Jens Steger Analyzes the German Bundeskartellamt’s New Pamphlet on the Handling of Foreign-to-Foreign Mergers
Jens Steger analyzes the latest pamphlet issued by the German Bundeskartellamt, which provides guidance on foreign-to-foreign mergers, in the prominent German newspaper Börsen Zeitung. This finalized guidance was published in order to help companies determine whether a proposed merger has so-called “domestic effects” within Germany and is therefore subject to a merger control notification with the Bundeskartellamt. The guidance replaces an existing guidance which dates as of 1999. According to the German Act Against Restraints of Competition, a merger is subject to German merger control if: (i) the combined aggregate global turnover of the companies involved exceeds € 500m; (ii) the domestic (German) turnover of at least one company involved exceeds € 25m; (iii) that of another company involved exceeds € 5m per year; and (iv) the merger has a “significant effect” within Germany (the so called “effects doctrine” (“Auswirkungsprinzip”) in § 130 II ARC.). Generally, German merger control law applies to all mergers having a “significant effect” within Germany, even if the merger itself only happens abroad. The new guidance does not amend German statutory law, but specifies which effects on the German market are to be qualified as “significant effects” on the German market triggering a notification requirement, according to the Bundeskartellamt. Steger analyzes the new guidance paper critically in a short overview and notes that several typical M&A constellations, such as private equity transactions and joint venture activities, appear not be covered by the new guidance; those M&A activities should always be viewed in the light of international (and German) merger control law if the transaction triggers a merger control notification. If companies misjudge the need for a merger control notification with the Bundeskartellamt, the authority can issue high fines to the companies and declare the M&A contracts invalid until the final clearance decision of the authority.