New Guidance on Substantive Merger Control

Today the Bundeskartellamt has published a new guidance document which describes the concept it applies in examining corporate mergers.

Every year the competition authority has to decide on around 1,000 merger projects. In merger control proceedings the Bundeskartellamt examines whether a merger will create or strengthen a dominant position. The guidance document explains the criteria by which the authority decides whether a project can be cleared or whether it raises competition concerns. It thus serves as an important guide for companies and their advisors. The revised guidance document replaces the previous document which was published in 2000 under the title "Principles of Interpretation of Market Dominance".

Andreas Mundt, President of the Bundeskartellamt, stated: "There has been a continual development in the Bundeskartellamt's merger control practice in recent years. Sharper focus has been given to economic findings and concepts in the decision-making process. This development is reflected in the Bundeskartellamt's new Guidance on Substantive Merger Control".

Following its invitation for consultation on its draft guidance document, the Bundeskartellamt has received numerous comments on this document from within Germany and abroad. Several comments have been considered and some points in the draft revised accordingly.

In contrast to the previous "Principles of Interpretation of Market Dominance", the new document 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 examination is to determine how the merger will change market conditions and whether this will be harmful to competition. The guidance document also explains in detail the economic concepts underlying the theories of competitive harm.

The bill introducing the 8th Amendment of the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB) which was passed by the German government this week provides for the prohibition criterion in German merger control to be aligned with the European merger control regime. This means that the SIEC test ("significant impediment to effective competition") will replace the dominance test in German merger control. However, whether a merger creates or strengthens a dominant position will still be maintained as the key standard example of a significant impediment to effective competition. The guidance document will thus remain significant after the introduction of the SIEC test.

The guidance document on dominance in merger control is available for download on the website of the Bundeskartellamt. Here you can also find information on the preceding consultation on the draft guidance document.