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Corona pandemic: developments in German antitrust law

28.05.2020

* Updated on 28 May 2020: Act and its date of entry into force announced *

The Act “to mitigate the consequences of the Covid-19 pandemic in competition law and for the self-governing organisations of the commercial sector was published today (28.05.2020) in the Federal Law Gazette (Bundesgesetzblatt), Volume I No. 24 of 28 May 2020, pages 1067-1069. The Act will come into force tomorrow, 29 May 2020 (see Article 4 of the Act).

* Updated on 15 May 2020: German Bundestag adopts draft law *

The Bundestag (lower house of the German parliament) today unanimously adopted a draft law tabled by the CDU/CSU and the SPD “to mitigate the consequences of the Covid-19 pandemic in competition law and for the self-governing organisations of the commercial sector” (19/18963) without prior final debate on the basis of a resolution proposal by the lead Committee on Economic Affairs and Energy (19/19207).

The Bundesrat (upper house of the German parliament) already waived its right to request the convening of a mediation committee. Therefore, the law will enter into force after it has been executed by the Bundespräsident (Federal President) on the day after it has been published in the Bundesgesetzblatt (Federal Law Gazette).

* News published on 30 April 2020 *

Besides its economic effects, the Covid-19 pandemic is also affecting the activities of the German Federal Cartel Office (FCO). The associated restrictions are making it difficult for the FCO adhering to some of the time schedules as usual. For this reason, the German government intends to introducing an Act extending the investigation periods for concentrations notified from 1 March 2020 to 31 May 2020 in order to prevent possible clearances occurring due to the mere lapse of time (A.) In addition, the Act is intended to suspend the obligation to pay interest on antitrust fines in order to relieve additional economic pressure on companies in the course of the Covid-19 pandemic (B.).

A. Extension of investigation periods in German merger control

Status quo

German merger control is divided in two phases. Normally the FCO has one month to examine the concentration (known as “Phase I”). If the concentration proves unproblematic, the Decision Division clears it before the expiry of the one month time limit. However, clearance can also occur by the mere lapse of time if the FCO does not react during Phase I. If the FCO considers further examination necessary, a formal in-depth investigation is initiated (known as “Phase II”). This Phase II may last up to four months from receipt of the complete notification.

Intended changes

These two phases are to be extended as follows for concentrations notified between 1 March 2020 and 31 May 2020: Phase I from one to two months and Phase II from four to six months. These changes do not apply to concentrations which have been notified since 1 March 2020, but meanwhile cleared or where the deadlines already expired by the time the Act enters into force. Considering the one-month clearance period of Phase I, which will have expired in many current cases by the time the Act enters into force (to be expected in June, see below), the intended changes will in practice mainly affect Phase II proceedings. Only for those concentrations where the notification is made towards the end of the period (i.e. in particular May 2020) might the extension also influence Phase I procedures.

Implications on practice

It remains to be seen in how many cases the FCO will actually use the extended investigation periods. It would be desirable for the FCO to continue clearing legally unproblematic mergers quickly. As a matter of caution, companies should however take into account the possibility of significantly longer investigation periods if they decide to notify a concentration these days.

B. Intended changes regarding antitrust fines

Furthermore, the German government intends to suspend the obligation to pay interest in cases where an immediate payment of a fine is unreasonable for companies in view of their economic situation.

Under current law, the FCO is already authorised to grant facilitation of payments. Measures include deferral or payment by instalments, if the payment is economically unreasonable for a company in view of its economic circumstances. However, this measure does not affect the obligation to pay interest under section 81(6) of the German Act against Restraints of Competition. With the entry into force of the new Act, this section will not be applied until 30 June 2021 in cases where facilitation of payments has been granted in order not to jeopardize the existence of companies after the Covid-19 pandemic. The suspension of the obligation to pay interest is limited to the period during which facilitation of payments is granted. For the suspension of the obligation to work, it is not necessary that the facilitation of payment is granted by the time when the new law enters into force. The obligation to pay interest will also cease to apply when facilitation of payment is granted at a later stage, as the financial situation of companies can deteriorate at any time during the pandemic.

Due to the particular urgency of the matter, the Act will enter into force the day after promulgation. Although no exact date has been set as of today, the Act is expected to be adopted in June. We will keep you updated on further developments.