Merger control

The merger control (including merger control ) is an instrument of the state (partly also of interstate ) competition, which is aimed to prevent substantial interference with the free and unfettered competition due to excessive concentration of corporate power. Rules for merger control are made in a variety of countries around the world - including all the major industrialized nations and all Member States of the European Union with the exception of Luxembourg - and partly also on an international level, such as in European law.

Merger control has considerable practical importance. It provides in almost every major company purchase a necessary way station dar. addition, it is particularly important in markets that are already rather concentrated, such as the food retail sector, the power supply or the petroleum trade, an important tool for the protection and preservation of the remaining competition.

2.1 need for individual merger control
2.2 Material standard of review and examination procedures
2.3 ministerial approval

5.1 Competition Authorities
5.2 Sources of law

Foundations and meaning of merger control

Concept and nature

Merger control is used to prevent adverse effects on competition by the coalescence of previously independent undertakings or parts and associated circumstances " excessive " concentration of corporate power. Concentration operations are for this purpose (the Merger or Merger ) subjected prior to its implementation a state control method, in which the effects of the concentration process are identified and evaluated on competition and remedial measures may be needed or the operation is also prohibited entirely.

The convergence of enterprise ( the German Act against Restraints of Competition - called a merger, but for which the term " concentration " and, in certain cases, "Fusion" is common - GWB ) is an everyday modern economic life. The number of cases and their allocation to the various industries in Germany show that such concentrations are not specific to only a few lines - even if individual industries may be more active than others in this respect ( see adjacent figure).

No less diverse are its manifestations. The most frequently encountered form - if not the rule - is the company's purchase, in which a company assumes, for example, the majority of the shares and voting rights in, or into another company (also called a share deal ), or by another company assets acquired, operating a or part of make up (eg a single production site, one or more retail outlets are chain stores, etc., also called asset deal). Furthermore, the establishment of a joint venture (joint venture) by two or more previously independent companies belong here. In addition, concentrations of corporate power can but also by a variety of more subtle, less transparent measures be effected about the fact that a company is granted the right, the majority of the members of the management bodies ( management, board, supervisory board, or similar) of another to occupy the company and hence, indirectly, to determine the corporate policy of the latter.

Competition law is mergers in principle positively. Mergers may in many ways have pro-competitive effects, as far as they allow, for example, cheaper offer products or services through economies of scale, resources ( production capacity, know-how, supply sources, etc.) more efficient use or small, no longer competitive on its own business units again to make an effective market participants.

The merger control to draw on until corrective action when a quasi -free state competition by focusing - especially a dominant position - for the first time would create or an existing condition of this kind would cemented by further concentration. If this is the case, permitted the merger control by the competent competition authority to intervene, by fully or partially prohibited the transaction or renders its implementation depends on the fulfillment of pro-competitive obligations or conditions. Adverse effects on competition can have combinations especially in the following way:

Join competitors combined (so-called horizontal merger ), reduce, for example, the alternatives of the demand side ( suppliers or customers ) and get accordingly, the possibilities of the combined entity to prevail with their price and condition ideas against both their suppliers and their customers. Close approximately two grocery retail chains together, so the consumer can look at the prices that calls one of these chains, no longer escape the fact that it instead buys at the other chain. Make horizontal mergers under the Federal Cartel Office notified cases, by far the largest part (2008: 1,341 of 1,675 registered projects).

Close to businesses along the downstream side within the same value chain before - or so as the manufacturer with the wholesaler or the wholesaler to the retailer each of the same product, (so-called vertical merger ) this can the competitors of these companies access to sources of supply or markets more difficult. For example, electricity-generating energy companies have acquired stakes in municipal utilities and other electricity distributors to a considerable extent in the past, so these distributors often no longer were eligible for competing power generators as current customers.

Join enterprises together based on various markets ( different products and / or different geographical sales regions ) are active (so-called conglomerate merger ), in particular their newly gained financial strength of the combined entity may have anti-competitive effects, namely a deterrent to competitors - and disciplining - act. Companies that are active in different product markets or sales areas, have better chances to spread the risks of their business and to compensate internally.

Economic Importance

The effects of the merger control in economic practice actually has, is difficult to estimate. The absolute numbers of cases - as measured by the Bundeskartellamt registered or displayed in recent years proposed merger (Figure) - are actually quite remarkable. Subject to some fluctuations, the Bundeskartellamt received in the past few years around 1,500 applications per year, with the number of cases to 2007 showed a slight upward trend. The development of the number of cases also has a certain correlation with the general economic development and the business climate.

The large number of cases does not mean that the Bundeskartellamt had actually used this scale on the design of the projects registered content influence. In 1588 decisions which are taken in the year 2008, the Federal Cartel Office, the Office has only availed in 8 cases of its statutory powers design by conditions or requirements has ( 4 cases) or the project has prohibited ( 4 cases). In further 56 notified cases in which the Bundeskartellamt has finally made a decision, because the notifying parties have withdrawn their application, an influence of the Cartel is after all not be excluded, even if the withdrawal of an application may have a variety of other reasons (eg collapse of the financing of the project, change in strategy of the companies involved, etc.).

The development of the notified transaction also documented the ever progressive internationalization of the economy. Yet the proportion of purchasers with headquarters abroad in all the Federal Cartel displayed merger in 1991, about a quarter, he is on almost half risen (Figure) until 2007. Among the nations in which the foreign acquirer domiciled, took part in 2008 the United States with approximately 25 %, by far the top spot, followed by its European neighbors France, the Netherlands, the UK and Austria with around 10 %. Japan follows with less than 5% and 8th place

Basic elements and concepts of the law of merger control

A number of countries of the world - including all the major industrialized nations and all EU Member States except Luxembourg - have a private right of merger control. There are also regulations on an intergovernmental level, such as in European law. Although these laws in detail in part differ significantly from each other, can nevertheless some basic elements and principles make up that are a majority of the different systems of merger control in common:

Aufgreifschwellen

Almost all jurisdictions make the question of whether a specific concentration process of merger control subject, depends on whether he certain - mostly formal - meets minimum requirements, which tie usually on the economic importance of the project or of the parties (so-called Aufgreifschwellen ). The Aufgreifschwellen serve obviously uncritical concentration processes to avoid the bureaucracy of a merger control from the outset and only submit those projects for the control in which a certain anti-competitive potential of at least can not be excluded a priori. Is common and widespread (especially in Western European jurisdictions, such as Germany, Austria, Netherlands, France, Belgium, etc.) to establish the Aufgreifschwellen to the annual turnover of the undertakings concerned. Advantage of these criteria is that the parties may determine relatively easily and reliably whether their project is subject to regulatory control or not. Disadvantage, however, is that sales-related Aufgreifschwellen permit is usually only a very rough pre-selection and therefore have relatively little " filter effect ". Also common, but less common, a connection exists exclusively or at least even to the market share of the parties (eg the UK, Spain, etc.). The better filtering effect of these criteria is, however, paid for by the higher uncertainty in the determination of market shares, based on the fact that this may very complex market considerations must be made. Addition, however, other criteria are found. Some jurisdictions, for example (eg United States, Japan, Mexico, etc.) provide supplementary or instead from the operating assets of the companies involved.

Comments on the table: ( 1) as of October 2009. Excluding Bagatellregelungen and range exceptions (press, financial institutions, etc.) (2 ) Domestic sales of a company involved more than 25 million EUR, domestic sales of another participating company, more than 5 million EUR. (3 ) Alternative conditions. It is sufficient if one of these thresholds is achieved.

Leading end monitoring and enforcement ban

Merger control is usually leading control, ie Control, which takes place before the merger is actually performed. Behind this is the practical consideration that a trailing control in the case of a competitive unacceptable concentration this to reverse in hindsight ( disentangle ) had, which is associated with considerable effort and usually not completely successful. Thus, for example, technical know-how that has been disclosed to the other if a party, do not just move back again.

Thus, the leading control can take place effectively, it is normally secured by a legal prohibition on completion. The prohibition imposed prohibiting the parties to a concentration that reaches the Aufgreifschwellen and is therefore subject to controls to anticipate in whole or in part, as long as the competition authority has not approved the concentration. Until the release of the project by the Competition Authority may, in other words neither transferred shares nor transferred as operating plants or occupies governing bodies of the acquired company with representatives of the acquirer or any other enforcement action is taken. Measures that will be taken in breach of the prohibition imposed are usually ineffective. Mostly, the competition authority may also impose a fine in this case.

