Article by Dr. Christine Bader and Emanuela Lecchi
Merger Control ‑ Procedural Aspects
Merger control issues should be considered early in any transaction timetable. Early consideration allows the parties to identify potential obstacles to the transaction – and possible solutions – early on and is also helpful in cases that clearly do not raise competition concerns, to ensure that the necessary clearances are obtained prior to the expected completion date.
Approximately 100 countries operate merger control regimes. Many of these merger control regimes are mandatory with strict tests to determine whether a merger must be notified, in most cases based on the parties' turnover or on shares of supply/market shares.
Parties should seek advice for all jurisdictions where the merger may produce a change in the status quo. Failure to notify a merger can result in the transaction being void as well as in fines1 . Fines can be substantial, e.g. the European Commission can fine companies up to 10% of their worldwide group turnover for merging without notifying the Commission.
This briefing sets out the thresholds for notifications in the EU and Germany and provides an introduction to EU and German merger control procedures. It does not deal with substantive aspects of merger control, namely whether any merger that needs to be notified may give rise to competition concerns.
EU Merger Control
The European Commission has exclusive jurisdiction under the EU Merger Regulation (the "EUMR")2 to investigate mergers and joint ventures within the EU which fulfil the filing requirements under the EUMR.
When is a filing required?
The EUMR applies to concentrations with an EU dimension. There are two elements to this test: (1) is there a concentration? and (2) does it have an EU dimension?
A concentration arises where there is a change in control on a lasting basis. This includes a change in the quality of control (e.g. where one jointly controlling shareholder exits a joint venture). Temporary changes of control will not meet this test, although the Commission has found joint ventures lasting no more than eight years to be concluded "on a lasting basis".3.
Whether a concentration has an EU dimension is determined by the parties' turnover (see Annex One for a detailed guide to the turnover test under the EUMR). As a starting point, though, a merger will not have to be notified to the European Commission unless the merging parties have:
a combined worldwide turnover of more than €2.5bn; and at least two of the merging parties each have a turnover...