Germany: The Scope Of The Relevant Geographic Market – Germany’s Federal Supreme Court Opens the Border

Last Updated: 24 February 2005

By Dr. Jens Peter Schmidt (Brussels)

With its decision1 of 5 October 2004 the Bundesgerichtshof (Federal Supreme Court) of Germany (the "Court") has abandoned its decisional practice that the scope of a product market due to legal principles is geographically limited to the territory of Germany. In its decision the Court recognizes the concept of market definition based on economic principles and acknowledges that product markets may be transnational.


The definition of the relevant market involves the appraisal of the product market and the geographic market. The determinative criterion for the definition of the geographic market is the substitutability from a demand-side viewpoint. The question is, from where can the customer choose the goods he wishes to buy, be it for instance on a local, national, European- or world-wide basis? Some goods may easily be supplied throughout the Community or even the world, others for technical, legal or practical reasons can only be supplied within a narrower area. Basic demand characteristics like the preference for national brands, language or local presence requirements, and trade flows among countries are only two of a number of criteria that are used to determine the geographic scope of a market.

For many goods the reach of suppliers has been broadened through the completion of the internal market in Europe and through globalization of economies in general. Hence, many markets from an economic point of view are much greater than a national territory. The application of national merger control legislation however is, per definitionem, restricted to the effects of a merger in a national territory.

Previous Court’s Decisions

The apparent tension between the scope of a geographic market and the territorial scope of the Gesetz gegen Wettbewerbsbeschränkungen (German Act against Restraints of Competition) ("ARC") led the Court in previous decisions, notably in the decision of 24 October 1995 (Backofenmarkt)2 to the conclusion that the geographic market could not be greater than the ambit of the ARC.

The Court reasoned that the ARC aims at protecting competition on the domestic market. This aim would define – but also limit – the objective of the substantive merger control provisions. The substantive analysis under the German merger control provisions would only refer to the issue of whether or not a merger is expected to create or strengthen a dominant position in Germany. The argument was that it follows from legal reasons that the geographic scope of the market, on which mergers which create or strengthen a dominant position shall be prohibited, would need to be limited to the territory of Germany.

The Court certainly recognized that from an economic point of view markets would go beyond the territory of Germany. It also acknowledged that within a wider geographic market a strong competitor in one geographic segment would have a chance to enter other geo- graphic segments, and, hence, could restrain the competitive behavior of a market participant in Germany. Systematically, the Court took that into account within the assessment of dominance when evaluating actual or potential competition (that is market entry barriers). The Court therefore postulated a two-step assessment: First, market definition and identification of market shares within the territory of Germany, and second, evaluation of market dominance within the real economic market, including foreign territories.

Another argument the Court put forward to support its view of a normative German market was that the Federal Cartel Office would have only limited resources and powers to investigate market conditions in foreign countries.

The Backofenmarkt decision earned widely-spread criticism, because it lead to an artificial market definition that was often contradictory to economic reality, in particular in light of the Common market. But most important, the question of where to assess dogmatically competition from foreign countries was not an academic issue only. The real drawbacks were the practical consequences: the ARC provides a – rebutable – presumption of single firm dominance once the merging parties reach a market share of one-third. Such presumption of dominance when applying the Backofenmarkt doctrine was fulfilled if the merging parties had a share of one-third in Germany, irrespective of the fact that on the economic market the share was smaller. As such, the merging parties were placed in a defensive role, and it was up to them to demonstrate that they do not hold a dominant position. As a consequence, the parties had to substantiate the relevance of actual or potential competition from third countries.

The Court’s Latest Decision

The latest decision explicitly deviates from the principles of the Backofenmarkt decision. The Court holds that the geographic scope of a given market cannot be defined through legal but only through economic criteria. Since any definition based on legal criteria would not reflect economic reality, it would be artificial and "not satisfactory." The (alleged) difficulties of gathering information with regards to product markets beyond the territory of Germany could not validly be maintained. First, the European network of competition authorities would facilitate the information gathering process. Second, in the past the Federal Cartel Office had to appraise ex officio actual or potential market entries within the assessment of dominance, and so they faced the issue in any event.

The Court states that there is no longer the need to bring in line the geographic market with the ambit of the ARC. If an undertaking has a dominant position on a transnational market, the undertaking has also a dominant position on any segment (for example Germany) of such transnational market.


The decision of the Court deserves applause, because it no longer maintains an artificial definition of a geographic product market, and acknowledges that markets need to be determined by economic criteria. In relation to the presumption of dominance, the practical consequences of the Court’s decision remain to be seen. There seem to be two ways of how to apply the presumption of dominance in light of transnational geographic markets.

First, the presumption continues to be applied to the German territory, but would be readily rebutable if the economic market is greater, and the threshold of one-third in such greater market is not met. This would be the preferred interpretation given that it is (still) the common view that the presumption of dominance relates only to domestic markets. Second, the presumption of dominance test applies to the economic market. The latter way seems to better conform with the recent decision’s principles. However, only future practice will show which method the Federal Cartel Office will adopt.


1 Bundesgerichtshof, KVR 14/03 (Melitta/Schultink), available under

2 Bundesgerichtshof, KVR 17/94 (Backofenmarkt), BGHZ 131, 107.

Copyright © 2007, Mayer, Brown, Rowe & Maw LLP. and/or Mayer Brown International LLP. This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

Mayer Brown is a combination of two limited liability partnerships: one named Mayer Brown LLP, established in Illinois, USA; and one named Mayer Brown International LLP, incorporated in England.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions