Merger Control Under the GWB and EU Merger Regulation

1. Introduction

Merger control under German competition law and European Union competition law is designed to prevent business combinations that significantly reduce competition, strengthen market dominance, or create durable barriers to entry. It seeks to preserve effective competition while allowing legitimate corporate restructuring, economies of scale, innovation, and investment.

Germany regulates mergers primarily under the Gesetz gegen Wettbewerbsbeschränkungen (GWB), particularly Sections 35–43a, with Section 36 governing the substantive assessment of concentrations. At the EU level, the principal legislation is Council Regulation (EC) No 139/2004, commonly known as the EU Merger Regulation (EUMR).

The two systems operate alongside one another but are coordinated through jurisdictional thresholds and referral mechanisms. A transaction may fall under German national review, EU review, or, in appropriate circumstances, review by another national authority.

The central question is not merely whether a merger increases the size of a business. It is whether the transaction is likely to weaken competition in a way that harms customers, suppliers, competitors, innovation, or the competitive structure of a market.

2. Legal framework

A. German merger control under the GWB

The principal provisions are:

Section 35 GWB: Establishes the general scope of German merger control and applicable turnover thresholds, subject to statutory qualifications and exemptions.

Section 36 GWB: Provides the substantive test for prohibiting concentrations.

Section 37 GWB: Defines a concentration, including certain acquisitions of control, voting rights, assets, and competitively significant influence.

Section 38 GWB: Contains rules for calculating turnover.

Section 39 GWB: Establishes notification requirements.

Section 39a GWB: Permits the Bundeskartellamt, subject to statutory conditions, to require specified undertakings to notify certain future concentrations.

Section 40 GWB: Governs the review procedure and prohibition decisions.

Section 41 GWB: Regulates implementation of concentrations before clearance.

Section 42 GWB: Provides for ministerial authorisation in exceptional circumstances.

Section 43 GWB: Addresses publication of decisions and related procedural matters.

The Bundeskartellamt is the principal authority responsible for German merger review. Its assessment considers the relevant product and geographic markets, the parties' competitive positions, entry conditions, customer alternatives, and the likely effects of the transaction.

Under Section 36(1) GWB, a concentration may be prohibited where it is expected to create or strengthen a dominant position, subject to statutory exceptions and the assessment of countervailing competitive factors. The provision also contains a balancing mechanism for certain improvements in competition in other markets.

B. EU Merger Regulation

The EUMR establishes a centralised system for concentrations with a Union dimension.

Its principal provisions include:

Article 1: Defines the turnover thresholds for a Union dimension.

Article 2: Establishes the substantive test for compatibility with the internal market.

Article 3: Defines a concentration, including mergers and acquisitions of control.

Articles 4–5: Address notification and turnover calculation.

Articles 6–8: Govern the Commission's examination and substantive decisions.

Article 7: Prohibits implementation before clearance, subject to applicable exceptions.

Article 9: Allows referral of qualifying cases from the Commission to Member States.

Article 10: Establishes review deadlines.

Article 11: Provides for requests for information.

Articles 14–15: Address fines and periodic penalty payments.

Articles 21–22: Govern the relationship with national law and referrals to the Commission.

The European Commission's Directorate-General for Competition administers the EUMR.

Under Article 2, the central substantive test is whether a concentration would significantly impede effective competition (SIEC) in the internal market or a substantial part of it, particularly as a result of creating or strengthening a dominant position.

This test reaches beyond transactions that create dominance. A merger between firms that are not individually dominant may still be prohibited if it substantially weakens competitive constraints, including through unilateral effects or coordinated effects.

3. Jurisdictional thresholds and allocation of authority

A. German turnover thresholds

Under Section 35 GWB, the ordinary German thresholds generally require:

Combined worldwide turnover of the participating undertakings exceeding €500 million.

One undertaking achieving more than €50 million in German turnover.

Another participating undertaking achieving more than €17.5 million in German turnover.

A separate transaction-value threshold may apply where the target has limited domestic turnover but the transaction value exceeds the statutory threshold and the other legal conditions are met. The rules contain additional qualifications and exemptions.

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B. EU turnover thresholds

Article 1 EUMR establishes two principal routes to a Union dimension.

Both tests contain additional requirements and exceptions, including the two-thirds rule for turnover concentrated in one Member State.

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These figures should not be confused with the substantive test for prohibiting a merger. Turnover thresholds determine jurisdiction; the competition assessment determines whether the transaction may proceed.

C. One-stop-shop principle

Where a concentration has a Union dimension, the Commission generally has exclusive jurisdiction under the EUMR, subject to the Regulation's referral arrangements and specific exceptions.

