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Five Things To Know About German Merger Control

As reported previously, German competition law was recently amended. The amendments included with the introduction of a “size of transaction”-threshold a notable change with respect to German merger control. The following is a reminder of five important features of German merger control which you should be aware of:

The jurisdictional thresholds of German merger control are easily triggered

German merger control applies if the parties to a transaction (usually the acquirer and the target) exceeded, in the last financial year, certain turnover thresholds. In an interna­tional context, these thresholds are relatively low and easily triggered:

  • Joint worldwide turnover of all parties > € 500 million, and
  • German turnover of at least one party > € 25 million, and
  • German turnover of another party > € 5 million.

There is a new “size of transaction”-threshold

Since June 2017, German merger control can also be triggered if a newly introduced “size of transaction”-threshold is exceeded:

  • Joint worldwide turnover of all parties > € 500 million, and
  • German turnover of at least one party > € 25 million, and
  • “value of compensation” > € 400 million, and
  • The target company has “significant business activities” in Germany (which may be activities with revenues < € 5 million).

The “value of compensation” includes the purchase price and all other assets and non-cash benefits, as well as liabilities assumed by the purchaser.

Acquisition of minority shareholdings may be notifiable

Similar to the HSR Act, but different to European Union merger control and most European jurisdictions, German merger control is not limited to the “acquisition of control”. Additional triggering events are

  • The acquisition of 25% or more of the shares in a company, and
  • The acquisition of a shareholding below 25% if this, combined with other factors (e.g. the right to appoint one out of five members of the board), may have an im­pact on competition (“acquisition of ability to exercise competitively significant influ­ence”).

Review of joint venture situations

German merger control may apply in joint venture situations that are often not covered by other merger control laws:

  •  German merger control may apply to the setting up of a joint venture company, even if the joint venture will have no activities in Germany. The jurisdictional thresholds may be satisfied by the parent companies alone. While there is an exemption for transactions with “no effect in Germany”, it is interpreted very narrowly and applies only in exceptional circumstances.
  • German merger control applies to all joint venture situations where two or more par­ties acquire or continue to hold a shareholding of 25% or more. Examples:
    – A and B set up a 50/50 production joint venture.
    – A acquires sole control and a 70% shareholding, and B acquires a non-control­ling 30% shareholding.
    – A sells 75% of a fully owned subsidiary to B, and retains only a 25% minority shareholding.
    – A, B and C each own 1/3 in a joint venture company. C divests his share­holding [...]

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Reform of German Competition Law

A number of amendments to the German competition law (Amendment) entered into force on 9 June 2017. The key changes are:

  • Merger control: Introduction of a new “size of transaction”-threshold
  • Sanctions for antitrust law infringements: Rules of liability aligned to EU concept, in particular with respect to “parental liability”
  • Private enforcement: Implementation of EU Cartel Damage Claims Directive.


McDermott EU Competition Annual Review 2016

It is difficult for General Counsel and their teams to monitor all new developments adequately. With the growth of the Internet and the daily updates to EU competition rules, everyone receives and has access to masses of information, but it is difficult to select that which is really relevant to one’s business.

McDermott’s EU Competition team across Brussels, France, Germany and Italy has authored the EU Competition Annual Review 2016 to help General Counsel and their teams to focus on the essential updates that they should be aware of.

This Special Report summarizes recent developments in EU competition rules during the year 2016 where several new regulations, notices and guidelines were issued by the European Commission and many interesting cases were decided by the General Court and the EU Court of Justice.

All these new rules and judicial decisions can be relevant for international companies operating in the EU. Indeed, in addition to the daily update, this booklet provides an overview of the main recent developments in EU competition rules and can be kept as a ready reference when dealing with complex issues of EU competition law.

Read the full report.

Getting the Deal Through: Pharmaceutical Antitrust 2014

McDermott has contributed to the Italian chapter of the 2014 edition of “Pharmaceutical Antitrust” published by Getting the Deal Through, a valuable work tool for legal practitioners dealing with antitrust rules in the pharmaceutical sector.  The chapter addresses the most significant regulatory and antitrust issues affecting the marketing, authorization and pricing of pharmaceutical products in Italy.

Click here to read the full chapter.

