The Merger Control Review: Germany


While Germany is the largest economy in Europe, the turnover thresholds that trigger a merger filing requirement in Germany are some of the lowest across the continent. Even though the near-final draft of the tenth amendment (the 10th Amendment) to the German Act against Restraints of Competition (ARC), which is expected to come into force by the end of 2020 or early 2021, aims to increase the lower of the two national turnover thresholds from €5 million to €10 million, the threshold remains very low compared to other jurisdictions.

In addition to the low thresholds, the types of transactions that are caught by the German merger control regime go significantly beyond the usual 'acquisition of control', which is the applicable test in the vast majority of other European jurisdictions (along with the EC Merger Regulation2 (ECMR) itself). As a result, unless subject to the ECMR, almost every significant European transaction that involves businesses with sales in or into Germany results in a German merger filing, with the German Federal Cartel Office (FCO) receiving well beyond 1,000 merger filings each year.

Although the FCO is a very experienced authority that never shies away from taking a hard line if a transaction raises serious competition concerns, its approach is generally pragmatic and cooperative. The FCO's divisions are each responsible for certain industries. Thus, parties can generally expect decision makers with sector-specific knowledge and experience. Also, the formal requirements for submitting a complete notification in unproblematic cases are less burdensome than in many other jurisdictions.

In cases that raise serious competition concerns, the FCO's approach tends to be more legalistic and focused on documentary and empirical evidence than in other major jurisdictions where economic theories increasingly appear to dominate merger reviews. Even if this is only a subtle difference – the FCO certainly employs economic theories and involves its chief economist team – it can make investigations less data-intense. On the other hand, it can also lead to parties fearing that the authority does not sufficiently understand commercial realities.

All in all, the German merger control regime, although differing in many respects from regimes in other countries, strikes a strong working balance between an unusually wide scope of applicability on the one hand and a flexible and practical review on the other.

Regarding its industry focus, the FCO continues to show an active interest in the numerous aspects of e-commerce and online markets, big data, platform markets, network effects, online marketing and others. Companies involved in transactions that require merger clearance in Germany are well advised to consider the implications of German merger control at an early stage of their contemplated transactions.

Year in review

2019 saw an average level of merger control enforcement in comparison with previous years. With the total number of merger filings submitted to the FCO increasing slightly to approximately 1,400 in 2019,3 the FCO issued six decisions following in-depth Phase II reviews. While two Phase II mergers were cleared (unconditionally), four mergers were prohibited. In five other cases, merger filings were withdrawn by the parties after the FCO informed them about its competition concerns during the merger review. In cases that may raise serious competition concerns, the FCO continues to be prepared to engage in detailed pre-filing consultations (see Section IV). The following overview highlights some recent key cases and developments in German merger control.

i Online platforms and big data

E-commerce and online content, including online platforms, continued to be an important focus of the FCO's merger reviews. However, 2019 did not bring any significant cases or new developments with regard to actual cases but provided the FCO with opportunities to apply the experience it has gained in previous years.

ii Loomis/Ziemann

In a proposed transaction involving two companies primarily active in cash handling services, the FCO prohibited the acquisition of Germany-based Ziemann by Sweden-based Loomis.4 Even though the FCO acknowledged that the combined entity would not have reached a dominant position in any relevant market due to the existence of strong competitor and market incumbent Prosegur (as well as other established, albeit smaller, regional players) to which customers could have easily switched, it based its prohibition decision exclusively on the mere existence of unilateral effects due to the alleged high concentration in the market, although it was undisputed that the parties were not each other's closest competitor (which was Prosegur). Potential coordinated effects were examined only marginally and as a mere subsidiary argument.

Should this become the new line of merger enforcement, it would considerably widen the scope of what is considered a 'gap case' under the significant impediment of effective competition (SIEC) test.