Procedures and deadlines

Merger control is basically an application process. It is set in motion by a written request ( the so-called merger notification ) of the companies participating in the relevant competition authority. On their own initiative, the Competition Authority is investigating a concentration only in exceptional cases, such as when there is a fear, a merger had been carried out in breach of the prohibition on implementation.

Thus, the leading control on corporate acquisitions and similar economic processes not to a - particular in terms of time - is not calculable for the risk factor involved, the merger control is usually bound to relatively rigid statutory deadlines. The deadlines are usually set with the receipt of a complete notification to the Competition Authority in motion. Will the competition authority to intervene against the project, they must do so within the time limits. Usually see the legal time limit rules to a two-part process. It consists of a preliminary phase in which the competition authority can decide whether to release the project immediately or in a detailed examination ( the main test ) wants one ride, and the main examination (several months), in which the authority to examine the project in detail and prohibit, where appropriate, can. Should the Authority within the time limits, no decision, the project often as released applies.

Statutory deadlines for the submission of a notification to the Competition Authority, however, are uncommon and occur in only a few countries. How to notify within 15 banking days after the establishment of the first binding document between the parties, for example, in Brazil submitted. Usually this is the signing of a Letter of Intent or a Memorandum of Understanding. But even without legal time limits, there is a factual time pressure especially for those involved acquisition of a company in general. Not infrequently, the success of a corporate acquisition depends on that the transaction is completed at a particular time and carried out - such as the financing of the project is assured only within a certain time frame. Because of the statutory prohibition enforcement, the parties will therefore be tried in practice, so time to register the project with the Competition Authority that the project can be released to the planned completion date.

Sources of law

Germany

In German law, the rules on merger control in the Act against Restraints of Competition (GWB ) can be found, in its § § 35 et seq addition also apply to the merger control the general provisions of the GWB in particular on the authorities jurisdiction, administrative procedures, and the legal, be found in § § 48 ff of the law.

The Federal Cartel Office has the statutory provisions on merger control also explained in detail by management principles in the form of fact sheets. On the merits, the administrative principles contain systematic representations of the administrative practice of the Office, so explanations about how the Office interprets the statutory provisions on merger control and how it has been applied to various situations and will apply in the future. Leaflets exist, inter alia, for the execution of a merger control proceedings ( including explained forms for the application), for the treatment afterwards - ie in disregard of the prohibition enforcement - registered mergers or the assessment of concentrations with an international dimension. The leaflets are available in several languages on the Office's website for download.

The administrative principles of the Federal Cartel are not legally binding; in particular, the courts are not bound by the administrative principles when they have to decide on a case of merger control. Therefore, they are not sources of law in the proper sense. Nevertheless, the antitrust agency may need to hold on to the administrative principles in individual cases can ( and from the viewpoint of so-called self- binding ) when there are no reasonable grounds for deviating from the principles of treatment in this particular case. In addition, the leaflets are a by no means unimportant work assistance for the practice because they allow the parties to a merger is to anticipate the expectations and standards of the antitrust decision.

European Union

At European level, the equivalent of the German § § 35 et seq of the ARC, the provisions of Regulation No 139 /2004 of 20 January 2004 on the control of concentrations between undertakings ( the EC Merger Regulation ), an ordinance on the basis in particular of European competition law ( Article 101 ff TFEU). The Regulation sets out the key substantive aspects of European merger control (among Aufgreifschwellen, proposed facts, form and time limits for decisions, investigative powers of the Commission and rules for the distribution of cases between the Commission and the competition authorities of the Member States). Details of the design of the European merger control proceedings ( processes in detail, dealing with deadlines, involvement of third parties, particularly file inspection and consultation, etc. ) governs a separate legal regulation, namely Regulation No 802/ 2004 of 7 April 2004 implementing the EC merger Regulation ( the Implementing Regulation). The latter also contains the forms which are to be based on the notification of a concentration (so-called "Form CO " for the normal case, as well as other forms for certain special cases). In contrast to German law, the forms have therefore in European law legal standard quality.