Germany Amends Competition Law: Key Changes

by Martina Maier, Philipp Werner and Robert Bäuerle

On 18 October, the German Federal Parliament (Bundestag) adopted several changes to German competition law.  The new legislation still has to be passed by the second chamber of the German parliament (Bundesrat) but the changes are expected to come into force on 1 January 2013.  Overall, the changes are less far-reaching than many of the proposals discussed during the preparatory phase of the reform.  The changes, however, are significant and will have to be taken into account by companies doing business in Germany. The article summarizes the main points of the reform.

To read the full article, click here.

ECJ Rules Access to Documents Can Be Denied on Basis of General Presumption That Disclosure Undermines Merger Control Proceedings

by Philipp Werner and David Henry

There is a general presumption that the grant of public access to documents relating to merger control proceedings would undermine the purpose of those proceedings. The Commission does not therefore have to carry out an individual examination of each document before deciding to refuse access under EU transparency legislation.

To read the full article, click here.

Liberalizations Decree: Main Relevant Changes and Powers of the Italian Competition Authority

by Veronica Pinotti and Martino Sforza

The main developments in antitrust are:

1. Merger Control (Art. 5-bis)

From January 1, 2013:

  • The Italian merger control thresholds will be cumulative and no longer alternative (i.e. the combined turnover in Italy of all undertakings concerned exceeds € 468 million AND the Italian turnover of the target exceeds € 47 million);
  • The current mandatory merger control filing fee (i.e. 1.2 percent of the value of the transaction in a range of € 3,000 and € 60,000) will be replaced by a mandatory fee of 0.08 per thousand of the turnover applicable (regardless of a transaction being filed) to all companies having a turnover exceeding € 50 million (such contribution shall be paid by October 30, 2012 for the first year, and July 31, 2013 for the following years).

2. New Bodies

  • Business Courts (Art. 2) – by September 24, 2012, the IP specialized sections of Italy’s Tribunals and Appeal Courts (renamed “business specialized sections”) will have jurisdiction also over all claims for damages caused by national and EU antitrust infringements, as well as corporate and public procurement matters involving limited companies.
  • Transport Authority (Art. 36) – it will be created within May 31, 2012 and will have supervising powers on the transport sector and the access to relevant infrastructures (it will be fully operative following the adoption of its implementing decrees).

3. Main New Powers of the Authority

  • Unfair clauses (Art. 5) – since March 24, 2012, the Authority is responsible to ensure protection against unfair contractual clauses in business to consumer agreements and it may impose fines up to € 50,000.
  • Unfair commercial practices (Art. 7) – since March 24, 2012, extension of the Authority’s powers in the enforcement of the unfair commercial practices rules to protect, not only consumers, but also small enterprises (with less than 10 employees and a turnover of less than € 2 million).
  • Food sector (Art. 62) – from October 25, 2012, the Authority will have the power to supervise and may apply fines up to € 500,000, in case of breach of the new rules concerning agreements in the food sector (i.e. written form and other specific requirements; obligation to pay within 30 days for perishable goods and within 60 days for all other goods).
  • Public Utilities (Art. 25) – since March 24, 2012, the Authority shall now be consulted in various fields, including the public utilities local award procedures (where the population is above 10,000 inhabitants).

4. Banks and Insurance

  • Banks (Art. 28) – from July 1,2012, banks shall propose to their customers the offers of at least two different insurance groups, if they require a life insurance as a condition to issue a mortgage.
  • Insurance (Art. 34) – no later than July 24, 2012, car insurance intermediaries will be required to inform their customers about the contractual conditions proposed by at least three different insurance groups.

5. Class Action (Art. 6)

Amendments to the current rules (entered [...]

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China Law Alert: Focus on Competition – March 2012

by Henry L.T. Chen, Frank Schoneveld, Alex An, Brian Fu and Angel Wang

McDermott Will & Emery has released the latest China Law Alert: Focus on Competition, which provides insight on current issues surrounding cross-border antitrust and transactional issues. 

