On 30 September 2014, the German Bundeskartellamt published a revised guidance paper on "Domestic Effects in Merger Control". The guidance paper aims to provide more legal certainty for concentrations between companies based outside Germany, which often raise the question as to whether German notification thresholds are triggered. The paper provides an analytical framework to assess scenarios in which domestic effects can either be clearly identified or ruled out and identifies essential criteria for the necessary case-by-case assessment of domestic effects in other cases.
Under German law, the obligation to notify is triggered if the relevant turnover thresholds are met. This is the case if the combined aggregate global turnover of all companies involved exceeded EUR 500 million in the past financial year; at least one company achieved turnover in Germany of more than EUR 25 million; and the turnover of another company involved exceeded EUR 5 million. Additionally, the concentration must have a significant effect in Germany.
Domestic effects can clearly be identified if the concentrations involve only two companies and the target company is active in Germany and its turnover exceeds at least the second domestic turnover threshold of EUR 5 million. These concentrations thus need to be notified.
Concentrations involving more than two companies (i.e. in joint venture situations) are exempted from notification if the companies are neither active nor potentially active on a market that includes Germany, or if the parent companies of the joint venture do not compete with each other on the joint venture's relevant German product market (or on domestic upstream and downstream markets).
The concentration of two or more companies will be subject to merger control if the turnover achieved by the joint venture exceeds EUR 5 million in Germany or anticipates to exceed this threshold within three to five years in the case of a newly established joint venture company or if the joint venture has or expects to have a market share of more than 5 %.
Even if the above thresholds are not met, the joint venture may have to be notified if it involves the transfer of significant resources (e.g. intellectual property rights and know-how). Finally, domestic effects could result from spill-over effects if the parent companies are active on the same market as the joint venture and they have a combined market share of more than 20%.
The guidance paper provides useful guidance for foreign-to-foreign mergers between two companies. However, in the case of joint ventures an often complex case-by-case analysis is still required.