To a much greater extent than the Federal Cartel Office, the European Commission has also published management principles in the form of notices and guidelines. Of particular importance are the " Consolidated Commission on jurisdictional issues ," which explains the Aufgreifschwellen and combination facts of European law, as well as the various messages to the competitive assessment of mergers, including the releases on the assessment of horizontal mergers, on the assessment of non-horizontal mergers and restrictions which are necessary for the implementation of a concentration. A complete, continuously updated list of all publications available on the website of the Directorate-General for Competition of the European Commission under the heading of mergers / legislation available. As to the legal significance of these publications, so this applies on the merits nothing more than for the leaflets of the Federal Cartel Office ( to see above ).

On March 23, 2013, the European Commission has published proposals for simplification of procedures in connection with the EU Merger Regulation. This is intended to reduce the administrative burden and are supported by a streamlining of the process to the needs of firms. The scope of the simplified procedure under the EU merger control, the threshold should be increased from 15% of the market share to 20% in the case of mergers between companies that are in the same market in competition. Case of mergers between companies that are active in upstream or downstream markets (eg, a manufacturer of motor vehicle parts and a motor vehicle manufacturer) is proposed to raise the threshold from 25% to 30%. The Commission would also provide the opportunity to even use the simplified procedure, if two companies operating in the same market, although together have a market share of more than 20% of the market share by the merger but hardly increases.

Austria

In Austria, the merger control, especially in the federal law against cartels and other restraints of competition ( antitrust law, Cartel Act ) is regulated. Equivalent to the federal German § § 35 ff GWB is primarily the Cartel Act § § 7 ff. In addition, the Austrian Federal Competition Authority has published Principles of management, including a familiar form for the notification of concentrations.

Switzerland

Legal basis in Switzerland is the Federal Act on cartels and other restraints of competition ( antitrust law ). Aufgreifschwellen and material standards of judgment rules in Article 9 et seq of the Act; Details of these provisions as well as the transition of the merger control procedure, the Regulation on the control of concentrations between undertakings (the Merger Regulation ).

Merger control in Germany

The merger control in Germany is governed by § § 35 ff of the Act against Restraints of Competition ( ARC). After the merger control in Germany is basically organized as follows:

Need for individual merger control

A grouping of firms must be formally notified to the Bundeskartellamt, if

The parties have achieved a total worldwide sales of more than 500 million euros and also
At least one of the parties has achieved within Germany revenues of more than 25 million euros, and any other party to revenues of at least 5 million euros.

This second domestic turnover threshold of 5 million euro was introduced by Article 8 of the Third SME Relief Act of 17 March 2009 and is intended to reduce the scope of German merger control law in particular for SMEs.

From the notification, such mergers are excluded, where, on the one hand, a medium-sized company (in the sense of an independent company generates more than 10 million euros in sales worldwide) is involved, and mergers, which concern a minor market (ie a market, has existed for at least five years, be on the implemented but not more than 15 million euros per year). The fact, however, that one or more of the participating companies have their headquarters abroad, makes a German merger control is not readily superfluous.

As long as a merger by the Federal Cartel Office has not been released, the parties may not implement the merger. It may, in other words, basically acquired neither shares nor land, plants, furniture, patents or other assets are transferred. Fully tighten the company's merger yet, so are the agreements that make up the merger, ineffective. Addition, the Bundeskartellamt may impose fines sensitive and order the separation of the merger.

Material standard of review and examination procedures

The Federal Cartel Office prohibits a merger, when created or strengthened by the merger on the markets concerned by the merger of a dominant position. Despite a dominant position, a merger is then exceptionally not prohibited if the merger leads to improvements in market structures (eg, the fact that one of failing competitors alive or a new market is opened ), and these improvements are so significant that it disadvantages, associated with the dominant position outweigh. To determine the prohibition requirements, the Federal Cartel Office is equipped with extensive investigative powers.

In the cases subject to control the Bundeskartellamt has in principle an examination period of four months after receipt of a complete application; that is, it may prohibit the merger within this period. There must, however, the notifying parties within one month of receipt of the notification (so-called " Monthly Letter " ) that it has occurred in the examination of the concentration ( main examination ). The main examination should be initiated if a further examination of the concentration is required ( § 40 para 1 sentence 2 of the ARC). In the main examination, the Bundeskartellamt decides by formal decision whether the merger is prohibited or released. The release decision is justified; they may be subject to conditions, including requirements ( § 40 para 3 of the ARC ). The criteria may not aim to subject the parties to a continued control. Decisions in the main examination are disclosed ( § 43 ( 2) No. 1 GWB ).

