Answer ... The Federal Cartel Office (FCO) generally prefers divestiture commitments to behavioural remedies. In particular, behavioural remedies must not result in a need for long-term monitoring by the FCO. Where the sale of a business or part of a business is not a feasible option, behavioural remedies may also, in appropriate cases, be accepted as a remedy. For instance, it may be sufficient to enable third companies to enter the market – for example, by providing access to important infrastructure, granting licences to technologies or disclosing interface information, granting customers special rights to terminate long-term contracts or opening up the award of long-term contracts to a public tender process. The closure of capacities and the obligation to implement so-called ‘Chinese walls’ to protect competitors’ business secrets are typically not considered effective behavioural remedies for enabling market access.
Remedies must be proposed by the parties. While the remedies must be sufficient to address competition concerns identified by the FCO, they can be requested by the FCO only if and to the extent that the transaction would otherwise have been prohibited. If accepted, they can take the form of conditions (subsequent or precedent) to clearance or obligations, which are independent legal acts. The FCO has a preference for conditions precedent, which must be fulfilled for the clearance decision to become effective.
Answer ... Remedies can generally be submitted at any stage of the proceedings, including Phase 1. However, the negotiations between the FCO and the merging parties on the scope and content of remedies can generally be concluded only once the FCO’s investigations of the likely competitive effects of the transaction are complete. This stage of the FCO’s investigations is usually marked by the FCO’s statement of objections. In some cases it may also be possible to finalise the negotiations once preliminary competition concerns have been orally communicated to the parties. In Germany, a merger can be cleared subject to remedies only once Phase 2 is complete. Clearance with commitments in Phase 1 is not possible under German competition law. Remedies should be submitted in due time before the end of the Phase 2 proceedings, so as to give the FCO sufficient time to assess the proposed commitments and carry out a market test.
To facilitate the drafting of remedy proposals, the FCO has formulated model texts for divestment remedies which are available on its website.
Answer ... The FCO has imposed remedies in a number of foreign-to-foreign transactions. A typical remedy imposed in such a transaction is a condition or obligation to divest the German operations of one of the undertakings concerned to a third party. However, the FCO may also require the divestiture of operations located outside Germany. According to case law, public international law is not in conflict with a prohibition of a foreign-to-foreign merger if the merger produces effects in the German territory. If a merger is subject to review in several jurisdictions, the FCO may discuss appropriate remedies with other competition authorities, provided that the parties have granted a waiver of confidentiality.