German Merger Control: German Federal Cartel Office Publishes Draft Guidelines on Jurisdiction for Merger Review

Sullivan & Cromwell LLP - 6 December 2013

On 5 December 2013, the German Federal Cartel Office (Bundeskartellamt) published new draft guidelines on its jurisdiction to review M&A transactions.

Under German law, a transaction does not automatically require notification to, and prior approval by, the Federal Cartel Office if the parties’ turnover meets the German filing thresholds. Transactions are notifiable (and require approval) only if they have sufficient “domestic effect” on competition, i.e., sufficient nexus to Germany. This sets German merger control apart from the EU merger control rules which apply extra-territorially and can subject transactions to merger review that have no effect on competition in the EU, but where the parties’ turnover meets the applicable filing thresholds.

The draft guidelines that the Federal Cartel Office has released for public consultation are intended to provide guidance on the concept of “domestic effect”. The Federal Cartel Office hopes that this will enable parties to a proposed merger to determine more easily and quickly whether their transaction requires notification and approval in Germany. This is particularly relevant for foreign-to-foreign transactions.

The draft guidelines confirm that the formation of joint ventures will not require merger control approval in Germany if (i) the joint venture is not, and will not be, active in Germany (or a wider geographic market that includes Germany) and (ii) the parents, despite meeting the filing thresholds in Germany, do not compete on any market in Germany (or a wider geographic market that includes Germany).

The Federal Cartel Office has invited comments on the draft guidelines by 30 January 2014. It intends to adopt the new guidelines thereafter, at which time they will replace the current guidelines on “domestic effect” that have been in force since 1999.