Is the proposed merger factually problematic, as it is usually released within considerably less than four weeks from the Federal Cartel Office.

Ministerial approval

According to § 42 GWB, it is the Federal Minister for Economic allowed a merger, which was prohibited by the Federal Cartel Office may issue. This authorization should be granted if there is an overriding public interest exists. This condition may be subject to conditions. A report by the Monopolies Commission is required.

European merger control

At EU level, the merger control is governed by the so-called Merger Regulation (Regulation 139/2004/EG ). The merger control by the Commission of the European Communities ( DG Competition ) are subject to mergers when, according to Article 1, Section 2 of the Merger Regulation

The participating companies worldwide and generated sales of more than 5 billion euros,
Least two undertakings concerned have an aggregate Community -wide turnover of more than EUR 250 million and
Not achieve more than two- thirds of their Community-wide turnover within one and the same Member State participating companies.

If these thresholds are not reached, the European merger control is still in accordance with Article 1, paragraph 3 ECMR place when

The combined aggregate worldwide turnover of the undertakings concerned is more than EUR 2.5 billion,
The combined aggregate turnover of all companies involved in at least three Member States, 100 million euros,
In each of at least three of these Member States the aggregate turnover of at least two parties concerned is more than EUR 25 million,
Community-wide turnover of at least two parties exceeds 100 million euros and
Not achieve more than two- thirds of their Community-wide turnover within one and the same Member State participating companies.

As for the German merger control, as is also true for the EU control that the merger may not be consummated, as long as it has not been approved by the Commission. The release is not granted under European law, if effective competition in the common market is prevented by the merger, in particular through the creation and strengthening of a dominant position. The Commission will apply in this case in accordance with Article 2 of the Merger Regulation frequently the so-called SIEC test ( Significant Impediment to Effective Competition). Here, the merger with respect market share, financial strength, barriers to entry, supply and demand development and other criteria (Art. 2 para 1 lit. B ) and impacts on potential and actual competition (Art. 2 para 1 lit a) checked.

In further examination procedure, the Commission determined depending on the type of bonding ( horizontal, vertical or conglomerate ) the possibility and probability of non- coordinated ( single dominance ) and coordinated ( joint dominance ) effects. Evidence may include: foreclosure, Marktzutrittschschranken, weakening of competition and incentives (price) transparency, deterrent mechanisms, no sufficient competition between other competitors, limited customer switching, eliminates an important competitive force, and much more. If coordinated or non- coordinated effects may occur that lead to the assumption that the effective competition is impaired, the Company may so-called remedies ( remedies ) offer (for example, sale of a corporate division to competitors so that dominance is generated in this segment ). In addition, the Commission is under Article 8 of the Merger Regulation to the possibility to combine the decision conditions and obligations ( for example, commitments).

Should the Commission grant approval of the merger, the process is terminated and the merger may not be consummated in accordance with Articles 7, 8 ECMR. Has the Commission by the deadline of 25 days (Art. 10 para 1 of the Regulation ) in deciding " significant concerns ," said a second phase has begun. However, such is unlikely at very high market shares.

For a merger, which is subject to EU merger control, is a Member State merger control principle no longer held (so-called one-stop - shop). But there is, according to Article 9 ECMR a message right of Member States to inform the Commission if in that country the creation or strengthening of a dominant position through a merger threatens ( " German clause "). The Commission shall indicate whether the case should be dealt with at national or EU level. If they opt for a transfer of test results to national law of the Member State, then the further course of the inspection procedure is carried out exclusively by the national rule provisions and not according to the EU regulations. Where Member States have a legitimate interest (such as public security, plurality of media, prudential rules, acquisition of a French water utility by an English ) pursuant to Article 21, Section 3, 4 of the Merger Regulation, as well as national competition law may be a priority.

For a review of a merger under the European Merger Regulation, the following scheme offers, which is also used by the European Commission in your decisions:

Merger control in other countries

In the U.S. merger control by the Federal Trade Commission is perceived.

In Switzerland, the merger control by the Competition Commission is perceived.

233619