Effective today, the thresholds for the application of German merger control legislation have been amended through the introduction of a requirement that at least two parties to the transaction achieve certain revenue levels in Germany.
What has been changed?
The amendment to the German Act Against Restraints of Competition narrows the scope of transactions that will be subject to notification requirements. Until now, a concentration between undertakings had to be reported to the German Federal Cartel Office (FCO) and approval obtained prior to completion if, in the last business year preceding the concentration:
- the combined aggregate worldwide turnover of all the undertakings concerned was more than €500 million, and
- the domestic turnover of at least one undertaking concerned was more than €25 million.
Now, German merger control law will also require that:
- at least one other undertaking concerned achieved a turnover of at least €5 million in Germany.
What is the significance?
Through the introduction of a second domestic turnover threshold the number of concentrations that are subject to German merger control will be reduced significantly. Before the change, acquisitions of undertakings with very limited business activities in Germany were often subject to German merger control. It was sufficient that one party achieved turnover of the relevant amount in Germany. The amendment means that the central aim of German merger control is brought back into focus, since now at least two parties will need to have a relevant amount of sales into Germany, such that concentrations that will be reviewed will be only those of significance for the overall German economy.
For those transactions affected by the amendment this is a major boost. Now, certain transactions that may have a small but competitively significant impact in Germany can close without prior review. The aforementioned concentrations are not subject to any pre-approval requirements under German antitrust laws.
The introduction of a second domestic turnover threshold reflects not only international recommendations (from, for example, the International Competition Network (ICN) and the OECD) but also recommendations from national trade associations. In addition, the change reflects a convergence with other premerger schemes around the globe, since most foreign merger control regimes require domestic turnover thresholds for at least two of the undertakings concerned. The lack of a second domestic turnover threshold previously resulted in a high number of concentrations being filed with the FCO when compared with other international control regimes. In 2007, a total of 2,231 concentrations were reported to the FCO. The FCO expects that this number will be reduced by one third.