GERMANY Law and Practice Contributed by: Bettina Mertgen, Felix Siebler, Michael Herold and Sebastian Faust, GvW Graf von Westphalen
• cross-sectoral, nos 8–27 (eg, AI, semiconductors, aerospace, quantum technologies): 20%; and • all other sectors: 25% (voluntary filing). Incremental acquisitions crossing further statutory thresholds (varying by category, eg, 20/25/40/50/75% for Nos 1–7) and atypical acquisitions granting addi - tional control also trigger notification. 6.3 Mandatory vs Voluntary Notification Notification is mandatory for defence sector trans - actions under both the sector-specific and, where applicable, cross-sectoral regimes. In these cases, the transaction must not be closed prior to clearance. Where notification is mandatory, the transaction is provisionally invalid until clearance is granted. Pend - ing clearance, exercising acquired voting rights or exchanging sensitive information with the acquirer is prohibited. Violations of these prohibitions constitute criminal offences punishable by imprisonment of up to five years or substantial fines. Where no listed sector is involved, filing is voluntary, but the Federal Ministry for Economic Affairs and Energy may review transaction ex officio within five years. 6.4 Review Process and Timetable The review follows a two-phase structure. Phase 1 serves as an initial screening to determine whether the transaction raises concerns that warrant closer examination. If concerns are identified, the authority opens a Phase 2 in-depth investigation. The same timetable applies to both sector-specific and cross- sectoral proceedings. The information to be provided includes transaction and ownership details as well as information on the activities of the target. More in- depth information may be requested in Phase 2. • Phase 1 – following submission of a mandatory notification, the Federal Ministry for Economic Affairs and Energy has two months to either clear the transaction or open an in-depth (Phase 2) investigation. If no decision is issued within this period, the transaction is deemed approved. • Phase 2 – an in-depth investigation must be com - pleted within four months after receipt of complete
documentation. This period may be extended by three months for cases involving particular factual or legal difficulties and by a further month where defence interests are specifically affected. Review deadlines are suspended during formal requests for information and during negotiations on mitiga - tion commitments. Until clearance has been granted by the Federal Min - istry for Economic Affairs and Energy, the completion of the acquisition is provisionally invalid where a noti - fication was mandatory. 6.5 Assessment Criteria The sector-specific test examines whether the invest - ment is likely to affect the essential security interests of Germany. The cross-sectoral test asks whether the public order or security of Germany, another EU mem - ber state or projects of EU interest may be impaired. Under both regimes, investor-related factors are also assessed, including whether the acquirer is directly or indirectly controlled by a foreign government, whether it has previously been involved in activities affecting security or public order, and whether there is a risk of involvement in criminal activities. The Federal Ministry of Defence provides an advisory assessment in defence-related cases focusing on: • security of supply to the German Armed Forces; • preservation of Germany’s defence-technological edge and know-how protection; and • the target’s military relevance and the investor’s security profile and governance structure. 6.6 Conditions, Remedies and Prohibition Where the Federal Ministry for Economic Affairs and Energy concludes that a transaction threatens Ger - many’s essential security interests or public order and security, it may issue directives or impose conditions on the acquisition. Conditions can include behavioural commitments such as continued supply obligations, know-how protection mechanisms or information security arrangements. Prohibition is available as a last resort and requires the approval of the entire Federal Government, under -
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