Two recent developments have reshaped the German merger control regime. First, the legislator has introduced an additional notification threshold, which is expected to reduce the number of merger filings by one third. Second, the German Federal Cartel Office (“FCO”) has imposed significant fines on two companies that tried to circumvent German merger control rules.

New notification threshold should lead to fewer filings  

In March 2009, Germany amended its jurisdictional thresholds for merger filings. Previously, companies were required to notify a deal to the FCO if the parties’ combined worldwide sales exceeded €500 million and if one of the parties had German sales in excess of €25 million. As a result, a transaction could be reportable in Germany merely because the buyer was a large global corporation with German sales of more than €25 million (even if the target had negligible domestic activities).  

The 2009 amendment maintained the €500 million and the €25 million thresholds, but added the requirement that one other party to the transaction must have sales in Germany in excess of €5 million. Consequently, a transaction which consists of an acquisition by a large international company with a substantial presence in Germany of a business with German sales of less than €5 million would no longer be reportable to the FCO.  

The amendment brings Germany’s rules in line with the approach advocated by the OECD and other international advisory bodies. The new legislation is expected to reduce the number of merger filings in Germany by approximately one third (more than 2,300 merger filings submitted in Germany in 2007). The change is also likely to render less relevant the “domestic effect” doctrine, which in the past provided an exemption from the filing obligation when the target company was not active in Germany.  

Two record fines for violation of merger control rules  

In December 2008, the FCO imposed a record-breaking €4.5 million fine on U.S.-based Mars for closing the acquisition of U.S. animal feed producer Nutro Products before obtaining German clearance. Mars had made merger control filings with the U.S., German, and Austrian competition authorities. The U.S. agency let the waiting period expire but the FCO opened an indepth investigation (the Austrian investigation was also ongoing). Mars then decided to close the transaction and integrate Nutro, with the exception of Nutro’s German and Austrian businesses. However, the FCO found that the carve-out of Nutro’s German activities was not sufficient, and that the transfer of Nutro’s foreign production facilities and global trademarks violated the stand-still obligation (i.e., the duty not to close the transaction before obtaining German clearance). The FCO noted that the fine would have been even higher if Mars had not actively cooperated in divesting Nutro’s German business.  

Two months later, the FCO fined German publisher Druck und Verlagshaus (“DuV”) €4.13 million for failing to notify DuV’s acquisition of the rival publishing house Frankfurter Stadtanzeiger. The acquisition took place in 2001 but the FCO became aware of it only in 2009 while reviewing another transaction. The FCO found that DuV had deliberately concealed the transaction by way of a trustee arrangement. Moreover, DuV had significant sales and market shares in the affected markets.  

Two recent developments have reshaped the German merger control regime. First, the legislator has introduced an additional notification threshold, which is expected to reduce the number of merger filings by one third. Second, the German Federal Cartel Office (“FCO”) has imposed significant fines on two companies that tried to circumvent German merger control rules.  

These cases illustrate the FCO ’s willingness to impose heavy penalties on companies that disregard German merger control rules. The Mars precedent would also make it more difficult for the merging parties to implement carve-out arrangements.  

German merger control in a nutshell:  

  • Reportable transactions: a filing is required if the transaction meets the notification thresholds (see below) and the buyer acquires (i) control over the target, (ii) a stake of 25% or more or 50% or more in the target, or (iii) competitively significant influence over the target.  
  • Notification thresholds: the parties’ combined worldwide revenues exceed €500m, German revenues of at least one party exceed €25m, and German revenues of another party exceed €5m.  
  • Deadlines: Phase 1 review is one month; Phase 2 review is three additional months.  
  • Stand-still obligation: if the transaction is reportable in Germany, the parties must not close it before obtaining the FCO ’s clearance.