A one-stop shock: Notification requirement for non-full function JVs in Germany on the basis of the value of the transaction

30 November 2021

We recently had an exchange with the German competition authority about the notifiability of a joint venture for car battery cell production under the German merger control rules. The founders of the JV, an automotive company and a manufacturer of battery cells, are based outside Germany and the JV will be established outside Germany as well. Despite falling short of the respective turnover thresholds, the question arose, if the joint venture was subject to the German merger control regime on the basis of the value of the transaction.


Alongside the implementation of the Damages Directive Germany also revised its merger control rules. Against the background of the acquisition of WhatsApp by Facebook in 2014, it was decided to fill an identified merger-control-gap. Mergers worth EUR 400 million or more were thereby subjected to German Merger control despite not falling within the previously all-determining turnover thresholds. Whilst well intended, this inclusion may have led to unparalleled uncertainty within the otherwise relatively straight forward merger regime. As a result, whenever the transaction value of EUR 400 million is exceeded, one is well advised to double check if the merger in question may fall within the scope of the revised German merger control regime.

35 (1a) ARC was introduced to assume control over those concentrations where the involved companies’ turnover does not adequately reflect the potential competitive impact of a proposed merger. This includes for example concentrations in ‘digital-revenue’ markets where companies such as WhatsApp or other digital service providers generate ‘data-revenue’ rather than money. Therein the lack of monetary compensation may lead to the inadequacy of turnover as an indicator for potential anticompetitive effects of a concentration. Concentrations in ‘traditional’ markets on the other hand shall only fall within the scope of § 35 (1a) ARC if the involved undertaking’s turnover, appears to be similarly inadequate to indicate potential anticompetitive effects. For example, this may be true for pharmaceutical companies in the early stages of a drug development.

A local nexus to maintain adherence to the effects-theory?

To establish adherence to the so-called effects-theory, providing that a state should only claim jurisdiction over a merger, if the merger has a sufficient local nexus, the transaction value only applies in case the target undertaking has substantial operations in Germany. According to the Bundeskartellamt’s guidelines, the criteria to establish whether or not substantial operations in Germany exist, may be different for each sector. The Bundeskartellamt for example suggests monthly active users within Germany in digital markets; R&D facilities located in Germany or a target undertakings customers located in Germany. The Bundeskartellamt does however refrain from quantifying any of the aforementioned criteria.

The requirement of “substantial operations in Germany” functions as a qualitative criterion in stark contrast to the in large parts quantitative assessment of the question if a specific merger regime applies.

Non full-function joint ventures caught in the midst

One might be forgiven to overlook the extent of practical implications of a transaction value threshold under German merger control at first glance: Transactions worth EUR 400 million or more are likely to be carried out by undertakings well within the turnover thresholds of European merger control anyway. Thereby rendering aforementioned struggles to a problem rather academic in nature.

Further practical implications do however derive from the fact, that the German merger control regime also applies in case of non full-function joint ventures outside the scope of Art 3 (4) EUMR. Hence, in such cases the German merger control regime may be the only merger control regime applicable. All due to a yet to be shaped qualitative criterion.


Practitioners are well advised to double check if a merger falls within the scope of the German transaction value threshold. It may come as a nuisance to walk the extra mile of a German merger notification. Given the potential for administrative interference (Gun Jumping Rules etc.) it might be a mile worth walking.