This avoids duplicative national merger reviews. Referrals under Articles 4(4), 4(5), 9 and 22 can alter which authority examines a transaction, depending on the statutory conditions and procedural requirements.

Germany therefore does not ordinarily conduct a parallel substantive review of a concentration falling within the EUMR's exclusive jurisdiction. National competition rules may nevertheless apply to matters outside that allocation of jurisdiction.

4. The substantive test: significant impediment to effective competition

The EUMR's SIEC test and the GWB's corresponding substantial-impediment test are broadly aligned in their central concern: whether a merger will materially weaken competitive constraints.

A. Creation or strengthening of dominance

A merger can eliminate a close competitor and give the combined firm the ability to raise prices, reduce output, worsen contractual terms, restrict access, or reduce service quality.

Dominance is important but is not the exclusive route to intervention. The EUMR also covers significant harm in oligopolistic markets where the merged firm does not become dominant.

B. Unilateral effects

Unilateral effects arise when the merged firm can profitably worsen its offer because competition between the merging parties disappears.

For example, if two major suppliers compete closely for the same customers, their merger may remove the most important alternative available to buyers.

C. Coordinated effects

A merger can make coordination between the remaining market participants easier by reducing the number of major competitors or increasing transparency and predictability.

Authorities examine market concentration, transparency, the ability to detect deviations, incentives to retaliate, and the response of customers and smaller competitors.

D. Vertical foreclosure

Vertical mergers combine firms operating at different levels of a supply chain. The authority examines whether the merged undertaking could restrict rivals' access to an essential input or distribution channel.

Examples include a manufacturer acquiring a key distributor, a cloud provider acquiring an important software supplier, or an energy company combining generation and retail operations.

E. Conglomerate effects and ecosystem power

A merger involving complementary products can enable tying, bundling, discriminatory access, or the leveraging of market power from one product into another.

In digital markets, the authority may need to assess data advantages, interoperability, network effects, default settings, access to users, and the ability to disadvantage competing services.

F. Innovation and potential competition

Merger control is not limited to current prices or market shares. A transaction may eliminate an emerging competitor, a research programme, or a credible future entrant.

This is particularly significant in pharmaceuticals, biotechnology, artificial intelligence, cloud computing, semiconductors, and digital platforms, where the target's present turnover may not reflect its future competitive significance.

5. Procedural stages under German and EU merger control

Transaction planning: Identify the acquisition of control or other qualifying concentration and determine whether notification is required.

Jurisdictional analysis: Calculate relevant turnover, assess the German and EU thresholds, and consider referral possibilities.

Pre-notification and filing: Prepare market information, transaction documents, competitor data, customer evidence, and internal assessments.

Initial review: The authority considers whether the transaction raises competition concerns requiring a more detailed investigation.

In-depth investigation: The authority examines market definition, competitive effects, entry, efficiencies, customer evidence, and possible remedies.

Decision: The transaction may be cleared, cleared subject to commitments, or prohibited.

Implementation and compliance: The parties must observe the applicable standstill obligation and comply with any commitments or conditions.

Under the EUMR, Phase I normally lasts 25 working days, subject to applicable extensions and adjustments. A Phase II investigation ordinarily has a 90-working-day deadline, also subject to extensions and other statutory adjustments. The precise timetable depends on the procedural circumstances.

Under Section 40 GWB, the German system provides for an initial review period and, where a main examination is opened, a statutory decision period that is generally five months from receipt of the complete notification. Applicable extensions and procedural rules must be checked for the particular transaction.

Gun-jumping—implementing a notifiable transaction before clearance—can result in substantial fines and potentially remedial measures. The standstill obligation must be treated separately from the ultimate merits of the transaction.

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6. Important case laws: at least eight leading decisions

The following cases illustrate the development of German and EU merger control, including dominance, coordinated effects, conglomerate foreclosure, evidential standards, and jurisdiction.

1. Europemballage Corporation and Continental Can v Commission (Case 6/72, 1973)

Legal principle: Abuse of dominance and structural change.

The Court of Justice considered the relationship between merger-like acquisitions and the prohibition of abuse of a dominant position under the former Article 86 EEC Treaty.

The case concerned Continental Can's acquisition of a significant position in the metal-container sector. The Court accepted that structural changes resulting from acquisitions could, in principle, be relevant to competition law, while requiring the Commission to establish the necessary elements of abuse.

Significance: The case exposed the limitations of relying exclusively on abuse-of-dominance law to address anticompetitive concentrations. It helped establish the need for a dedicated EU merger-control regime.

2. Kali und Salz v Commission (Joined Cases C-68/94 and C-30/95, 1998)

Legal principle: Collective dominance and the failing-division defence.

