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

According to Section 40 GWB, the FCO may not prohibit a notified merger unless, within one month after receipt of the notification, it informs the parties to the concentration that it has initiated a second stage inquiry. A reasoned decision in such second stage proceedings must be issued within four months of receipt of the complete notification or the concentration is deemed to have been cleared …

Proceedings before the FCO

Notification of a merger to the FCO, prior to it being put into effect, is compulsory once a merger comes within the scope of the merger provisions of the GWB (Section 39(1), GWB). A notification must contain the information listed in Section 39(3).

The filing fee which is determined by the FCO cannot exceed EUR 50,000.

On 30 September 2014, the FCO has published a Guidance paper “on domestic effects in merger control” providing useful advice on the issue of whether foreign-to-foreign mergers must be notified in Germany. In principle, the notification obligation is triggered by two conditions: the transaction must meet the turnover thresholds described in Section 35 GWB and have an appreciable effect within Germany. The guidance paper describes typical case scenarios in which domestic effects can be clearly identified or ruled out. In any other instance, a case-by-case assessment must be conducted and the guidance provides essential criteria for such examination. Where the assessment of a concentration's domestic effects raises more complex questions than the assessment of its competitive effects and it is obvious that the concentration will not raise any competition concerns, the Bundeskartellamt suggests a pragmatic approach, advising the parties to notify the merger. It will then focus on the relevant competition issues and leave open the question of domestic effects. 

According to the guidance, there are two scenarios where appreciable effects can be clearly identified. Firstly, where the concentration involves only two parties and the target company is active in Germany with a turnover exceeding at least the domestic turnover threshold of EUR 5 million, the merger is deemed as having appreciable domestic effects. Secondly, where more than two companies are involved in the concentration, the joint venture will clearly have sufficient domestic effects if the turnover it achieves exceeds EUR 5 million in Germany. 

In cases involving more than two parties, domestic effects can be clearly ruled out if the following (cumulative) conditions are met: 1. the joint venture is only active on markets outside Germany; 2. the parent companies do not compete on the joint venture's relevant product market (or on upstream or downstream markets).

A case-by-case assessment must be carried out in any other scenarios involving more than two parties. A useful criterion is whether the activities of the joint venture have marginal domestic effects. The turnover achieved by the joint venture in Germany must not exceed the EUR 5 million threshold. It also must not hold a market share exceeding 5% of the relevant market. However, the guidance specifies that a joint venture's business activity is not automatically deemed “marginal” where the turnover and market share thresholds are not reached.  Indications that a market position is more than “marginal” may also result from the transfer of intellectual property rights and know-how to the joint venture. Likewise, despite the marginal activities of the joint venture in Germany, domestic effects may arise due to possible spillover effects between or among the parent companies. In the case of a newly established joint venture that has not yet achieved a turnover, its projected sales in Germany during the first three to five years after its establishment may provide a useful benchmark as to whether the joint venture's activity in Germany is more than marginal.

Merger notification

According to Section 40 GWB, the FCO may not prohibit a notified merger unless, within one month after receipt of the notification, it informs the parties to the concentration that it has initiated a second stage inquiry. A reasoned decision in such second stage proceedings must be issued within four months of receipt of the complete notification or the concentration is deemed to have been cleared. Usually, the undertakings that are planning a merger engage in informal contact with the FCO before the formal notification in order to try and ensure that the merger is cleared at first inquiry stage.

A notified concentration may be put into effect after the one-month period under Section 40(1) has lapsed and where the FCO has not initiated the second stage proceedings. Once the five-month period under Section 40(2) has lapsed, or if the FCO has cleared the concentration, the latter may be put into effect.

Section 41 GWB poses the principle of the suspension of the merger operation until the end of the control procedure. It explicitly prohibits undertakings from implementing a concentration until the period of between one and four months fixed by Section 40 has expired or until the concentration has been authorized by the FCO. The FCO imposes fines of up to 10% of the turnover on undertakings which implement a concentration without having notified it or without having obtained authorization. Under the new provisions of the GWB resulting from the 8th Amendment of June 2013, mergers implemented without clearance may be provisionally invalidated pending assessment of any competition concerns. If the transaction is finally cleared, it is retroactively validated. Furthermore, the prohibition of implementation of a merger before clearance by the FCO no longer applies to takeovers by public bid as long as the merger notification has been filed by the acquirer and voting rights are not exercised, in line with EU merger procedure.

Legal acts in defiance of the principle of suspension are null and void. Unlike the European regulation, the GWB contains no exception in favor of public takeovers. Generally, in the case of a takeover bid, the initiators launch the offer on condition of having obtained an authorization for the proposed merger.

The investigations by the FCO are in two phases: the preliminary phase (phase 1) and the more in-depth phase of the procedure (phase 2). However 95% of concentrations are authorized at phase 1. In the event of a phase 2 investigation, the FCO has now four months in which to issue its decision. This can be extended by one month if, during this phase, the parties submit remedies. The 8th Amendment also introduced a stop-the-clock mechanism where the parties do not submit information requested by the FCO within the time-limit.

While decisions rendered at Phase 1 shall take the form of simple administrative letter, authorization decisions, authorization with conditions or refusals to authorize taken in phase 2 must be fully reasoned and published.

Concentrations that are subject to control under the Act and that have been examined by the FCO according to the merger control procedure must again be notified to the FCO once they are put into effect (Section 39(6), GWB). Failure to comply with this obligation is an administrative offense according to Section 81(1) No 4.

The Federal Ministry for Economic Affairs and Energy may authorize a concentration prohibited by the FCO if, in a specific case, the restraint of competition is outweighed by advantages to the economy as a whole, or if the concentration is justified by an overriding public interest (Section 42 GWB). An authorization may be granted subject to conditions and obligations. The Minister had four months to decide on the application. Under the 9th amendment to the GWB of March 2017, Section 42(4) now specifies that the request is deemed to be rejected where six months lapse without any ministerial order being taken.

Global Competition Law

332. Proceedings before the FCO

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise

Les notions juridiques connexes

332. Proceedings before the FCO

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise