GERMANY Law and Practice Contributed by: Bettina Mertgen, Felix Siebler, Michael Herold and Sebastian Faust, GvW Graf von Westphalen
6.9 Interaction with Competition/Antitrust Review Under German law, FDI/national security screening, administered by the Federal Ministry for Economic Affairs and Energy, and merger control, administered by the Federal Cartel Office (BKartA), are legally dis - tinct, parallel regimes. Both may apply simultaneously to a defence sector transaction, and clearance under one does not substitute for clearance under the other. There is no formal statutory co-ordination mechanism between the two authorities, although informal co- ordination occurs in practice. In practice, the Federal Cartel Office has recently assessed several defence- related transactions and granted clearances factoring in the characteristics of the sector. National security considerations can override com - petition law outcomes through a ministerial authori - sation: where the Federal Cartel Office prohibits a merger, the Federal Minister may authorise it if the restraint of competition is outweighed by an overrid - ing public interest, which may include defence and security interests. Conversely, an FDI prohibition can block a transaction that has been cleared on competi - tion grounds. However, a ministerial authorisation is rare and does not override a separate FDI prohibition – it only applies to merger prohibitions by the Federal Cartel Office. 7. Investigations and Litigation in the Defence Sector 7.1 Principal Investigative Authorities In Germany, responsibility for investigating potential breaches of defence-related regulations is shared among several authorities. The Federal Office for Eco - nomic Affairs and Export Control administers export controls, reviews licence applications, monitors com - pliance with licensing conditions, and investigates potential violations of export-control, sanctions and dual-use rules. The German Customs Administration enforces export-control and sanctions laws at the bor - der and investigates suspected unauthorised exports, embargo breaches and related customs offences. Where criminal or administrative misconduct is sus - pected, public prosecutors and law enforcement
scoring its exceptional character. Transactions that were completed without required clearance can also be unwound retroactively. The Ministry’s decisions are subject to judicial review before the Administra - tive Court of Berlin. 6.7 Golden Shares and Special Government Rights Germany does not generally employ “golden shares” or similar permanent special shareholder rights in defence companies. Unlike some jurisdictions, the German government does not typically retain special voting rights, veto rights or government-appointed directors simply by virtue of a state-held golden share. Instead, Germany protects national security inter - ests through its foreign investment screening regime under the Foreign Trade and Payments Act and the Foreign Trade and Payments Ordinance. The Federal Government may review acquisitions of defence and security-related companies by foreign investors and may prohibit transactions or approve them subject to conditions where national security concerns arise. 6.8 Joint Ventures in the Defence Sector While Germany does not have a separate legal regime specifically governing defence joint ventures, transac - tions involving defence companies are subject to the foreign investment screening regime under the Foreign Trade and Payments Act and the Foreign Trade and Payments Ordinance. Joint ventures involving foreign partners may be reviewed where they could result in access to sensitive defence technologies, know-how or security-relevant capabilities. The Federal Govern - ment may impose conditions or prohibit a transaction if it poses a risk to public order or national security. In addition, defence joint ventures must comply with: • export control laws governing military and dual-use technologies; • the War Weapons Control Act, where war weapons are involved; and • security requirements applicable to classified infor - mation and defence contracts. Technology transfer and IP issues are typically addressed by contract.
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