In its CK Hutchison decision,5 the European Court of Justice significantly raised the bar for finding unilateral effects in concentrated markets. It will be interesting to see what impact this decision will have on the German (and European) decisional practice.

iii Deutsche Telekom/EWE

In December 2019, the FCO rendered two decisions concerning the proposed creation of a joint venture between Deutsche Telekom and EWE, aiming to jointly build a fibre optic network in north-western Germany and jointly market wholesale access to the network.6

The FCO investigated the joint venture in two parallel proceedings: a merger review concerning the concentration as such as well as a behavioural investigation pursuant to Section 1 of the ARC (which is the national equivalent of Article 101 of the Treaty on the Functioning of the European Union) concerning potential collusion between the parties outside the concrete scope of the joint venture. Deutsche Telekom was the clear incumbent and EWE the strong number two in the relevant markets.

Remedies under the German merger control regime cannot require permanent monitoring by the FCO (or a monitoring trustee) and, therefore, must principally not be of behavioural, but rather structural, nature.

In a first step, the FCO imposed a range of behavioural remedies as part of the review, pursuant to Section 1 of the ARC, although those remedies also addressed concerns resulting from the concentration as such. In a second step, the FCO granted unconditional approval under the merger review by making reference to the remedies under the behavioural review.

Both decisions were appealed by intervening parties, inter alia, on the grounds of whether the FCO circumvented the prohibition to impose behavioural remedies in merger cases by imposing behavioural remedies that address structural issues of the merger as part of the parallel behavioural investigation.

iv CRRC/Vossloh

In April 2020, the FCO released a case report announcing a merger clearance concerning the acquisition of German Vossloh by Chinese state-owned CRRC,7 both active in the market for the manufacture of shunting locomotives. As the clearance decision has not yet been published, only two points are noted. First, the FCO reviewed market share statistics for the past five years instead of only the highest actual market shares in the year prior to the merger to capture the volatility of the shunting locomotives market. Second, it also increased the time period taken into account for its market prognosis from the usual three to five years to five to ten years, which is surprising since the predictability of marketplace developments decreases appreciably the longer the period considered.

The merger control regime

i Jurisdiction

The German merger control regime provides for a mandatory pre-merger filing requirement if:

  1. the transaction constitutes a concentration pursuant to Section 37 of the ARC;
  2. the turnover and transaction value thresholds of Section 35(1) and (1a) of the ARC are met; and
  3. none of the exemptions provided for in Section 35(2) of the ARC apply.


Unlike in many other jurisdictions, German merger control not only covers the acquisition of control8 (solely or jointly), but also:

  1. the mere acquisition of at least 25 per cent of either the capital or voting rights in another company, irrespective of whether or not the shareholding will confer control or a significant influence over the target (all existing shareholdings of all entities of the purchaser's group have to be taken into account); and
  2. the acquisition of shares or voting rights even below the threshold of 25 per cent if the transaction results in the acquisition of a 'competitively significant influence'. Competitively significant influence is less than control but generally requires the acquisition of significant influence through additional rights (plus factors) such as (1) information rights in respect of the operative business of the target, (2) the right to nominate members of the management board, the board of directors or the supervisory board, or (3) de facto blocking minority on annual shareholder meetings. Such influence is competitively significant if the purchaser is or controls a competitor of the target, or if the purchaser or any of its group companies is party to a significant vertical supply relationship with the target.

Turnover thresholds

The turnover thresholds9 (referring to the previous full business year) are as follows:

  1. the combined worldwide turnover of all undertakings concerned exceeded €500 million;
  2. one undertaking concerned had a turnover exceeding €25 million within Germany; and
  3. at least one further undertaking concerned had a turnover in Germany exceeding €5 million.

The 10th Amendment intends to increase the third turnover threshold from €5 million to €10 million. However, this threshold is still very low in comparison with other EU Member States and, in fact, to a large extent, the increase compensates for past inflation.

