Answer ... The provisions governing merger control in Germany are set out in the Act against Restraints of Competition (ARC), in particular Sections 35 to 43a. In addition, the Federal Cartel Office (FCO) has published several guidance papers and notices summarising its interpretation of certain provisions and best practices. Most of these documents are also available in English on the FCO website (although only the German language versions are authentic).
Answer ... Direct or indirect acquisitions by a foreign investor of, depending on the sector concerned, either 10% or 25% of the voting rights in a German company may be subject to the German foreign investment review regime set forth in the Foreign Trade Act and its accompanying ordinance. The German government has been increasingly active in this area recently. It may ultimately prohibit such acquisitions or impose obligations if this is necessary to safeguard public order or security. In this regard, an acquisition by a German company in which a foreigner holds 25% of the voting rights may be considered to constitute an indirect acquisition by a foreign investor.
A notification requirement applies to direct or indirect acquisitions of at least 10% of the voting rights if the German target is active in certain areas. Such transactions must be reported to the Federal Ministry of Economics and Energy (FMEE). For instance, this may apply to acquirers from outside the European Union or the European Free Trade Area (EFTA) if the target operates in one of the following areas:
- critical infrastructure, or the provision of software or cloud computing services in this area;
- telecommunications surveillance or telematics infrastructure; or
- radio, telemedia or print media with a wide-ranging impact.
Further, a notification requirement applies if the target manufactures or develops certain weapons, military equipment or technology used to process classified government information or components thereof, provided that the acquirer is foreign (including acquirers from EU or EFTA states).
The FMEE may ex officio review across sectors acquisitions of at least 25% of the voting rights in a German target by acquirers from outside the European Union or EFTA. There is no notification requirement for such acquisitions. However, in order to obtain legal certainty, an acquirer may request a certificate of non-objection from the FMEE.
Answer ... The FCO, based in Bonn, is mainly responsible for enforcing the merger control regime. The FCO is an independent federal authority assigned to the FMEE. The FCO has approximately 330 employees. Decisions are taken by a total of 12 decision divisions, organised mainly by economic sector. Within the decision divisions, each case is decided by a collegiate body consisting of the respective division’s chairman and two associate members. All decisions must be majority decisions. The decision divisions decide autonomously and are not subject to instructions in their decision making.
The FCO has a wide range of powers. In particular, it may prohibit transactions or clear them subject to obligations or conditions. To safeguard its review powers, it may issue cease and desist orders or order the dissolution of a merger under certain circumstances. The FCO may impose substantial fines for failure to comply with merger control rules. It also has considerable information-gathering powers.