The Bundeskartellamt has published its "Draft Guidance on Substantive Merger Control" for consultation. This guidance document is to replace the previous document which was published in 2000 under the title "Principles of Interpretation of Market Dominance." The draft document is available for download on the Bundeskartellamt's website. A courtesy translation of the text is also available:

http://www.bundeskartellamt.de/wEnglisch/download/pdf/20110721-Guidance_Merger_Control.pdf

Comments on the draft guidance can be submitted until 21 September 2011. A press release of the Bundeskartellamt is also available in English: http://www.bundeskartellamt.de/wEnglisch/News/press/2011_07_21.php

The draft guidance describes the concept applied by the Bundeskartellamt in its examination of corporate mergers. In other words, it explains how the Bundeskartellamt examines whether a merger will create or strengthen a dominant position. The document therefore focuses on the substantive test in merger control which is used to decide whether a merger project should be cleared or prohibited.

The document is intended to provide guidance to companies and their legal or economic advisers. On its basis they can better predict which issues the Bundeskartellamt will be likely to focus on in its investigation. Companies will be able to take this into consideration before notifying a merger project. As a result they will be able to better evaluate whether or to what extent their project might raise competition concerns in the Bundeskartellamt's assessment.

In contrast to the previous guidance document, the new draft places greater emphasis on the necessary appraisal of all relevant conditions in the market. It does not employ a checklist approach. Instead, the focus of the examination is to determine how the merger will change market conditions and whether this will be harmful to competition. In order to answer this question it is necessary to determine on a case by case basis which characteristics of the market are relevant in a particular case and what weight has to be accorded to them in the analysis. Only an overall appraisal of all aspects can reveal what changes a merger will bring about and how this will affect competition in the market concerned. This approach is reflected in the guidance document, which is a substantial overhaul of the 2000 document. It also builds on the economic concepts underlying the respective theories of competitive harm.

The competition authorities of several other countries have also recently revised their merger guidelines. In spite of the broad common ground, it is appropriate for the individual authorities to have their own documents. In this way, the concepts applied can be illustrated by national decisional practice. Guidance documents also need to take national case-law into account, hence the many references to decisions of the Bundeskartellamt and judgments of the courts in the draft document.

In the context of the upcoming amendment of the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB) a particular focus of the discussion is whether the prohibition criterion in German merger control should be harmonized with the European merger control regulation. This would mean that the SIEC test (“significant impediment to effective competition”) would replace the dominance test. The current revision of the guidance document is timely because it sums up the current state of the Bundeskartellamt’s practice in this area and contributes to the discussion surrounding the upcoming revision of German competition law. Whether a merger would create or strengthen a dominant position would still remain a standard example for the SIEC test.

The Bundeskartellamt will publish the final version of its guidance document on its website in autumn after consultation and further review.

Comments on the guidance document can be submitted until 21 September 2011 to leitfaden@bundeskartellamt.bund.de.