction. This is, however, a mere formality.

Fines can be imposed for closing before clearance as well as for submission of incorrect or incomplete filing. Those sanctions are regularly applied in practice (see question 12 below).

Which parties are responsible for filing and are filing fees required?

In principle, all parties involved in a merger (ie, typically the purchaser and the target company) are responsible for filing. In the case of an acquisition of shares or assets, the vendor must also notify. In practice, the filing is often done by the acquiring firm on behalf of all parties involved.

Filing fees payable to the BKartA can amount to up to €50,000 (in cases of minor importance or with insignificant effect on the German market, the filing fees normally range between €3,000 and €15,000). In exceptional cases, a fee of up to €100,000 is possible. The BKartA determines the fees by taking into consideration both its administrative (ie, personnel and material) expenses and the economic significance of the transaction notified. In addition to the fees, the BKartA can recover costs for external consultants (eg, economists) from the merging parties.

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

Mergers that are subject to merger control may not be completed before either the BKartA has cleared the transaction or the relevant waiting periods of one month (first phase) or four months (first and second phases together) after submission of a complete notification have expired without the BKartA having prohibited the transaction.

2008 case law clarified that the suspension obligation also applies to transactions that are notified to the BKartA even where there is no formal notification obligation. Therefore, the decision to submit a ‘precautionary notification’ of a transaction where the question of the notification requirement is not entirely clear (eg, in possible cases involving the acquisition of material competitive influence (see question 4)) must be carefully made, as the notification, once submitted, triggers the waiting periods until a final decision of the BKartA is rendered. The BKartA can, upon the submission of an application, grant an exemption from the suspension obligation if there are compelling reasons to do so. This is the case, in particular, if the parties involved can establish that an exemption would prevent severe damage to one of the undertakings involved or to a third party. However, both the BKartA and the courts interpret this exemption restrictively. Stock market, staff loss or competitiveness risks usually would not suffice - exemption tends to be limited to situations of imminent insolvency.

The parties have the right to withdraw their notification at any time, unless the BKartA itself has delivered a decision ending the procedure (such as an explicit or implicit clearance decision or a prohibition decision). Such withdrawal automatically ends the merger control procedure.

Pre-clearance closing

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

The completion of a notifiable merger prior to clearance can lead to severe penalties: fines of up to €1 million or, in the case of undertakings, of up to 10 per cent of their total worldwide group turnover in the preceding business year, can be imposed. The BKartA regularly imposes fines for closing notifiable transactions prior to clearance. Since the end of 2007, the BKartA has imposed five fines (up to €4.5 million) for closing before clearance.

In a recent judgment in the case Edeka/Kaiser’s Tengelmann, the Higher Regional Court of Düsseldorf decided that a partial implementation of a concentration before clearance also violated the suspension requirement. In that case, the merging parties had already started implementing some aspects of the merger agreement (one party agreeing to close outlets in an interim period before clearance and joint purchasing cooperation). This decision has been confirmed by the German Federal Court of Justice (Bundesgerichtshof) in November 2017 that decided that measures or behaviour, which themselves cannot constitute a concentration per se, but which are made in the context of the intended concentration and can (at least) partly create the effects of that intended concentration, constitute gun jumping. In another judgment relating to the same case, rendered in 17 July 2018 (Edeka/Kaiser’s Tengelmann II), the German Federal Court of Justice also confirmed the possibility for the BKartA to formally issue interim measures against existing or merely imminent gun-jumping acts of the parties (and according to the BKartA this approach also holds in the context of the Court of Justice of the European Union’s Ernst & Young judgment).

In cases of negligent disregard of the notification obligation, the BKartA normally informs the parties to the transaction of their obligations and insists on the submission of a post-completion notice containing all the details that are normally required in a pre-merger notification. If the parties comply with this request, they may in many cases escape a fine, if it was their first violation of the obligation to notify. However, if the concentration involves parties with significant business activities in Germany who have already submitted a number of notifications in prior transactions, fines are more likely. In cases of deliberate disregard of the notification obligation, the BKartA normally will impose a fine. Fines are much more likely if there is already a negative track record.

The BKartA does not treat notifications of transactions that occur after their (complete or partial) completion as ‘proper’ notifications but will rather consider them as post-completion notices. The BKartA assesses the competition issues triggered by the proposed transaction directly as part of a ‘merger dissolution procedure’. As a consequence, the one-month period for first-phase cases does not apply. Should the BKartA reach the conclusion that the transaction raises substantial issues, it may directly order the dissolution of the transaction. As a consequence, it is easier for the BKartA to undo a consummated merger that fulfils the prohibition conditions in the GWB quickly, as there is no longer a need to issue a formal decision prohibiting the merger before opening a merger dissolution procedure.

Further, any transaction implementing a merger in violation of the clearance requirement is regarded as invalid under civil law (at least in German law) until final clearance is given.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

Sanctions for closing before clearance are applied to any notifiable concentration. Whether the concentration involves national undertakings or foreign undertakings is irrelevant. The largest fine ever imposed by the BKartA for closing before clearance related to a foreign-to-foreign merger (fine imposed on Mars in 2008 for having closed the non-German parts of the acquisition of Nutro Products, see question 14).

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

Hold-separate arrangements that are entered into between the parties for the purpose of closing a foreign-to-foreign transaction prior to clearance without breaching the suspension obligation may be possible if they ensure that the closing will not have an impact on the market in Germany. However, because they are unusual under German merger control rules, they require analysis in each individual case, and in practice, it is difficult to design hold-separate arrangements in a way that clearly excludes effects on the German market. This was made particularly clear after the BKartA’s fining of Mars for having closed its acquisition of Nutro before clearance (one of the five gun-jumping fining decisions mentioned in question 12). Mars had notified its intention to acquire all shares in Nutro. Nutro had no assets in Germany and all sales of Nutro products into Germany were made through an independent third-party distributor located outside Germany. Following clearance by the FTC in the United States, Mars acquired the majority of the shares in Nutro prior to the BKartA’s clearance. Prior to the transfer of the Nutro shares, the seller and Mars agreed to transfer and carve out the German activities that remained with the seller. The BKartA found that this was not sufficient as, in the BKartA’s view, the German business could not be separated from the remaining Nutro business. It therefore concluded that the acquisition of the foreign Nutro assets had an impact on the German market and that the transfer of the shares therefore constituted an infringement of the German standstill obligation.

It is generally advisable to discuss all kinds of carveout or hold-separate solutions with the BKartA beforehand to avoid fines. In cases that do not raise competitive issues, asking the BKartA for a quick clearance may be the preferable option.

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

German merger control rules are aligned with article 7(2) EUMR, allowing the notifying parties under certain conditions to consummate the public takeovers prior to clearance. The GWB does not prevent the implementation of a public bid that has been notified to the BKartA, provided that the acquirer does not exercise the voting rights attached to the securities in question or does so only to maintain the full value of those investments and on the basis of a derogation granted by the BKartA.

Documentation

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

Germany is one of the few jurisdictions worldwide that requires only a limited amount of information in a notification. The GWB requires, as a minimum, a description of the transaction and, in respect of all participating enterprises: name, place of incorporation, type of business, turnover of the parties involved (worldwide, in the European Union and in Germany), market shares of the parties in Germany and the basis of its own calculation if the combined market shares amount to 20 per cent or more, and in the case of an acquisition of shares in another company, information about the shares already held in the target company and the shares to be acquired. In the case a transaction is notified because the second set of thresholds is met, the value of consideration for the transaction as well as the principles dictating its computation are also required pieces of information. It is advisable, and may accelerate the proceedings, to provide at least some basic information on the markets concerned by the transaction. The level of information and analysis will depend on the extent to which the merger raises substantive competition law issues. The usual form of notification is a simple letter setting out the necessary information.

The notification must be submitted in German. The relevant waiting period begins after a complete notification has been received by the BKartA.

Foreign parties must appoint an authorised representative in Germany, on whom documents in the merger proceedings can be formally served. In contrast to EU merger control law, there is no obligation to submit the acquisition or merger agreement or any additional documents such as internal reports or annual reports and accounts to the BKartA. However, the BKartA sometimes requests such documents. Similarly, the BKartA does not usually require the submission of powers of attorney.

If a filing is made with incorrect or incomplete information, a fine of up to €100,000 can be imposed (this is an administrative offence). A fine of €90,000 was imposed in a case in which one notifying party did not disclose a majority participation in a company, although this participation was relevant for the substantive assessment of the notified concentration with another company (Clement Tönnies/Tummel, January 2013). The same penalties can apply for a failure to submit a post-merger completion notice or in cases of incomplete, incorrect or late notice. A fine of up to €1 million or, in the case of an undertaking, up to 10 per cent of its total worldwide group turnover in the preceding business year, can be imposed if the notifying parties intentionally include or make use of incorrect or incomplete information in the notification with a view to causing the BKartA to refrain from issuing a prohibition decision or from opening a second-phase investigation. External lawyers advising the notifying parties can also be fined if they intentionally submit incorrect information. Several external lawyers have already been or are subject to such an infringement procedure. Fines for incomplete filings have, so far, been rare in practice. Early in 2016, the BKartA imposed a fine of €90,000 on Bongrain Europe SAS for submitting incorrect (under-evaluated) market shares in a merger control filing. Where the parties intentionally submit incorrect information, the BKartA is likely to impose significant fines (eg, a fine of €250,000 has previously been imposed on a US company that provided incorrect information on its market share).

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

If the BKartA has sufficient data on the relevant markets, a decision is likely to be issued after internal discussions within the BKartA’s division responsible for the case. If it requires more information (which is often the case) or needs to verify the information provided by the parties, it often contacts other market participants (such as competitors, customers or suppliers) to seek their views and information on their activities and the relevant markets, as well as often requiring the notifying parties to provide further information.

In the vast majority of cases, the BKartA is able to ascertain during the first-phase investigation that the case does not raise substantive competition problems in Germany. In these cases, the BKartA will issue an informal clearance letter within the first phase. The clearance letter is not reasoned and not subject to appeal by third parties.

