GERMANY Law and Practice Contributed by: Gregor von Bonin, Natascha Doll, Andreas Ruthemeyer, Stefan Schröder and Mirko Masek, Freshfields
Germany also has robust export control regulations, managed by the Federal Office for Economic Affairs and Export Control (BAFA) in accordance with EU law. These controls aim to prevent the proliferation of weapons of mass destruction, avoid the destabilising the accumulation of conventional military equipment in crisis regions, regulate dual-use items (goods with both civil and military applications), and prevent con- tributions to human rights violations. 5.5 Antitrust Regulations The basic antitrust filing requirements applicable to takeover offers and business combinations in Ger- many are governed by the Act Against Restraints of Competition (GWB) and enforced by the Federal Car- tel Office (BKartA). The BKartA must prohibit a merger if it would significantly impede effective competition, in particular by creating or strengthening a dominant position. A filing obligation arises if the undertakings involved meet certain turnover or consideration thresholds. The authority then conducts a review, which can be a one-month Phase I investigation for simple cases or an extended Phase II investigation for complex ones. Transactions meeting the EU dimension thresholds under the EU Merger Regulation fall under the exclu- sive jurisdiction of the European Commission instead of the BKartA. 5.6 Labour Law Regulations Acquirers of German companies must carefully con- sider the employee participation and labour-law framework, which can materially affect both the trans- action process and post-closing integration. Employee representatives organised in a works coun- cil have extensive information and consultation rights in the event of a business transfer or restructuring. While the works council’s opinion or advice is not binding on management or the board, it must be for- mally sought and documented before implementation of measures that affect employees. In share deals, mere changes in ownership do not trig- ger consultation duties, but subsequent operational changes, such as restructuring or integration, do. In
asset deals constituting a transfer of business (TUPE), employees automatically transfer by operation of law to the buyer on existing terms, and both employer and works council must be informed in writing about the timing, reasons, and implications of the transfer. 5.7 Currency Control/Central Bank Approval Germany generally does not impose specific currency control regulations that restrict the free flow of capi- tal for M&A transactions, meaning there is typically no requirement for a central bank approval for such transactions. Cross-border payments must comply with foreign exchange reporting obligations. However, anti-money laundering (AML) stipulations have an increasing and critical impact on business operations and M&A processes in Germany. Banks and notaries and also lawyers involved in facilitating M&A transactions have a legal duty to ensure AML compliance. 6. Recent Legal Developments 6.1 Significant Court Decisions or Legal Developments M&A activity in Germany’s energy and infrastructure sector continues to be shaped primarily by regulatory and political developments rather than by individual court judgments. Court decisions tend to have case- specific effects and rarely alter overall valuation mod- els or deal structures. Tightened Regime for Foreign Direct Investment Control In recent years, Germany has strengthened its regula- tory regime on FDI control. These rules now provide executive power to the Federal Ministry for Economic Affairs and Energy (BMWE) to review and block acqui- sitions of German companies involved in critical ener- gy and infrastructure sectors. Critical infrastructure explicitly includes energy grids and storage systems, as well as several types of production assets. Energy Crisis Legislation In response to the 2022 energy crisis, the Energy Security Act (EnSiG) has been amended. The amend- ments grant the state detailed powers to intervene
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