Transaction value threshold

The transaction value threshold is structured similarly to the size-of-transaction test under US merger control law and will be triggered if the transaction value exceeds €400 million and the target has 'significant' business activities in Germany (local nexus). It is, however, combined with turnover thresholds and will apply if:

  1. the combined worldwide turnover of all undertakings concerned exceeded €500 million;
  2. in Germany:
    • one of the undertakings concerned had turnover of more than €25 million; and
    • neither the target nor any other undertaking concerned had turnover of more than €5 million;
  3. the value of the consideration paid in return for the transaction is more than €400 million; and
  4. the target has significant activities in Germany.

The FCO and the Austrian Federal Competition Authority issued the joint 'Guidance on Transaction Value Thresholds for Mandatory Pre-merger Notification (Section 35(1a) GWB and Section 9(4) KartG)' in July 2018.10 Additionally, the FCO recently resorted to the transaction value threshold to assume its jurisdiction in the Paypal/Honey case concerning a free browser extension that automatically finds and applies promotional and discount codes in online shops.11

Application of reduced turnover thresholds based on FCO injunction

The 10th Amendment intends to provide the FCO with a tool to temporarily lower the turnover thresholds for individual undertakings in individual economic sectors to be determined by the FCO by way of an 'injunction to notify future mergers' (injunction) if the following criteria are met:

  1. the worldwide turnover of the undertaking addressed by the injunction exceeded €250 million in the previous full business year;
  2. the worldwide turnover of the undertaking to be acquired exceeded €2 million in the previous full business year and more than two-thirds of that turnover were generated in Germany; and
  3. there is an indication that future mergers involving the undertaking addressed by the injunction would restrict competition in Germany in the economic sectors determined in the injunction.

According to the legislative documentation, such indication can, for example, be deduced (1) from sector inquiry findings or from the fact that (2) a dominant undertaking has formed a pattern of consecutively acquiring smaller competitors, (3) an undertaking in a sensitive economic sector or an already concentrated market acquires a potentially threatening newcomer or (4) there are complaints by competitors, customers or consumers. While the principal concern is understandable, the thresholds appear to be extremely low and – if finally implemented – it remains to be seen how the FCO will apply these in practice.


If the same parties enter into two or more transactions concerning the acquisition of parts of a company within a two-year period, these transactions will be treated as a single concentration. The thresholds will apply to the transaction as a whole, to ensure that parties do not circumvent a notification obligation by slicing a deal into staged transactions, each falling below the relevant threshold.

If the transaction also exceeds the turnover thresholds of the ECMR (see the EU chapter), a notification has to be made to the European Commission only, without the need for an additional review in Germany (the 'one-stop shop' principle). However, if a transaction meets the ECMR turnover thresholds but does not qualify as a concentration under the ECMR (e.g., in the case of a non-controlling interest above 25 per cent or a non-full-function joint venture), German merger control remains applicable.


The ARC provides for two exemptions. A filing will not be required if:

  1. one of the participating companies is independent (i.e., not under the control of another company) and has achieved a worldwide turnover of less than €10 million in the previous business year; or
  2. the concentration has no 'domestic effects' or, in other words, no impact on the German market. Given that the German merger control regime requires at least two undertakings concerned generating turnover in Germany, this exemption only plays a role in joint venture cases where both joint venture partners, but not the joint venture itself, generate turnover in Germany.

Even though it is not an exemption from the formal filing requirement but rather a restriction of the FCO's scope for assessing competition concerns, there is still an exemption when assessing mergers affecting de minimis markets (i.e., markets in existence for more than five years, with total turnover of less than €15 million in Germany in the previous calendar year).12 The 10th Amendment intends to increase this threshold to €20 million. Mergers meeting the exemption criteria need to be notified if they meet the relevant thresholds but cannot be blocked to the extent that de minimis markets are affected.

ii Consequences of completion without merger clearance

Concentrations that are subject to merger clearance in Germany must not be completed prior to having obtained clearance.13 The consequences of infringing the filing obligation are threefold.

