Part 1: Unburdening small and medium-sized companies
The German Act Against Restraints of Competition (“Competition Act”) has been amended to address challenges of the digital economy, to make merger control more efficient for small and medium-sized companies, and to implement EU legislation. This reform of January 2021 concerns several aspects that are of relevance to foreign investors. Those aimed at unburdening small and medium-sized companies will be outlined in this newsletter. A subsequent newsletter will give an overview of the tightened antitrust rules for “Big Data” companies. All our newsletters are also available for download on our website at www.arqis.jp.
1. Lower filing thresholds in merger control
Following the increase of turnover thresholds, a deal must now be notified if
– the combined worldwide turnover exceeds EUR 500 million,
– one party to the concentration has turnover in Germany of more than EUR 50 million (previously: EUR 25 million) and
– another party has turnover in Germany of more than EUR 17.5 million (previously: EUR 5 million).
This reform is expected to reduce the number of new notifications to the Federal Cartel Office (“Bundeskartellamt”) by at least 30 % per year. It has been effective since January 2021, meaning that it applies to any deal that is not yet closed.
However, considering the size of the German economy, the new turnover thresholds are still relatively strict by international comparison. Moreover, an additional (albeit rarely applied) transaction-based threshold might capture the acquisition of a target company regardless of its turnover if the consideration paid exceeds 400 million EUR. The transaction-based threshold may capture, e.g., start-ups with considerable R&D activity or digital business models with low turnover.
For these reasons, many international transactions will still need to be approved beforehand by the Bundeskartellamt, which has announced that freed-up resources will be redirected to a more thorough investigation of the remaining cases.Continue Reading (PDF)