After a lengthy legislative process, on June 7, 2013 the two chambers of the German Parliament finally reached agreement on the 8th Amendment of the Act Against Restraints of Competition (“ARC” - Gesetz gegen Wettbewerbsbeschränkungen – GWB). The amendment came into effect on June 30, 2013. The new law includes some important adjustments to harmonize German competition law with EU law and aims to strengthen the enforcement of competition law. It does, however, not fundamentally change the concepts of the German ARC. We have set out below an overview of some of the most important changes in the areas of merger control, procedural law, abusive practices and private enforcement of competition law.
- Replacement of Market Dominance Test by SIEC Test: Under former German law, the German Federal Cartel Office (Bundeskartellamt) had to assess whether a merger was expected to create or strengthen a dominant market position. If the merger created or strengthened a dominant market position, the Office would prohibit the merger unless the parties could show that the merger will also lead to improvements of the conditions of competition and that these improvements will outweigh the disadvantages of dominance (“balancing clause”). Under EU merger control rules, the substantive test is whether the merger results in a “significant impediment to effective competition” (SIEC Test). The 8th Amendment has now incorporated the SIEC test into German Competition law. In the future, the German market dominance test will serve as one example of such an impediment. The German balancing clause will remain in place.
- Presumption of Market Dominance: The new law raises the market share threshold for presumed dominance of a single firm from one third (33.3%) to 40%.
- De-minimis Market: The former German merger control exempted transactions affecting socalled de-minimis markets from German formal merger control. After the 8th amendment, such transactions are formally subject to merger control, but the question whether the de-minimis market clause applies will be part of the substantive merger control test. If the transaction is found to relate only to a de-minimis market, it cannot be prohibited.
- Public Offerings: In line with EU merger procedure, the general prohibition to implement a transaction before it was cleared by the Cartel Office will no longer apply in the event of public bids or a series of transactions in securities admitted to trading on a stock exchange. This exemption will only apply provided that the acquirer notifies the transaction to the Federal Cartel Office without delay and does not exercise the respective voting rights before clearance.
- Consecutive Transactions: Transactions which take place within a two-year period between the same undertakings will be treated as a single transaction.
- Procedural Changes: Under the current ACR, the Cartel Office is granted periods of one month (first phase) or four months (first and second phases together) for investigation of the merger after submission of a complete notification. In line with EU law, the ARC now grants the FCO an additional one-month period to evaluate a merger if, during the phase II investigation, the parties offer remedies to the FCO for the first time. The review period will also be suspended if the parties do not timely provide information requested by the FCO unless the parties are not responsible for such delay.
- Private Enforcement: The new law further allows certain associations of undertakings to bring actions in proceedings for antitrust law infringements. In the future, consumer protection associations may also actively participate in private enforcement of competition law.
- Disclosure Obligations: The 8th Amendment has further brought the enforcement powers of the German Cartel Office more in line with the powers of the EU Commission. The German FCO is now also entitled to issue requests to antitrust infringers to disclose data, e.g. to report their turnover for the purposes of calculating antitrust fines.