If competition concerns are identified during the first-phase investigation, the BKartA must inform the parties (usually, but not necessarily, in writing) within one month that a second-phase investigation will be initiated. If the initial concerns are not confirmed during the second phase, the BKartA will either clear the concentration directly or, if there are intervening third parties, issue a draft clearance decision. If the second-phase investigation confirms the competition concerns, the BKartA will set out the identified issues in a written statement of objections. Both the statement of objections and the draft clearance decision provide an opportunity to submit comments. In addition, upon request of the notifying or the intervening third parties, the BKartA will also allow them to present their comments in a meeting with the case team.

Merging parties can submit proposals for commitments at any time of the procedure, provided that the BKartA still has sufficient time to review and market test the proposal. At the end of a second phase, the BKartA will either issue a clearance decision, a clearance decision with commitments or a prohibition decision. All three types of decisions are formal administrative decisions, which means that they must be reasoned and are subject to full judicial review.

The BKartA is open to pre-filing consultations in cases that are high-profile, are likely to raise competition concerns or present an unusual degree of complexity. Such discussions will usually help with the efficient preparation of the notification, as they will identify the areas in which the BKartA would like to receive more information etc. In fact, the President of the BKartA, Andreas Mundt, welcomed this explicitly by stating the following in its annual end-of-year press release: ‘Companies often approach us first, in particular in cases which might be critical. Some of these projects will then not even be notified. After taking preliminary soundings in the extensive Karstadt/Kaufhof case we were able to send out formal requests for information to around 100 companies on the actual day of notification. This ultimately meant that the merger could be examined very quickly and at the same time very thoroughly.’ By contrast, in simple cases, pre-filing consultations with the authority appear unnecessary.

What is the statutory timetable for clearance? Can it be speeded up?

The BKartA must decide within one month of complete notification whether to clear the merger or, if the transaction raises competition concerns, whether to commence an in-depth second phase investigation. Decisions in second phase proceedings must be issued within four months of the notification date. The four-month period may be further extended, provided that the notifying parties consent. This is applied in many cases after commitments have been proposed by the parties to allow the BKartA to properly market test the commitments, and there is an automatic one-month extension of the second phase if the parties submit commitments. In addition, there is a stop-the-clock mechanism in second phase proceedings should the notifying parties not fully respond to an information request of the BKartA.

In practice, decisions are usually issued within the initial investigation (first phase) period of one month (more than 95 per cent of all notifications).

Substantive assessment

Substantive test

What is the substantive test for clearance?

A merger must be prohibited by the BKartA if it ‘would significantly impede effective competition’, in particular if it leads to the creation or strengthening of a dominant market position.

In 2013 the dominance test was replaced by the EU significant impediment to effective competition (SIEC) test. However, the dominance test remains the key standard example of SIEC. In the context of dominance (as an example of an SIEC), the principles set out in the 2012 Guidance document on the dominance test continue to be relevant. The BKartA applies the analytical framework of the SIEC test in a similar way to the European Commission.

According to the definition of dominance under the GWB, a dominant position exists if one or more enterprises have no competitors at all, are not subject to material competition, or are in a superior market position that enables them to act independently of competitors, customers and other market participants. The GWB contains a number of rebuttable presumptions as to the existence of dominant market positions. There is a presumption of single dominance where a single company has a share of at least 40 per cent of the market. Collective dominance is presumed if three or fewer enterprises have a combined market share of at least 50 per cent, or if five or fewer enterprises have a combined market share of at least two-thirds. Collective dominance is an issue that was at the heart of a number of recent high-profile mergers reviewed by the BKartA and the German courts. In contrast to the presumption of single firm dominance, the parties themselves must rebut the presumption of collective dominance (by showing, inter alia, that there would be no implicit collusion between the presumed jointly dominant companies). Because the BKartA is under a statutory obligation to fully investigate all relevant factors, these presumptions function more like soft safe harbours. Before the courts, they continue to play a slightly more important role.

The BKartA often considers complex economic arguments. Besides market share levels, the factors it takes into account include the competitive structure of the market, barriers to entry, potential competition, closeness of competition (a factor whose weight appears to have gained importance in recent years), switching costs, access to customers (eg, importance of distribution networks and brands), access to suppliers, vertical integration, structural links to competitors, suppliers and customers, and also, if relevant, the parties’ financial resources. This trend has been further evidenced by the Guidance on Substantive Merger Control. One of the two prohibition decisions of 2019 concerned a horizontal overlap case in the area of plain bearings that are used in large bore engines. The BKartA concluded that the two parties were the major competitors in a market which was already highly concentrated and where it is already complex and costly for customers to switch to one of the few alternative suppliers. The BKartA also noted that no new companies were likely to enter the market for the production of the special bearings because this would require extensive knowledge of technological development and manufacturing processes and a high level of investment.

There are three exceptions to this rule. A concentration cannot be prohibited by the BKartA even if it would significantly impede effective competition in three situations.

The first is where the parties can show that the merger will result in an improvement of market conditions on another market, which outweighs the detrimental effects on competition. The most recent application of this clause can be found in the clearance by the BKartA of the takeover of Mediengruppe Frankfurt by the Ippen Group, with both companies publishing newspapers in the Hesse region in Germany (possible negative effects existed on some regional reader markets; however, improvements on the reader market in another region were viewed, on balance, as being significantly more important).