  1. A transaction that is completed before having obtained clearance is deemed to be invalid as far as Germany is affected. In particular, the acquisition of shares in German companies and the acquisition of assets located in Germany are invalid until clearance is obtained. In addition, intellectual property rights of the target are unenforceable in Germany. To remedy a legally defective acquisition and to obtain retroactive effect, the parties are required to submit a post-completion notice containing all details required in a pre-merger notification. The FCO will then assess the competitive issues triggered by the proposed transaction directly as part of a 'merger dissolution procedure' without any statutory deadlines running.
  2. The parties are subject to fines that can theoretically range to up to 10 per cent of the parties' worldwide group turnover in the previous business year. In practice, the fines have been well below this threshold, but can still be significant depending on the circumstances.
  3. Finally, infringing the filing obligation can – if detected – seriously affect the parties' relationship with the authority, which will make future filings much more difficult.

iii Procedure

There is no filing deadline. The filing can be made as soon as the parties to the concentration can show a good faith intention to complete the transaction.

There is also no official filing form that needs to be completed. Instead, German notifications are submitted in the form of a letter that has to include certain information required by law and can, following the implementation of the 10th Amendment, be submitted online (by German attorneys). The parties also have to submit a mandatory post-completion notice to the FCO, which needs to be filed without undue delay following completion of the transaction. This is, however, a mere formality and shall be abolished by the 10th Amendment.

The fact that a filing has been received (including the names of the parties and a brief description of the affected markets) will be published on the FCO's website shortly after the submission of the filing.

The German merger control regime also provides for a potential stop-the-clock, with an automatic extension of the deadlines, upon submission of a remedy proposal, similar to that which occurs under the EU merger control regime. Once notified, the vast majority of cases are cleared after a Phase I inquiry lasting a maximum of one month. In straightforward cases, the FCO is generally prepared to clear the transaction even well before expiry of the Phase I one-month waiting period. Although this is entirely within the discretion of the FCO and also depends on the workload of the case handler, it is not uncommon to receive early clearance after two or three weeks, or even earlier.

The maximum time frame for an in-depth review, encompassing Phase I and Phase II, is four months from the time of receipt of the complete notification. The four-month period is extended by one month, to five months, if remedies are offered. With the parties' consent, the time frame can be extended further without any given limit. The 10th Amendment aims to change these provisions by (1) extending the four- and five-month periods by one month, to five and six months, and (2) limiting the extendability with the parties' consent to a maximum of one month.

In cases that give rise to competition concerns, the FCO must inform the notifying parties within one month of receipt of the complete notification that it is initiating an in-depth investigation of the proposed transaction. In the absence of such communication prior to the end of Phase I, the proposed merger is deemed to be cleared by time lapse (which never occurs in practice). Phase I clearances are communicated by standard clearance letters merely informing the parties that the requirements for a prohibition are not met without containing any substantive reasons or competitive assessment. A reasoned decision will only be issued following an in-depth Phase II investigation. As opposed to Phase I decisions, Phase II decisions are published by the FCO (in confidential versions agreed upon with the parties) and can be appealed before the Higher Regional Court of Düsseldorf.

In the case of a prohibition decision, the parties also have the option to apply for an overruling approval by the Federal Minister for Economic Affairs and Energy if the negative effects of the merger on competition are outweighed by benefits to the economy as a whole or if the merger is justified by an overriding public interest. The ministerial decision may include conditions imposed on the parties. Following the EDEKA/Kaiser's Tengelmann ministerial authorisation and the dispute about the lack of transparency, the ninth amendment provided for a faster and more transparent procedure.

Third parties, such as competitors, suppliers and customers of the merging parties, generally have the opportunity to comment on a proposed merger in the context of information requests issued by the FCO in the course of its investigation, or to submit unsolicited comments and concerns.

Additionally, third parties whose economic interests will be substantially affected by a decision of the FCO may formally intervene in the proceedings upon application and admission by the authority. Once admitted, third-party interveners have the right to be heard, to submit comments on the proceeding and to have access to the non-confidential part of the authority's file. They also have the right to appeal the FCO's decision.

