GERMANY LAW AND PRACTICE Contributed by: Daniel Möritz, Jan Bonhage, Hendrik Bockenheimer, Carl-Philipp Eberlein, Markus Ernst, Matthias Rothkopf, Christoph Wilken and Alexander Rang, Hengeler Mueller
Competitive Assessment Market share
In addition, the FCO can order certain companies to notify all concentrations for an initial period of three years if a previously conducted sector inquiry has shown that there are objectively plausible indica - tions that future concentrations could significantly impede effective competition in Germany – provided the acquiring undertaking’s domestic turnover was more than EUR50 million and the undertaking to be acquired achieved a domestic turnover of more than EUR1 million in the previous business year. Thirdly, the concentration must not meet the jurisdic - tional requirements of the European merger control regulation. In this case, the transaction – subject to a potential referral to the FCO – only requires notifica - tion to the EC (“one-stop shop”). Fourthly, the concentration must have sufficient effect within Germany. This may require a more detailed analysis in the case of foreign-to-foreign mergers. Informal pre-notification consultation with the FCO is not mandatory – although it may be advisable in complex cases. After formal notification, the FCO has a “Phase I” review period of up to one month to deter - mine whether it either: • unconditionally clears the transaction; or • opens “Phase II” proceedings, owing to preliminary competition concerns based on the substantive criteria set out in 6.2 Criteria for Antitrust/Compe- tition Review . Phase II extends the Phase I review period by four additional months (ie, a total of five months from the date of filing). This period may be extended by an additional month if the parties offer commitments, and by any further period with the parties’ consent. 6.2 Criteria for Antitrust/Competition Review The FCO is empowered to prohibit a concentration if it would significantly impede effective competition – in particular, as a result of the creation or strengthening of a dominant position.
The competitive analysis normally begins with the market shares of the merging parties and their com - petitors. The ARC provides for a rebuttable presump - tion of single dominance where one undertaking has a market share of at least 40%, and of collective dominance where three or fewer undertakings have an aggregate market share of at least 50%, or five or fewer undertakings have an aggregate market share of at least 66.6%. These thresholds indicate a mar - ket share level where the FCO would typically carry out a thorough investigation, as opposed to a rather straightforward clearance based merely on the par - ties’ low-to-moderate market shares. Additional factors Besides market shares, additional factors may be rele - vant for the competitive assessment, including factors such as closeness of competition between the merg - ing parties, barriers to entry and potential competition, the parties’ financial strength, and the countervailing In the context of FDIs, the FCO pointed out in its clearance decision (04/2020) regarding the acquisi - tion of German-based Vossloh Locomotives GmbH by Chinese state-owned manufacturer CRRC Zhuzhou Locomotives Co Ltd that certain particularities need to be taken into account when assessing the market position of state-owned companies originating from centrally planned economies. Notably, the FCO con - sidered that companies ultimately controlled by the Chinese state form a large corporate group, which benefits from economies of scale and a high level of vertical integration along the supply chain. Further - more, Chinese state-owned companies are more likely to be able and willing to engage in a low-price strat - egy that is not based on comparable cost advantages and may therefore damage competitive structures in the long run. In this regard, the FCO also took into account that Chinese state-owned companies have access to financial resources through subsidies from the Chinese state and loans from state banks. buyer power of customers. Foreign direct investment
244 CHAMBERS.COM
Powered by FlippingBook