The second applies if the relevant market has been in existence for at least five years and had a total annual value of less than €15 million in the last calendar year (de minimis market clause). It is worth noting that this rule does not apply where a concentration is notifiable pursuant to the second set of thresholds. This de miminis rule does also not apply in relation to markets in which the service is provided free of charge to users. For the purposes of assessing the €15 million threshold, only the value of the German market has to be taken into account, even if the geographical market is wider than the national market. If the relevant geographical market is narrower than the national market, the relevant geographical market must be taken as the reference point for the calculation.

However, the clause should be assessed carefully, as, in a limited number of cases and under clearly defined conditions, the BKartA is allowed to bundle closely related geographic and product markets and to aggregate their volumes of sales when calculating the total size of the German market for the purposes of the de mimimis market clause. This can be the case in particular where:

  • a product market has been artificially separated into different de minimis markets within Germany;
  • the transaction affects several homogeneous geographically neighbouring de minimis markets;
  • the transaction affects several neighbouring product markets that have comparable competitive market structures; or
  • the parties operate on a local de minimis market but also on non-de minimis upstream and downstream markets where the conditions of competition on the de minimis market directly determine which competitors are able to operate on the upstream or downstream markets.

Although the above principles were developed at a time where the legal framework was different (the question of de minimis markets played a role in determining whether there was a notification obligation in the first place), it is likely that the jurisprudence of the courts continues to be applied.

The third exception is a specific rule for the failing firm defence in the press sector. Dominant publishers will be allowed to acquire a small or medium-sized competitor even if this leads to the strengthening of a dominant market position, provided that the acquired publisher meets specific financial underperformance criteria (which are clearly defined by the law and differ from the failing firm defence criteria) and that no other acquirer could be found.

Is there a special substantive test for joint ventures?

Under the GWB, all joint ventures have to pass the SIEC test under the merger control rules.

In addition to the SIEC test under merger control, all cooperative aspects of the joint venture are reviewed under the restrictive practices provisions of the GWB (this is in contrast to the EUMR, where potential coordination effects between the parent companies are assessed as part of the merger control process). This review is not automatically integrated into the merger procedure but may be performed either in parallel or after the merger procedure (eg, after a merger control clearance). A joint venture will raise competition issues if it leads to coordination between the parent companies. Coordination will be more likely in cases where the parent companies continue to be active on the same market as the joint venture. Spill-over effects on neighbouring or other markets are less likely, but can also occur (eg, if the joint venture carries substantial weight compared to the parent companies’ other activities). However, a joint venture is unlikely to violate the restrictive practices provision if the following conditions are met:

  • it is a full-function joint venture that acts as an independent market participant;
  • the parent companies are not active in the joint venture’s relevant product markets; and
  • the joint venture is not exclusively or predominantly active in markets upstream or downstream of its parent companies’ activities.
Theories of harm

What are the ‘theories of harm’ that the authorities will investigate?

The BKartA examines all aspects of competition in the relevant markets. This covers unilateral and coordinated effects in horizontal, vertical and conglomerate mergers. A detailed summary of how the BKartA will typically approach the analysis can be found in its revised Guidance on Substantive Assessment (see question 19). In April 2019, the BKartA announced its intention to prohibit a concentration in the used packaging waste disposal and recycling sector (Remondis/DSD), for reasons of both vertical foreclosure risks (customer and input foreclosure) on the one hand, and horizontal overlaps leading to dominance on the other.

With regard to unilateral effects, key aspects of the BKartA’s analysis relate to market shares, concentration ratio, capacity and capacity restrictions, customer preferences and switching costs, IP and know-how factors, market phase, access to procurement or sales markets, links with other companies, financial resources, potential competition and market entry, neighbouring substitution and countervailing buying power. In vertical mergers, the BKartA focuses its assessment on input and customer foreclosure effects.

With regard to coordinated effects, the BKartA’s assessment focuses on the question of whether coordination becomes more stable, for example, because a significant outside competitor is acquired (eg, Magna/Karmann of 21 May 2010), or the companies participating in coordination become more symmetric (eg, Axel Springer/ProSiebenSat.1 decision of 19 January 2006, confirmed by the Federal Court of Justice on 8 June 2010).

The identification of competition issues in conglomerate mergers is rather rare. The only example of this goes back over 10 years. It is the Axel Springer/ProSiebenSat.1 case (2006), where one of the issues was cross-media effects and foreclosure. In the Tokyo Electron/Applied Materials case (2014) a significant conglomerate merger was cleared because the investigation did not confirm allegations by complainants that the merging parties would have the ability and incentive to foreclose rivals.

The protection of companies’ incentives and ability to compete play an increased role in the BKartA’s substantive assessment, and the degree of innovation capabilities is a factor that is taken into account by the BKartA in its substantive assessment. While the BKartA has had no prominent recent case, there is no reason to believe that the approach of the BKartA would be any different to the recent approach of the European Commission in innovation (please refer to question 21 in the European Union chapter).

Non-competition issues

To what extent are non-competition issues relevant in the review process?

Non-competition issues are not relevant and may not be taken into account by the BKartA. The BKartA regularly reiterates that its prerogative is the control of concentrations from a pure competition perspective. For example, when it cleared the acquisition of the newspaper General-Anzeiger by Rheinische Post in 2018, it noted that, while it is part of merger control to examine whether readers still have alternative sources to choose from, the BKartA cannot use diversity of opinion per se as an assessment criterion in its examination. It has also constantly taken the view that public interest and foreign investment grounds should be dealt with in a separate process by another authority.

However, the BKartA’s decision to prohibit a merger can be overruled by the Federal Minister for Economic Affairs and Energy if the negative effects of the merger on competition are outweighed by benefits to the economy as a whole or if the merger is justified by an overriding public interest. The decision may also include conditions imposed on the parties. The Minister enjoys a wide margin of appreciation with regard to the criteria for granting an authorisation, but the decision is subject to judicial review on questions of substance as well as on procedural questions. In addition, before an authorisation can be granted by the Minister, an elaborate procedure has to be followed. In particular, the Monopolies Commission, an independent but government-sponsored competition policy think tank has to issue a public opinion on the public interest issue. Afterwards, a public hearing has to be held.

Cases of ministerial authorisation being granted are rare. Since the introduction of merger control in 1973, a ministerial authorisation has only been granted without conditions in three cases and with conditions in six cases (recently in the Edeka/Kaiser’s Tengelmann case). In total, there have been only about 20 applications.

The ninth reform of the GWB in 2017 introduced new provisions on certain procedural aspects of a ministerial authorisation, in particular speeding up the procedure and allowing the Ministry of Economic Affairs and Energy to issue guidelines about details of the procedure. The minister is supposed to authorise a merger within four months from receiving the application; if a decision is not reached after six months, the application will be deemed to be denied.

In addition, the reforms limit the scope of third parties’ ability to appeal against a ministerial decision: in contrast to the legal situation before the amendment, where an economic impact would suffice, now only persons or companies that can show an infringement of their own rights will have sufficient legal standing. Because the requirements for such an own right are quite high, it remains to be seen if the option of an appeal against the ministerial decision will retain any practical relevance in the future.

These changes to the law follow the recent case of Edeka/Tengelmann where a merger was initially authorised by the minister, but then later blocked by the Higher Regional Court of Düsseldorf following appeals of competitors.

Economic efficiencies

To what extent does the authority take into account economic efficiencies in the review process?

Efficiency arguments have so far not played a major role in the BKartA’s practice. It is unlikely to accept efficiency arguments where the transaction would lead to the creation or strengthening of a dominant market position. However, in such cases, a clearance can still be granted if the parties can demonstrate that the merger will also result in an improvement of market conditions that outweighs the disadvantages of the market dominance. Efficiencies could only be considered as such an improvement of market conditions if the efficiency gains would be passed on to the consumer (balancing clause). In this respect the BKartA will require a high level of proof that the parties will pass on the efficiencies. As the BKartA works on the understanding that a dominant company will often have little or no incentive to pass efficiency gains on, it is difficult to succeed with efficiency arguments in cases involving the creation or strengthening of a dominant position. Whether efficiencies will be accepted as a defence in SIEC cases that do not create or strengthen a dominant position is an open question. Efficiency arguments can play a certain role in proceedings regarding a ministerial authorisation (see question 22).

Remedies and ancillary restraints

Regulatory powers

What powers do the authorities have to prohibit or otherwise interfere with a transaction?

If the statutory conditions for prohibition are fulfilled, the BKartA will prohibit the merger. The BKartA also has the power to order the divestment or the disposal of certain assets where a merger has already been completed (see question 12).

The BKartA has used the power to order the dissolution of a concentration and ordered two Swiss-based companies to undo their merger (Sulzer/Kelmix). This was the first ever divestment order from the BKartA in relation to a foreign-to-foreign merger (however, the decision was successfully appealed by the parties on other grounds). According to the Higher Regional Court of Düsseldorf, public international law is not in conflict with a prohibition of a foreign-to-foreign merger if the merger produces effects on the German territory. However, in the case of an already completed foreign-to-foreign merger, it remains unclear how the BKartA would in practice be able to enforce such a prohibition order if the parties refused to undo their merger.

Remedies and conditions

Is it possible to remedy competition issues, for example by giving divestment undertakings or behavioural remedies?

The relevant provisions expressly provide for imposing conditions and obligations and accepting structural undertakings in second phase clearance decisions. In addition, remedies (such as a restructuring of the transaction or divestment undertakings) are also possible prior to the clearance decision. Behavioural undertakings that do not affect the structure of the market are rarely accepted as sufficient to address competition concerns, unless they have similar effects (divestment of slots, access to infrastructure, etc).

Undertakings subjecting the parties to the transaction to permanent behavioural control by the BKartA are explicitly prohibited by the GWB. However, albeit rare in practice (but see question 26 for an example) behavioural remedies are possible under German law, if they are effective and do not lead to a permanent control of the undertaking’s behaviour by the BKartA.

The BKartA recently published a guidance on acceptable remedies explaining which conditions they must meet to enable the BKartA to clear the transaction with conditions and obligations.

The BKartA has also published model texts for the different types of remedies and a trustee mandate on its website. These templates are similar to the models used by the European Commission, but considerably shorter.

What are the basic conditions and timing issues applicable to a divestment or other remedy?

The BKartA can accept remedies if they effectively solve the competition problem and provided they do not involve a permanent monitoring of the parties’ behaviour by the BKartA. Consequently, a broad range of undertakings is possible as long as the undertaking effectively remedies the competition concerns raised.

In general, all kinds of structural undertakings are accepted by the BKartA, although in practice most are divestment undertakings.

Non-structural remedies have also been accepted in some cases (see, for example, the acquisition of the cable network operator Kabel Baden-Württemberg by Liberty Global Europe Holding, where remedies included the granting of early termination rights to large customers and the waiving of certain exclusivity clauses).

Divestitures can only be made to a suitable purchaser approved by the BKartA. The BKartA will nowadays normally ask for an ‘upfront buyer’, meaning that the parties agree not to implement the transaction until the buyer has been approved (suspensive condition). An upfront buyer will be required in circumstances where there is risk as to the viability of the business to be divested, finding a suitable purchaser, or where the remedy concerns a substantial part of the concentration. The sale must be completed within a specified time limit, six months being the usual term, extendible by an additional six months if a divestiture trustee is required to sell the business. ‘Fix-it-first’ solutions (ie, sale of the divestiture business before the clearance decision is issued) remain relatively rare. In exceptional circumstances, the BKartA can also agree to a resolutory condition (ie, implementation of merger before suitable buyer is accepted and divestment business is sold, but clearance lapses if no suitable buyer is found).

Any divestment remedy must be accompanied by a proposal to safeguard the business in the interim. Normally, the parties need to appoint a monitoring trustee to oversee compliance with the preservation measures. A ‘divestiture trustee’ will be required to handle the disposal of the business in the event that the parent companies do not find an acceptable purchaser within the disposal deadline.

Unlike the EUMR, the GWB does not provide for the possibility of commitments in first phase and nor is there a deadline in second phase for the submission of commitments. However, it is advisable to discuss commitments with the BKartA as soon as the BKartA’s competition concerns become clear.

What is the track record of the authority in requiring remedies in foreign-to-foreign mergers?

As for all mergers that it reviews, the BKartA may require remedies in relation to foreign-to-foreign mergers before issuing a clearance decision. As in domestic transactions, parties to a foreign-to-foreign merger have been required to divest parts of their business around the world. Other remedies have also been imposed on parties to a foreign-to-foreign merger.

The BKartA liaises closely with other competition authorities investigating a merger, in particular with regard to remedies, provided the parties supply a waiver allowing the BKartA to exchange the necessary confidential information with the other competition authorities.

Ancillary restrictions

In what circumstances will the clearance decision cover related arrangements (ancillary restrictions)?

A clearance decision of the BKartA does not automatically cover arrangements that are related and necessary to the implementation of the concentration insofar as these arrangements may restrict competition between the parties. They may, however, be reviewed outside the merger control process under the restrictive practices provisions of the GWB or article 101 TFEU. This does not mean that such arrangements are automatically unlawful and void. As a basic rule, ancillary arrangements are exempted from the restrictive practices provisions if they are necessary and indispensable to the successful implementation of the concentration and EU law and practice are taken into account. In particular, ancillary restrictions in the context of newly formed joint ventures and moderate non-compete obligations on the seller may be accepted.

Involvement of other parties or authorities

Third-party involvement and rights

Are customers and competitors involved in the review process and what rights do complainants have?

During the initial investigation period of one month, but even more so during the second phase in-depth investigation, the BKartA often contacts customers, competitors or other market participants for market information, and their reactions have a substantial influence. However, the BKartA will dismiss information or arguments brought by third parties if it is not competition-related or if it does not bring any new elements.

A third party may also, upon application, formally participate in merger control proceedings before the BKartA as an intervening party if its interests are materially affected by the notified transaction. Therefore, competitors, customers and suppliers usually qualify as intervening parties and have been admitted in many second-phase proceedings as interveners. No private action may be brought parallel to the merger control proceedings of the BKartA, as merger control in Germany is a purely administrative matter.

Third parties admitted as intervening parties have the right to access the file, the right to be heard and the right to challenge second-phase decisions to the extent they are affected by the decision. First-phase clearance decisions are not subject to appeal.

Publicity and confidentiality

What publicity is given to the process and how do you protect commercial information, including business secrets, from disclosure?

The BKartA publishes a list of notified transactions with very limited case information on its website. If the parties would like to keep the transaction confidential during an initial period, they normally have to limit themselves to informal pre-notification discussions with the BKartA and the submission of a draft notification. The fact that a formal merger notification has been made in a particular case can only be kept confidential by the BKartA in very exceptional cases upon request. If such a request is made and the BKartA needs to undertake further investigations, it usually does not accept the notification as triggering the waiting periods. However, the BKartA will only postpone publication in extremely rare cases.

In addition, the BKartA now also publishes a list of all ongoing second-phase investigations.

Information on important merger decisions is published in the form of press releases on the internet and in the biennial competition report of the BKartA. A non-confidential version of all second-phase decisions is also available on the BKartA’s website, along with summary reports of selected cases (some of which are also available in English).

The BKartA is under a statutory obligation to guarantee confidentiality and the disclosure of any business secrets by staff of the BKartA would constitute a criminal offence. Consequently, business secrets contained in a merger notification or in a response to an information request issued by the BKartA will be kept confidential by the BKartA if they are identified as such by the notifying party, and indeed amount to business secrets.