The FCO is among the most active authorities in the EU's referral system: Article 4(4) and 4(5) of the ECMR provide for the possibility of pre-notification referrals at the initiative of the notifying parties, while Articles 9 and 22 provide for the (often problematic) possibility of post-notification referrals triggered by Member States – an option used by the FCO on a regular basis.

iv Substantive assessment

The FCO principally applies the same substantive test as the European Commission; that is, whether the proposed transaction would lead to a SIEC; in particular, by means of the 'creation or strengthening of a dominant position'.

According to its Guidance on Substantive Merger Control of March 2012, the FCO first distinguishes between three broad categories of mergers: horizontal, vertical and conglomerate mergers. For each of these three categories, in line with the European Commission's Horizontal and Non-Horizontal Guidelines, the German competition authority distinguishes again between single and collective dominance.

For a finding of single and collective dominance, the German merger control regime provides for the following – rebuttable – presumptions: a single undertaking has a share of at least 40 per cent of the market; three or fewer undertakings possess an aggregate share of at least 50 per cent of the market; or five or fewer companies hold a combined market share of at least two-thirds.

However, in the FCO's decision practice, these presumptions play a very limited role, with the authority reviewing the competitive effects brought about by the proposed merger in their overall context. In practice, the presumptions primarily provide an indication as to whether a deal requires closer scrutiny.

The cooperative aspects of joint ventures will, in addition, be examined under the rules relating to anticompetitive agreements (Section 1 of the ARC).

A merger that leads to a SIEC will not be prohibited if the requirements of the balancing clause are met (i.e., if the companies show pro-competitive effects in a different market that outweigh the negative effects on the affected market). For the pro-competitive effects presented by the parties to be taken into account, they must be of a structural nature.

When the FCO reaches the preliminary conclusion that a concentration raises competition concerns, the parties can offer commitments in Phase II to secure conditional approval. Conditions precedent (i.e., conditions that must be satisfied before the actual merger may be implemented, such as upfront buyer solutions) are generally preferred by the FCO.

The type of remedy most likely to be accepted by the FCO is a structural remedy, namely a divestiture that removes the competition concerns. Even in cases where such structural remedy is not possible, the parties will likely face resistance from the authority in accepting any other remedy solution. While behavioural remedies are not generally impermissible, they are only (reluctantly) accepted if they are equivalent to divestitures in their effects and do not require constant monitoring by the FCO. Not surprisingly, it therefore continues to be difficult to convince the authority not to insist on structural remedies as a condition precedent.

In addition, certain transactions may not only require clearance by the FCO but also other regulatory approvals based on special rules for – among others – foreign investments, telecommunications or media. These rules apply in addition to the general merger control regime, are administered by special agencies and authorities, and can impose suspensory clearance requirements as well.

Other strategic considerations

The wide concept of reportable transactions under the German merger control regime, which also covers non-controlling minority interests below 50 per cent and in certain cases even below 25 per cent, regularly results in companies being required to notify transactions in Germany even though no other competition authorities are competent to review the transaction. Despite the far-reaching German merger control regime, there is still room for transaction structures that do not trigger a German merger filing requirement. For example, it may be a suitable strategy to first merge new businesses before they are acquired by an investor if only the investor would trigger the relevant merger control thresholds.

While pre-filing contacts are neither mandatory nor generally expected by the FCO, they can be very helpful in addressing and overcoming potential competition issues early on or in securing a Phase I clearance where otherwise the FCO would have to open a Phase II review simply to have enough time to assess the transaction. Such pre-filing contacts are handled by the FCO on a strictly confidential basis and are only shared with other competition authorities upon the parties' approval.

The FCO has a close involvement with, and a leading role in, both the European Competition Network and the International Competition Network, whose chair is Andreas Mundt, the president of the FCO. The close communications between the authorities require a coherent and consistent merger filing strategy by the parties in cases that are subject to merger filings in multiple jurisdictions.

