competition newsletter 21 Jun 2017 Recent major developments in German Competition law

Changes to German merger control

On 9 June 2017, the 9th Amendment entered into force, introducing a new alternative threshold test to German merger control based on the value of the transaction. The "old" turnover thresholds test remains unchanged and valid.

This means that as of 9 June, a transaction would need to be notified in Germany if the following criteria are met: 

• the combined worldwide turnover of all the relevant undertakings exceeded €500 million in the last financial year; and
• one of the parties to the transaction had turnover in Germany which exceeded €25 million in the last financial year, and:

• the domestic turnover of another undertaking concerned exceeded €5 million; or
• the value of the transaction concerned exceeded €400 million and the target has "significant business activity" in Germany

Changes to successor and parental liability and private damages actions

In addition, the 9th Amendment also introduces fundamental changes to successor and parental liability and strengthens private enforcement of competition law damage claims in Germany. For further information please see the Ashurst competition newsletter of 11 April 2017 which reported on these changes before they entered into force.

Guidance on remedies in German merger control published

On 30 May 2017, the FCO published Remedies Guidance on the requirements that need to be met for the FCO to clear an otherwise problematic transaction subject to remedies. 

The FCO has emphasised that the extent to which a remedy may be required and, if so, deemed acceptable will depend on the circumstances of each individual case.  However, the Remedies Guidance does make the following points:

• The FCO considers up-front buyer divestment remedies to be preferable because they represent the "easiest" form of divestment remedy to alleviate competition concerns and do not require further monitoring by the FCO.
• Divestiture remedies should typically relate to an existing stand-alone business that is equipped with all the necessary resources (such as relevant patents, licenses, employees, supply or service contracts) to compete on the market.  However, in exceptional cases, the FCO has in the past also accepted the divestment of stand-alone business units (e.g. a branch, a sales outlet or a production site) or of assets.
• The Remedies Guidance states that the FCO may accept behavioural remedies in exceptional cases where divestments are not appropriate.  However, this is likely to be limited to cases where the behavioural remedies will have a lasting effect on market conditions and their enforcement does not require continued control. Behavioural remedies accepted by the FCO in the past include granting third parties access to important infrastructure or technologies.

Whilst the aim of the Remedies Guidance is to provide increased transparency of the FCO remedies process, the FCO emphasises that it is not intended to act as an exhaustive list of relevant principles.  The FCO recognises that emerging and dynamic markets, such as those which utilise online platforms where market power may flow from access to data or network effects, "traditional" remedies might be less appropriate and more tailored remedies may be required.