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Germany: Legislation introduces value-based merger thresholds

By  |  April 9, 2017

On March 9, 2017, the Bundestag (the lower house of the German Parliament) passed the 9th amendment of the German Competition Act. The amendment also passed the Bundesrat (the upper house of the German Parliament) on March 31, 2017. The amendment mainly serves to transpose the Antitrust Damages Directive (EU Damages Directive), but also introduces some Germany-specific changes, such as a new value-based merger control threshold and the legal succession with regard to penalties.

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    The new law shall come into force once it is promulgated, which may happen in April 2017, but an exact date is not yet known. However, the rules transposing the Damages Directive shall come into force retroactively on 27 December 2016.

    One major change relates to the German merger control regime. The amendment introduces a value-based threshold. Such a value-based threshold is introduced due to a perceived gap, for which the Facebook/WhatsApp case is mentioned as an example. Merger Control proceedings should also apply in dynamic markets where the turnover would not justify a filing, as the turnover may not be an indicator of the market presence. Merger Control would apply in such markets to protect innovation, as the high purchase price indicates an innovative business practice. Examples of such cases are data-driven businesses or pharmaceutical and technology markets where the innovative technology has already been developed but a product is not yet on the market.

    Concerning the new threshold, a notification shall become necessary if current German merger control thresholds are not met and:

    • The combined worldwide turnover of the participating undertakings is more than €500 million.
    • One participant undertaking had a turnover of more than €25 million in Germany in the last business year prior to the concentration.
    • Neither the undertaking to be acquired nor another participant undertaking had a turnover of more than €5 million in Germany in the last business year prior to the concentration.
    • The value of the consideration for the concentration is more than €400 million, and
    • The undertaking to be acquired is active to a significant extent in Germany.

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