Cross-border regulatory cooperation

Do the authorities cooperate with antitrust authorities in other jurisdictions?

The BKartA cooperates closely with other competition authorities within and outside the European Union, both on a formal and informal basis, where appropriate. However, the transmission of business secrets provided by the merging parties or by third parties is only permitted if the parties that have submitted the information give their consent, if the information is used for the same subject matter for which it was collected and if the receiving authority protects the confidentiality of the information. Regular cooperation exists in particular with the European Commission on jurisdictional issues, with other national competition authorities (for a recent example please see the press release regarding the concentration between Horizon Global Corporation/Westfalia and Brink International, in which the BKartA mentions close cooperation with the United Kingdom’s CMA, which was also reviewing the transaction and expressed similar competition concerns), in particular with the US FTC and DOJ, and on policy matters, within the International Competition Network and the OECD. There is also a merger working group within the European Union with members from all EU national competition authorities and observers from the EFTA countries. Further details on cooperation between national competition authorities in the European Union can be found in the Merger Working Group’s Best Practices (2011).

The European Commission and the national competition authorities of the member states exchange basic case information about notified transactions. Notification of a transaction in one EU member state can therefore trigger questions from other national competition authorities.

Judicial review

Available avenues

What are the opportunities for appeal or judicial review?

All second-phase decisions of the BKartA are subject to full judicial review by the Higher Regional Court of Düsseldorf, and its judgments are subject to review by the Federal Court of Justice only on a point of law.

In its decision of 25 September 2007 regarding the Springer/ProSiebenSat.1 case, the Federal Court of Justice acknowledged the right to a declaratory judgment on the BKartA’s merger prohibition decisions, even in cases where the parties have abandoned the merger. Judicial review must be granted when the parties have ‘a particular interest’ in such review, either to clarify the factual basis of the BKartA’s decision or to obtain legal certainty on a point of law (eg, if a similar acquisition may be attempted in the future).

Judicial review of second-phase clearance decisions is also available to third parties admitted, at the BKartA’s discretion, as intervening parties (as well as, in some circumstances, third parties who applied for this status but were refused on the grounds of procedural efficiency) to the extent that they can show that their competitive interests are directly and individually affected by the decision.

However, third parties admitted as intervening parties in the initial merger control procedure do not automatically have the right to appeal the BKartA’s decisions. As stated above, they still have to demonstrate how the decision directly and individually affects their competitive interests.

In proceedings brought by third parties against a clearance decision, the Higher Regional Court of Düsseldorf may order interim measures preventing the parties from consummating the transaction. The court will do so if, based on a preliminary assessment, it has ‘serious doubts as to the legality of the appealed clearance decision’. In contrast to the normal court proceedings, the appellant further has to show that its rights are infringed by the clearance decision. Thus, the requirements for getting an interim order are more demanding than for lodging an appeal (see question 29).

Ministerial authorisation decisions overruling a prohibition order of the BKartA are also subject to full judicial review by the Higher Regional Court of Düsseldorf.

For the first time in the BKartA’s existence, one regional court (LG Köln) had to decide on the German state’s liability in connection with a merger that was declared by higher courts to have been unlawfully blocked by the BKartA. The court recognised the responsibility of the state but decided that no damages should be paid by the state, as the conditions for fault were not fulfilled. The judgment was upheld by the Higher Regional Court of Düsseldorf in 2014.

Time frame

What is the usual time frame for appeal or judicial review?

An appeal against a decision of the BKartA has to be filed with the BKartA within one month of service of the decision. In cases of an application for ministerial authorisation, the period for a subsequent appeal begins upon issue of the order by the Federal Minister for Economic Affairs and Energy.

Proceedings before the Higher Regional Court of Düsseldorf will typically last 12 to 36 months until judgment. The judgment of the Higher Regional Court can then be appealed within one month. Following this, a review process before the Federal Court of Justice will normally take another one to three years.

Enforcement practice and future developments

Enforcement record

What is the recent enforcement record and what are the current enforcement concerns of the authorities?

The BKartA has continued to be very active in merger control over the past year. Of 1,383 notifications made to the BKartA in 2018 (up 6 per cent compared to 2017), 12 led to in-depth second-phase investigations. In 2018, no transaction was prohibited by the BKartA (one transaction was prohibited, however, in 2017). One case was cleared subject to conditions and four notifications were withdrawn after the BKartA either expressed competition concerns or indicated that it intended to prohibit the proposed merger. In 2019, up to the beginning of May, however, the BKartA prohibited two concentrations and an unusually high number of other notifications were withdrawn after the BKartA expressed competition concerns. The BKartA also announced its intention to prohibit a concentration in the used packaging waste disposal and recycling (aka dual systems) sector (Remondis/DSD).