Empirical and documentary evidence play an important role in German merger control. While the German merger control rules do not provide for a mandatory submission of internal documents prepared in connection with a transaction, such documents can be requested in an information request and reviewed by the FCO during the course of the merger review. Thus, utmost care is required when drafting internal documents in preparation for the transaction and presenting it to either boards or investors; in particular, when it comes to the expected effects of the transaction. In transactions that might give rise to competition concerns, all relevant draft documentation should be thoroughly prepared by involving operations and management and should, ideally, be reviewed by in-house or external antitrust counsel before finalisation to avoid any negative impact on obtaining merger clearance.

The FCO acts independently and free from political influence. Attempts to lobby or even to exercise political influence almost always proves to be counterproductive.

As third-party interveners can play a strong role in merger proceedings, it can be an attractive proposition to become an intervener to challenge (certain parts of) the transaction, resulting in remedies that may form attractive acquisition opportunities.

Outlook and conclusions

The 10th Amendment will intensify the FCO's already prevailing focus on internet, online and big data issues. This can be seen not only from its title, 'Digitisation Law', and its explicitly stated efforts to tackle challenges particularly arising from digitisation and digital platforms, but also from its most recent and prominent cases against Facebook and Amazon in 2019. Even though the corresponding amendments to the ARC and the Facebook and Amazon cases relate to the abuse of dominance, they send a clear message on the FCO's focus of attention in its overall work, including merger control. Additionally, the FCO completed a sector review on comparison portals in April 2019, initiated another sector review on the gathering, analysis and output of user ratings in May 2019, and published a joint study with the French Autorité de la concurrence on algorithms and competition in November 2019. Transactions involving online businesses should, therefore, be prepared thoroughly with a particular view to the assessment of relevant customer data, network effects and innovations. Confidential pre-filing contacts may be recommendable to avoid surprises during the actual review process.

It remains to be seen to what extent the current draft of the 10th Amendment will be implemented. In particular, the newly proposed Section 39a of the ARC ('injunction to notify future mergers') does not blend in well with the prevailing structure of the German (and European) merger control regime and, hence, already gives rise to heated discussions.

The FCO will remain active in requesting referrals back from the European Commission to national level if the main effects of the transaction are to be expected in Germany.

As regards the substantive review, while the role of economists will continue to grow, it is also likely that it will remain less relevant than in other jurisdictions, with documentary and empirical evidence remaining important factors in the investigation.



1 Alexander Rinne is a partner and Alexander Zyrewitz is an associate at Milbank LLP.

2 Council Regulation (EC) No 139/2004.

3 This number is expected to decrease by approximately 20 per cent through the envisaged increase of the turnover threshold.

4 FCO, decision of 17 December 2019, B9-80/19 – Loomis/Ziemann.

5 European Court of Justice, decision of 28 May 2020, T-399/16 – CK Telecoms UK Investments v. Commission.

6 FCO, decision of 30 December 2019, B7-21/18 – Deutsche Telekom/EWE.

7 FCO, decision of 27 April 2020, B4-115/19 – CRRC/Vossloh.

8 The definition of control closely follows the definition contained in the ECMR and the Consolidated Jurisdictional Notice under Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings.

9 Special rules apply for the calculation of the turnover of financial services providers, insurance companies, companies active in the media sector (television broadcasting, radio, newspapers and periodicals) and certain trading activities. Companies operating in the field of publication, production and distribution of newspapers and magazines are subject to a turnover multiplier.

12 Section 36(1), No. 2 of the ARC.

13 In line with the EU's merger control rules, the eighth amendment introduced an exception to the suspension obligation according to which public takeover bids or a series of transactions in securities may be implemented prior to clearance, provided that the transaction is notified to the FCO without delay and the acquirer does not exercise the voting rights attached to the securities in question or does so only on the basis of an exemption granted by the FCO.

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