China’s New Merger Control Regime Makes Major Progress in Its First Three Years

It is now just more than three years since China’s Anti-Monopoly Law (AML) was introduced. Compared with the well-established practices of US antitrust and EU competition authorities, AML enforcement is still in its infancy. However, China’s AML regulators, especially the authority in charge of merger control, the Ministry of Commerce (MOFCOM), has moved quickly to make its mark on international business. Now, most large, cross-border mergers, acquisitions and joint ventures must also successfully pass the rigors of review by MOFCOM as well as the European Commission and the US Department of Justice (DOJ) and/or Federal Trade Commission (FTC).  Read the full article here.

NDRC and SAIC’s Actions in 2011 and Prospects in 2012

China’s National Development and Reform Commission (NDRC) and State Administration for Industry and Commerce (SAIC) are the two authorities in charge of investigation and supervision of “monopoly” agreements and abuses of dominant market position. NDRC focuses on price-related cases while SAIC takes care of non-price related violations of the law. Compared to MOFCOM, which is responsible for merger control, NDRC and SAIC have been relatively quite since China’s AML came into force on 1 August 2008.  Read the full article here.

Civil Litigation under China’s Anti-Monopoly Law

Since the introduction of the China AML in August 2008, Chinese courts have experimented with various methods of civil dispute adjudication based on breach of the AML. In general, China’s courts have very limited judicial experience with such cases. A number of civil cases have been brought before the courts, but very few, if any, have resulted in a successful judgment for breach of the AML.  Read the full article here.

Might the Ministry of Industry and Information Technology (MIIT) Become A New Enforcement Authority for China’s Competition Laws?

In addition to MOFCOM, SAIC and NDRC, the three major enforcement authorities for the anti-unfair competition and anti-monopoly laws, it seems the MIIT might also become a regulator of competition in the telecommunications sector. In addition to a Draft Regulation on Internet Information Services, published for consultation in January 2012, MIIT released an “Opinion on Regulating the Business Activities of Basic Telecommunications Carriers on Campuses” (the Opinion) on 30 June 2011.  Read the full article here.

Competition Law Reform in Brazil: Implications for Merger Control

by Andrea L. Hamilton, David Henry, Martina Maier and Joseph F. Winterscheid

Brazil’s House of Representatives passed a long-awaited competition bill (the Competition Bill) on 5 October 2011, making significant changes to Brazilian competition law. The Competition Bill has yet to be signed into law by the Brazilian President and will take effect 180 days after signing. Once in force, it will have wide-reaching implications across a number of areas, but from the perspective of international companies, some of the most important changes relate to merger control.

At the moment, Brazil’s competition authority (CADE), requires notification by companies that reach relatively low thresholds—which are based currently on revenues or market share—within 15 working days of the signing of the first documents relating to the deal. Once the parties have notified CADE, they are free to complete the deal; there is no obligation to suspend the deal pending clearance.

This will change substantially once the Competition Bill takes effect, and will have major implications for the strategy and timing of transactions that must be notified in Brazil.

  • Notification threshold. The Competition Bill requires CADE to be notified of a merger when one of the parties has achieved group-wide revenues of at least R$400 million (approximately €160 million/US$210.5 million) in Brazil in the previous financial year, and another party to the transaction has achieved group-wide revenues in Brazil of R$30 million (approximately €12.5 million/US$15.8 million). Significantly, this removes the market share threshold, which is likely to be welcomed by companies.
  • Suspension of the transaction. Parties will no longer be able to close the deal simply after notifying CADE. Instead, parties will need to wait to receive clearance from CADE before closing, which can mean potential delays. Closing a deal without clearance will expose parties to substantial penalties for “gun-jumping” and risk having the transaction deemed void. The fines that can be imposed range from R$60,000 to R$60 million (approximately €24,000-€24 million/ US$32,000-US$32 million).
  • Timing. As parties cannot close a deal notified in Brazil until CADE clears it, timing is critical. The Competition Bill envisages a two-phase merger procedure similar to those used in the United States and the European Union. In total, CADE will have a maximum of 240 days to complete its review of a proposed merger. This is subject to a 60 day extension (if requested by the applicant) or 90 days if required by CADE for a justifiable reason. It is expected, however, that CADE will endeavour to complete its review in a much shorter time period in most cases, to align itself with international practice.

International companies with interests or potential interests in Brazil are urged to be aware of these important changes and to consider the implications of the new rules on their business objectives.





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