GERMANY Law and Practice Contributed by: Daniela Seeliger, Christoph Barth, David-Julien dos Santos Goncalves and Kaan Gürer, Linklaters
exercise the voting rights attached to the shares and resells the shares within one year. Exemptions Internal restructurings or reorganisations within the same economic entity are not subject to merger con - trol. Further, concentrations of public institutions in the framework of municipal reforms (situations where municipalities decide to merge their institutions or where municipalities merge themselves) are explicitly not subject to merger control review. In practice, this rule particularly affects hospitals and savings banks. Some hospital mergers are exempt from merger con - trol under changes introduced by the Hospital Care Improvement Act ( Krankenhausversorgungsverbesse- rungsgesetz ). The exemption applies to cross-location hospital mergers involving hospitals qualifying for gov - ernment subsidies from the hospital structure fund ( Krankenhausstrukturfonds ) or the hospital transfor - mation fund ( Krankenhaustransformationsfonds ) and following the Federal State authority’s confirmation that the merger otherwise complies with competition law (Section 187 (9) GCA). Such transactions will need to be closed by 31 December 2038 in order to ben - efit from the exemption. However, parties will have to file a short post-completion notice to the FCO and in case they filed a merger notification with the FCO, they have to inform the FCO of whether an application for certain funding has been submitted. Furthermore, mergers involving hospitals (within the meaning of Section 107 (1) Social Code Book V) are now subject to the recently introduced Section 186a GCA (enacted with the Krankenhausreformanpas- sungsgesetz ), which replaces the former exemption in Section 187 (10) GCA. Section 186a GCA mandates that in case of concen - trations concerning at least two hospitals or medi - cal departments of such hospitals (within the above- mentioned meaning), the parties to the concentration must, upon the commencement of the scope of merg - er control, apply to the state authority responsible for hospital planning in which the parties’ hospital is situ - ated, for a confirmation that the merger is deemed
necessary to improve hospital care. The state author - ity responsible for hospital planning shall consult with the FCO prior to issuing a confirmation of necessity. The notification of a merger within the scope of Sec - tion 186a (1) GCA to the FCO is only admissible and required, if: • the application for such a certificate of neces - sity has been rejected or is deemed to have been rejected due to the state authority’s inactivity for three months after the parties’ submission; or • in cases where confirmation of necessity has been granted and the proposed merger does not exclu - sively concern markets in which hospitals/special - ist medical departments of the hospitals involved in the merger provide the services within the meaning of Section 39 (1) Social Code Book V. It should be noted that this provision shall apply only temporarily to mergers completed by 31 December 2030. Many federal states have already made use of the previous exemption (former Section 187 (10) GCA), issuing confirmations that they consider the merger necessary to improve hospital care. See – eg, the hos - pital merger between the university hospitals in Man - nheim and Heidelberg, where the German Ministry of Social Affairs, Health and Integration of Baden-Würt - temberg approved the transaction, although the FCO had previously prohibited the case. In contrast, the merger control provisions are applicable (analogously) to voluntary mergers of statutory health insurers. Prior to a prohibition in this sector, the FCO has to consult with the relevant supervisory authorities and, partly, different time limits and further specific rules apply. 2.4 Definition of “Control” The concept of control follows the EU merger control system and is regularly interpreted within this frame - work by the FCO. Control means the effective possi - bility of exercising decisive influence on an undertak - ing on a lasting basis. The actual exercise of control is not required. Control may be conferred through rights, agreements or other means (legal or factual) that indi - vidually or jointly enable the acquirer(s) to determine the target company’s strategic business decisions.
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