German and Austrian Merger Control: Joint Guidelines on the New “Size-of-Transaction” Tests

Sullivan & Cromwell LLP - July 23, 2018

On July 9, 2018, the German and the Austrian competition authorities published—for the first time jointly—jurisdictional merger control guidelines on how to calculate the transaction value and assess the local nexus requirements under the size-of-transaction tests introduced in Germany and Austria in June and November last year. The recently introduced tests, which supplement the established turnover thresholds, aim to adapt the German and Austrian merger control regimes to the digital economy and innovation-driven industries, including in particular tech and pharma, where certain transactions involving high-profile start-ups and other targets with no or limited revenues previously escaped review (see, e.g., Facebook’s USD 19 billion acquisition of WhatsApp that fell below the German filing thresholds).

Even though the joint guidelines provide welcome practical guidance and contribute to greater legal certainty, they remain unclear in several important respects. The authorities recognize this in committing to update the guidelines going forward. Parties active in the relevant industries are therefore well advised to carefully consider early on how the recently introduced size-of-transaction tests apply in the specific context of their transactions. Moreover, and regardless of whether a notification is ultimately required, parties should document in detail their method of calculating the transaction value in the course of their multi-jurisdictional filing analyses.