Overview of merger control activity during the last 12 months
In 2015, Germany’s Federal Cartel Office (“FCO”) reviewed around 1,100 merger filings. A detailed review in phase II proceedings has been initiated and/or concluded in 11 cases during 2015 and in a further three cases since January 2016. Eight phase II proceedings were concluded with clearance being granted unconditionally, and one transaction subject to conditions and obligations. One transaction was prohibited and a further four were withdrawn by the parties. At the time of writing this article, three phase II proceedings are still ongoing.
In comparison to 2014, the number of cases under phase II control decreased, from 25 cases in 2014 to 11 cases in 2015. Even though only one transaction has been prohibited, a more realistic picture appears if the cases in which notifications have been withdrawn are accounted for as prohibited transactions. Withdrawing a notification and thus aborting a transaction is often preferred by the parties to receiving a prohibition decision since the latter usually generates more (unwelcome) publicity and would also explicitly establish a precedent as regards market definition or other issues that have been contentious during the phase II investigation. Furthermore, in case of withdrawal only 50% of the filing fees have to be paid by the parties, thus providing an additional financial incentive. Still, considering that eight out of 14 phase II proceedings completed since January 2015 were nevertheless cleared unconditionally, one may conclude that the initiation of phase II proceedings does not equal “certain death” to a transaction, but that there is a good chance of dispelling the FCO’s competition concerns.
The only prohibition by the FCO concerned the takeover of the regional food retailer Kaiser’s Tengelmann by its competitor, Edeka. Nevertheless, this prohibition was overruled by the Federal Minister of Economic Affairs and Energy Sigmar Gabriel, who granted a ministerial authorisation of the transaction against the recommendation of the German Monopoly Commission, an independent advisory body to the Federal Government. The Federal Minister of Economy may grant such a ministerial authorisation of a transaction that has been previously prohibited by the FCO, if the restraint of competition caused by the transaction is outweighed by macroeconomic advantages and, respectively, justified by an overriding public interest. In response to the ministerial authorisation, the chairman of the Monopoly Commission resigned. REWE, a competitor of the merging parties, appealed against the ministerial authorisation, contesting the alleged macroeconomic advantages as well as the overriding public interest claimed by the parties. At the time of writing this article, this case is still pending before the Higher Regional Court Düsseldorf. (See more on the ministerial authorisation below, under “Approach to remedies (i) to avoid second stage investigation, and (ii) following second stage investigation”).