New Merger Filing Thresholds In Germany and Austria

Merger Acquisition Antitrust

Merger notification obligations are changing in Germany and Austria, as new alternative jurisdictional thresholds based on the “transaction value” are being introduced into the respective national regimes, previously solely based on turnover thresholds.

Germany

In Germany, the introduction of a new set of alternative thresholds was approved by both chambers of Parliament and will enter into force upon the (imminent) signature by the Federal President.

Even though the new thresholds are being introduced with a view to better control acquisitions of Internet startups, they apply regardless of the economic sector to any high-valued acquisition of undertakings that have a “significant” presence in Germany.

Under the current thresholds, as long as a transaction does not qualify for EU merger control, it must be notified to the Federal Competition Office (Bundeskartellamt) where during the last financial year preceding the transaction:

  1. the parties’ combined worldwide turnover exceeded EUR 500 million; and
  2. one party’s individual turnover in Germany exceeded EUR 25 million; and
  3. the individual turnover in Germany of another party exceeded EUR 5 million.

The new alternative set of thresholds apply in cases where the first two existing thresholds are met, but not the third. Under the new rules, a notification is required where an acquisition does not qualify for EU merger control and during the last financial year preceding the transaction:

  1. the parties’ combined worldwide turnover exceeded EUR 500 million; and
  2. the acquirer’s individual turnover in Germany exceeded EUR 25 million, whereas neither the target nor any other party had an individual turnover in Germany exceeding EUR 5 million; and
  3. the “value of the consideration paid in return for the transaction” exceeds EUR 400 million; and
  4. the target is active in Germany “to a significant extent”.

The definition of the “value of consideration paid in return for the transaction” includes the purchase price, i.e., all assets and other monetary benefits received by the seller from the acquirer in relation to the transaction as well as the value of any liabilities assumed by the acquirer.

The existing de minimis exemption for independent undertakings with a worldwide turnover of less than EUR 10 million remains in place; however, its scope of application is limited to transactions that fulfill the “old” set of thresholds. No de minimis exemption exists for transactions that are caught by the new alternative set of thresholds.

Merger notification thresholds (Germany)

Existing thresholds New thresholds
Combined turnover of all parties

 

Worldwide > EUR 500 million
 

Turnover of one undertaking

 

Germany > EUR 25 million
Turnover of another undertaking Germany > EUR 5 million < EUR 5 million and undertaking to be acquired has “significant” activities in Germany
 

Transaction value

 

N/A

 

> EUR 400 million

Austria

A reform similar to the one in Germany is underway in Austria, where the amended regime will enter into force on 1 November 2017.

Under the current thresholds, as long as a transaction does not qualify for EU merger control, it must be notified to the Austrian Federal Competition Authority (Bundeswettbewerbsbehörde) where during the last financial year preceding the transaction:

  1. the parties’ combined worldwide turnover exceeded EUR 300 million; and
  2. the parties’ combined turnover in Austria exceeded EUR 30 million; and
  3. the individual worldwide turnover of each of at least two parties exceeded EUR 5 million.

The new, alternative threshold will trigger a notification obligation where an acquisition does not qualify for EU merger control and during the last financial year preceding the transaction:

  1. the parties’ combined worldwide turnover exceeded EUR 300 million; and
  2. the parties’ combined turnover in Austria exceeded EUR 15 million;
  3. the “value of the consideration paid in return for the transaction” exceeds EUR 200 million; and
  4. the target is active in Austria “to a significant extent”.

The “value of consideration paid in return for the transaction” is not defined under the Austrian draft law, but the explanatory notes use wording largely similar to that of the German amendment.

Merger notification thresholds (Austria)

Preexisting thresholds New alternative thresholds
Combined turnover of all parties Worldwide > EUR 300 million
Austria > EUR 30 million > EUR 15 million and undertaking to be acquired has “significant” activities in Austria
 

Turnover of each of at least two undertakings

Worldwide > EUR 5 million N/A
 

Transaction value

 

N/A

 

> EUR 200 million

Austria also has a de minimis exemption with a scope of application limited to transactions that fulfill the “old” set of thresholds. Under this exemption, no notification is necessary where only one party has an individual turnover in Austria exceeding EUR 5 million and all other parties have a combined worldwide turnover of less than EUR 30 million.

No de minimis exemption exists for transactions that are under the new alternative set of thresholds.