Global Competition Law is primarly a practitioner's guide presenting the most salient aspects of the major competition laws country by country, giving an overview of their structure and most charasteristic elements.
Global Competition Law also provides insight into possible future developments in the field.

Global Competition Law

The GWB defines a concentration as:
a) the acquisition of all or a substantial part of the assets of another undertaking (Section 37(1) No 1) ;
b) the acquisition of direct or indirect control by one or several undertakings of the whole or parts of one or more other undertakings by which decisive influence can be exercised on the activities of an undertaking (Section 37 (1) No 2);
c) the acquisiti …

Concept of concentration

Germany has a wealth of experience in matters of merger control. The merger control provisions, added in 1973, put into place a preventive system of control. Mergers are governed by Chapter VII of the GWB (Sections 35 to 43a). Currently, just under a thousand operations are notified to the FCO each year.

  In August 2011, the German government published a reform bill for the provisions of the GWB relative to concentrations. The strong points of the bill were the adoption of the criterion of substantial impediment of effective competition in a market or a substantial part of a market (SIEC test: substantial impediment of effective competition), the derogation to the suspension in cases of takeover bids, the acceptance of behavioral commitments and the calculation of the EUR 5 million threshold. The bill was passed in June 2013 and become the 8th Amendment to the GWB. The 9th Amendment adopted on 9 March 2017 extends the reach of the FCO's control by allowing the Office to control mergers involving start-ups with extremely high potential yet very low turnover, in particular in digital markets. The 10th Amendment, which entered into force on 19 January 2021 also extended the FCO's reach. The 11th Amendment, which entered into force in 2023, introduced an additional specific threshold.

Context

a) the acquisition of all or a substantial part of the assets of another undertaking (Section 37(1) No 1) ;

b) the acquisition of direct or indirect control by one or several undertakings of the whole or parts of one or more other undertakings by which decisive influence can be exercised on the activities of an undertaking (Section 37 (1) No 2);

c) the acquisition of shares in another undertaking that allows the acquiring undertaking to enjoy 50 % or 25 % of the capital or voting rights of the acquired undertaking (Section 37(1) No 3); and

d) any other combination enabling one or several undertakings to directly or indirectly exercise a competitively significant influence on another undertaking (Section 37(1) No 4).

Inspired by the European Merger Regulation (Article 3, § 1-b), in its 1998 reform, the German legislature extended the notion of concentration to the acquisition of control (see b) above). This addition provides a flexible general rule (Auffangtatbestand) ensuring that all types of concentration, and especially newly created entities, come within the scope of the German merger control. Control is said to exist where it is possible for an undertaking to exercise a decisive influence on another undertaking by contract rights or other means. The definition of control is therefore almost identical to the notion of dependence within the meaning of Section 17 of the Joint Stock Corporation Act (Aktiengesetz).

Nevertheless, the more traditional specific definitions of the notion of concentration, listed above, e.g. the acquisition of assets, shares and even the existing general rule (see d) above) continue to apply.

As regards concentration by the acquisition of assets, a substantial part of the assets must be acquired. This provision aims to bring minority participation, which does not confer a decisive influence within the meaning of Section 37(1) No 2, within the scope of the merger control provisions.

Contrary to the EU rules, the Act, as amended in June 2013, now provides that acquisitions of non-controlling shareholdings of 25% or more may be considered as concentrations. Likewise, the acquisition of shareholdings of less than 25% may be deemed as a controllable concentration where it confers on the acquirer a competitively significant influence over the target company.

From June 2013, where two or more transactions between the same parties take place within a period of two years, they will be considered to be a single transaction.

Joint-ventures that fulfill the requirements of Section 37 are subject to merger control, in particular where undertakings acquire together a stake greater than 25% in the capital of the joint venture. But, unlike what is provided for in the European merger control regulation, it is not necessary that joint control exists or that the joint venture fulfills all the tasks of an autonomous economic entity. If the joint venture contains any cooperative element, it may also fall under the provisions of Section 1 GWB.

According to Section 35(1) 1 and 2 of the GWB, the Act applies if, in the last business year preceding the concentration, the combined aggregate worldwide turnover of all the undertakings concerned was more than EUR 500 million, and if in Germany the turnover of at least one undertaking concerned was more than EUR 50 million and that of another undertaking concerned was more than EUR 17.5 million. The 5 million threshold for another undertaking concerned was added by Article 8 of the Law of 17 March 2009 (BGBL 550).

The 9th amendment to the GWB of March 2017 added new, alternative, merger thresholds to enable the control of transactions not reaching the above-mentioned turnover thresholds despite their very high financial value, especially in the digital sector. From now on, under the new transaction value test, mergers will also have to be notified where the value in consideration is above EUR 400 million and the target is active to a considerable extent in the domestic market.

The 10th Amendment now permits the FCO to order an undertaking to notify every concentration in one or several specific sectors of the economy if (1) its worldwide turnover in the last business year exceeded EUR 500,000,000, (2) there are objectively verifiable indications that future concentrations in that sector may substantially impede effective competition, and (3) the undertaking supplies, in Germany, at least 15% of the goods or services in the sector. Where these criteria are met, the FCO may order an undertaking to notify every concentration in a specific sector during a period of three years, where the target to be acquired achieved a turnover of more than EUR 2,000,000 in the last business year, and generated more than two thirds of its turnover in Germany. This new mechanism is commonly referred to as the “Remondis clause”.

Section 36(2) 1st sentence ensures that dependent undertakings within the meaning of Section 17 of the Joint Stock Corporation Act (Aktiengesetz) and group companies (Konzernunternehmen) within the meaning of Section 18 of the Joint Stock Corporation Act are considered as one single economic entity with respect to the application of the merger provisions. Dependence is established by reference to corporate law principles.

In its second sentence, Section 36(2) introduces the so called “plurality of mother companies rule” (Mehrmütterklausel) by which each parent undertaking is considered to be dominant, if it is collaborating with several undertakings in order to exercise jointly a significant influence on another undertaking within the meaning of Section 17 of the Joint Stock Corporation Act.

The method for calculating turnover is defined in Section 38. In this regard, the provision distinguishes between economic sectors: only 75% of the turnover shall be taken into account in the sector of trade in goods, where concentrations are considered to be less anticompetitive.  With respect to undertakings involved in the publication, production and distribution of newspapers, magazines and parts thereof, eight times the amount of actual turnover is taken into account. As regards the production, distribution and broadcasting of radio and television programs and the sale of radio and television advertising time, the 9th amendment significantly relaxes the FCO's control, as only 8 times the amount of turnover must be taken into account, compared to twenty times previously.

The merger control provisions do not apply where the merging undertaking is not subject to control by another undertaking and has a turnover of less than EUR 20 million (Section 36(2)). Apart from this exception, the 8th Amendment abolished the de minimis market rule (Bagatellmarktklausel) and the GWB now requires that all mergers be notified to the FCO even if they only affect de minimis markets. However, such concentrations cannot be prohibited.

Since the entry into force of the 11th Amendment to the GWB on 7 November 2023, the FCO may require a company active in a sector that has been the subject of a sector enquiry to notify proposed mergers for merger control approval when there are objective indications that future mergers will significantly impede effective competition. In this specific case, adjusted thresholds apply: any operation for which the buyer has domestic revenues of at least EUR 50 million and the target has domestic revenues of at least EUR 1 million must be notified. 

As part of an increasing recognition of regional and local markets, the FCO created the so-called Bündeltheorie. Pursuant to this theory, which has been approved by the BGH, where two or more markets are neighboring and essentially identical they are considered one market.

Furthermore the merger control system only applies if the concentration in question has an effect on the domestic market.

Thresholds

Section 36(1) GWB prohibited concentrations that were expected to result in the creation or strengthening of a dominant position, unless the participating undertakings established that the concentration would also lead to improvements in the level of competition, and that these improvements would outweigh the disadvantages of dominance. Those provisions were not in line with EU law, which has used the SIEC test ("significant impediment to effective competition" test) since Regulation 139/2004. The 8th Amendment of June 2013 corrected this discrepancy by introducing the SIEC test in German law. The creation and strengthening of a dominant position, the criterium previously used, now only constitutes one example among others of the SIEC test. Furthermore, a market share threshold of 40% (compared to 33% previously) will give rise to a presumption of the existence of a single firm's dominance.

The parties to the concentration are however entitled to establish that the transaction may result in efficiency gains liable to outweigh its negative impact (Abwägungsklausel). 

There is an exemption from national merger control rules for certain hospital mergers under Section 187(10) of the German Competition Act. This exemption is part of a broader hospital care reform and was further improved by the German Parliament on 11 December 2024. To qualify, transactions must be completed no later than 31 December 2030 and must meet specific criteria.

Global Competition Law

327. Concept of concentration

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Les notions juridiques connexes

327. Concept of concentration

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Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise