Apart from enforcing the ban on cartels and the control of abusive pratices by dominant companies as well as providing legal protection in award procedures for public contracts, the Bundeskartellamt is also responsible for controlling corporate mergers in Germany, so-called merger control. Unlike the prohibition of cartels and of abusive practices, which was already embodied in the Act against Restraints of Competition (ARC) when it came into force in 1958, the provisions on merger control were only adopted in 1973.

In principle, companies in Germany and Europe can merge with each other in various ways. Such opportunities are intrinsic to entrepreneurial freedom in a market economy system because corporate mergers can have a positive effect on competition and markets. By forming mergers companies can reorganize their areas of business, increase their innovation potential and so stimulate competition in general. On the other hand, corporate mergers can also harm competition if they result in a substantial increase in the market power of companies. For example, a merger can lead to a major competitor being eliminated from the market, giving the market leader a market position which would allow him to raise his prices or limit the quantity of supply or quality of his goods.

Such negative effects on competition can be caused by one company which, as a result of a merger, exclusively dominates a market (so-called single-firm dominance) or by several companies which together dominate a market (so-called collective market dominance).

In order to prevent any possible negative effects on competition, ex ante, corporate mergers are subject to merger control by the competition authorities. Under merger control the competition authorities examine what effect a merger might have on competition in the affected market(s). Whether the Bundeskartellamt or the European Commission, as the European competition authority, is the competent authority to examine the merger will depend on the turnover of the respective companies.

Companies whose turnover exceeds the thresholds stated in the ARC have to notify any merger project to the Bundeskartellamt. If all the companies participating in a merger jointly achieve a worldwide turnover of more than € 500 million and at least two of the companies both achieve substantial turnover in Germany, one of them achieving a turnover of more than € 25 million and another company achieving a turnover of more than € 5 million, the companies have to notify the merger to the Bundeskartellamt. If one company belongs to a group of companies, the Bundeskartellamt has to take the turnover of the entire group into consideration. In this way account is taken of the total available economic efficiency of the participating companies in an examination of the possible effects on competition.

Relations between companies which enable a company to exercise a competitively significant influence on the behaviour of another company are considered to be a concentration within the meaning of the ARC. Under the provisions of the ARC, a concentration arises under the following circumstances:

• acquisition of shares: acquisition of at least 25 per cent of the capital or of the voting rights,
• acquisition of assets: acquisition of the assets or of a substantial part of the assets of another company,
• acquisition of control: acquisition of the control of another company.
• Any other relation between companies in which a company can exercise a competitively significant influence on another company is considered to constitute a concentration within the meaning of the ARC (so-called catch-all clause of “competitively significant influence”).

Until a notified merger is cleared by the Bundeskartellamt the participating companies may not merge with one another (so-called prohibition of putting a concentration into effect). Violations of the prohibition of putting a concentration into effect constitute an administrative offence, which can be punished by a fine.(Further information is available in the Bundeskartellamt’s Guidelines on the setting of fines.)

Further information on merger control is available from the Information leaflet on the German control of concentrations.

Any merger projects with a Community dimension are examined by the European Commission in Brussels. A merger has a Community dimension if certain turnover thresholds, which are well above those of the ARC, are exceeded. These are specified in the European Merger Control Regulation.

 

A brief overview of the relevant provisions of the European Merger Control Regulation is given in the Bundeskartellamt’s Factsheet on the Scope of EU Merger Control. Further information is available from the European Commission.

The overwhelming majority of mergers do not cause competition problems and can therefore be cleared informally within a time-frame of one month in so-called preliminary examination proceedings (so-called first phase). In individual cases a merger can also improve competitive conditions in other markets, which outweigh the disadvantages of market dominance. In this case the merger can also be cleared.

If there is any indication that the merger might cause competitive problems which cannot be cleared during the preliminary examination period, formal main examination proceedings are initiated (so-called second phase), which can take a further three months, extending the time-frame to four months in total from the date of notification. This time-limit can be extended with the approval of the companies involved.

In the main examination proceedings the Bundeskartellamt formally decides whether a merger can be cleared or has to be prohibited. Clearance is granted if the competition concerns could be dispelled in the main examination proceedings. Should the investigations reveal that the merger would create or strengthen a dominant position of the merging companies, the merger generally has to be prohibited.

However, a merger can be cleared subject to certain obligations or conditions, e.g. an otherwise dominant company can be obliged to sell parts of the company or business divisions to competitors. (For further information see the model texts for commitments and trustee mandate).

The formal decisions in the main examination proceedings are published in full – excluding business secrets (see List of Bundeskartellamt decisions).

Case summaries are provided which refer to important decisions taken in the so-called first phase. 

The Activity Reports present an overview of the Bundeskartellamt’s case practice.

Further information and practical examples of corporate mergers examined by the Bundeskartellamt can be found e.g. in the Bundeskartellamt’s Information Brochure.

Merger control is based on the following provisions and information leaflets:

Provisions:

• Act against Restraints of Competition
• Bundeskartellamt’s Guidelines on the setting of fines
• Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (EC Merger Regulation)

Information leaflets:

Click here for the information leaflets on merger control.

 

 

The Bundeskartellamt undertakes no guarantee that the content of the legal provisions linked to its website is up-to-date.