Between 2005 and 2009, merger control enforcement by the BKartA featured a number of cases concerning hospital mergers and electricity and gas mergers. Between 2009 and 2012, petrol stations, food retail and media proved to be sectors that kept the BKartA very busy. In 2013 to 2016, we observed that those sectors remained a focus, with hospital, media and food retail deals the object of intense scrutiny. Over the period of 2018 to mid-2019, either merging parties withdrew their notifications or the BKartA announced that it viewed individual merger projects very critically in cases concerning petrol stations, hospitals and used packaging waste disposal and recycling, three sectors well-known to the BKartA and often characterised by a high level of concentration at local and regional level (and, in relation to petrol stations, a situation of collective dominance). Other industries that the BKartA has already identified as being highly concentrated (and hence candidates for in-depth merger control scrutiny) include the airline industry and the telecommunications and mobile communications industry.

One of the most noteworthy deals of recent years is probably the BKartA’s decision in 2018 to block the proposed acquisition, by CTS Eventim, of Four Artists, a decision in which the BKartA applies, in a great deal of detail, various concepts relating to platform markets, which have been a clear focus of enforcement and conceptual analysis (also in consultation and guidance papers) by the BKartA. Indeed, there has been a proven focus on cases relating to two-sided markets, including online markets. The BKartA has established a ‘think tank’ on how to deal with these cases and recently published working papers on ‘Market Power of Platforms and Networks’ and ‘Data and its Implications for Competition Law’. Most of the merger control related amendments brought about by the ninth reform of the GWB in 2017 are also linked to the objective to render merger control more effective in the digital sector. It is noteworthy that the BKartA already started applying concepts applicable to the market power of platforms or relevant for the assessment of two-sided markets before the entry into force of the amendments. The only prohibition of 2017 (acquisition by CTS Eventim of Four Artists) assessed in detail the various sides of the markets concerned and the interplay between them. In that particular case, the BKartA analysed ticketing systems as being platforms. On the one side, such systems enable event organisers to sell tickets via different advance booking offices and online shops. On the other side, they enable advance booking offices to book tickets for different events. The BKartA examined factors establishing that CTS Eventim had a dominant position, in particular indirect network effects between the event organisers represented on the platform on the one hand and, on the other hand, advance booking offices and end customers using the platform. CTS Eventim’s lead over its competitors in its access to data was also considered relevant for the analysis.

Reform proposals

Are there current proposals to change the legislation?

The ninth reform of the GWB entered into force in 2017. However, the next reform of the GWB is already in the works and may enter into force in the course of 2020 (for more details, see question 36).

Update and trends

Key developments of the past year

What were the key cases, decisions, judgments and policy and legislative developments of the past year?

Key developments of the past year36 What were the key cases, decisions, judgments and policy and legislative developments of the past year? New law reform in the works

Although the last reform of the GWB is very recent (it entered into force mid-2017), the German legislator is already preparing the next reform of the law.

The last reform aimed particularly at improving competition law enforcement (including merger control) and responding to the challenges of the fast-moving digitisation of numerous industries. The next reform will continue on this path, although a recognisable focus is clearly on abuse of dominance in the digitised industries, the relevance of data to competition law, etc.

The following changes are currently under discussion:

  • The second local turnover threshold might be increased, possibly from €5 million to €10 million. This could lead to a reduction of the number of notifiable concentrations by around 20 per cent. This proposal responds to the BKartA’s plea to free up resources to concentrate on cases that are more likely to have problematic competition effects in Germany. The president of the BKartA, Andreas Mundt, has repeatedly said that reviewing 1,200 to 1,300 merger control notifications a year was very burdensome.
  • In order for the BKartA not to lose jurisdiction over all the cases that would not meet the amended thresholds (as some of them could be potentially problematic), some mechanisms are being considered. For example, an information obligation (but not an obligation to proceed to a fully-fledged notification) may be imposed for cases between the two thresholds, triggering a deadline for the BKartA to ask for further information or not.
  • The de minimis market threshold may also be increased from €15 million to €20 million or €25 million (as set out in question 19, if the relevant market has been in existence for at least five years and had a total annual value of less than this threshold in the last calendar year, the BKartA would not be able to prohibit a transaction impeding competition on that de minimis market).
  • An increase of the review deadline in the second phase is also considered.

Some other initial thoughts for the next reform were provided by a study by the competition institute DICE Consult on the ‘Modernisation of Abuse Control for Dominant Companies’ that was commissioned and received on 4 September 2018 by the Federal Minister for Economic Affairs and Energy. With regard to merger control, the authors proposed the extension of merger control by introducing a new rule that would prevent rapidly growing companies from systematically buying up start-up competitors with a view to foreclose the market. The GWB would include a new provision that would make it possible to prohibit a concentration that is part of an overall strategy, by a market-dominant undertaking, to systematically purchase high-growth but early-phase companies, where that strategy can significantly impede competition. For this, the target would need to have a recognisable and significant potential to become, in the medium-term, a competitor. That proposal, however, is not new and is quite controversial and may lead to numerous uncertainties in practice. Andreas Mundt already voiced practicability concerns over such a change. Currently, it does not appear that it will be retained in the draft bill.

We are currently not aware of any planned legislative changes relating to minority shareholdings and common ownership by large institutional investors, although this is a topic that is increasingly and regularly discussed.

The current debate involves numerous stakeholders (ministerial level, enforcers, scholars and practitioners) so it is currently unclear when the draft bill will be finalised and what it will look like. However, it is possible that the changes may be voted on as early as summer 2019 and could enter into force in the later months of 2019.