The Court examined a proposed concentration involving the German potash industry and the application of merger control to collective dominance.

The judgment addressed the circumstances in which a concentration may create or strengthen a collectively dominant position and the relevance of the economic conditions surrounding the transaction.

Significance: The decision illustrates that merger control must examine the structure of the post-merger market and the competitive relationship among the remaining firms. It also demonstrates why claims that a business or division is failing must be evaluated carefully rather than accepted solely on the basis of financial difficulties.

3. Airtours v Commission (Case T-342/99, 2002)

Legal principle: Evidential requirements for coordinated effects.

The General Court annulled the Commission's prohibition of Airtours' proposed acquisition of First Choice in the UK package-holiday market.

The Court found that the Commission had not adequately established the conditions necessary for collective dominance. The analysis required attention to:

Whether competitors could reach a common understanding of coordinated conduct.

Whether deviations could be detected.

Whether effective deterrent mechanisms existed.

Whether customers and outside competitors could destabilise the coordination.

Significance: Airtours remains a leading authority on coordinated effects. It requires competition authorities to support theories of harm with a coherent economic assessment and sufficient evidence.

4. Tetra Laval v Commission (Case C-12/03 P, 2005)

Legal principle: Conglomerate mergers and prospective evidence.

The case concerned Tetra Laval's acquisition of Sidel and the possibility that the combined business could leverage its position in packaging systems into related markets.

The Court of Justice upheld the requirement for a careful assessment of prospective competitive effects. Where a prohibition depends on a chain of future events, the authority must provide convincing evidence supporting the likelihood of those events.

Significance: Tetra Laval is particularly relevant to digital ecosystems, where a merger may create incentives to bundle products, restrict interoperability, or use strength in one market to gain advantages in another. A theory of potential foreclosure must be supported by evidence concerning capability, incentives, and likely market effects.

5. E.ON/Ruhrgas and the German energy-market restructuring

Legal principle: Market structure, vertical integration, and competitive constraints.

The restructuring of Germany's energy markets has generated important merger-control issues involving electricity generation, wholesale supply, retail distribution, and network infrastructure.

These transactions illustrate the need to assess market power across interconnected levels of the energy supply chain, including whether control over infrastructure or distribution channels can restrict competitors.

Significance: Energy mergers demonstrate why a transaction cannot always be assessed by looking at a single product market in isolation. Vertical relationships, access conditions, switching possibilities, and the role of infrastructure can materially affect the competitive outcome.

Qualification: This is an illustrative description of German energy-market merger issues, rather than a citation to one particular judgment establishing a single legal rule.

6. Commission v CK Telecoms UK Investments (Case C-376/20 P, 2023)

Legal principle: SIEC assessment and the elimination of an important competitive constraint.

The Court of Justice overturned the General Court's 2020 judgment concerning the proposed merger of O2 and Three in the UK mobile telecommunications market.

The Court clarified aspects of the SIEC test and the evidential requirements for assessing a merger that removes an important competitive constraint, even where the merged firm would not necessarily become dominant.

Significance: The decision confirms that the EUMR is not confined to traditional dominance cases. Authorities may intervene against non-coordinated effects in oligopolistic markets, but must apply the correct legal test and establish the necessary facts.

7. Illumina v Commission and Grail (Joined Cases C-611/22 P and C-625/22 P, 2024)

Legal principle: Limits of merger jurisdiction and Article 22 referrals.

The Court of Justice ruled on the Commission's approach to accepting referrals under Article 22 EUMR from national competition authorities that lacked competence to review the transaction under their own national merger-control rules.

The judgment rejected the Commission's interpretation of Article 22 that would permit such referrals in the circumstances at issue.

Significance: The case is central to the debate over acquisitions of innovative businesses with limited turnover. It highlights the distinction between a transaction's competitive importance and the legal authority to review it. Authorities must have a valid jurisdictional basis before proceeding.

8. EVH and Others v Commission (Joined Cases C-171/24 P to C-177/24 P, 19 March 2026)

Legal principle: E.ON/RWE asset transactions and the boundaries of merger review.

The Court of Justice considered challenges concerning the Commission's clearance of E.ON's acquisition of RWE's distribution and retail assets in the German electricity and gas markets.

The litigation addressed the legal assessment of concentrations, the relationship between separate operations in an asset-swap arrangement, and procedural questions under the EUMR.

Significance: The judgment is particularly relevant to complex transactions in regulated infrastructure markets. It demonstrates the importance of determining whether interrelated operations constitute a single concentration and of respecting the jurisdictional and procedural framework governing merger review.

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7. Comparative analysis: GWB and EUMR

8. Merger remedies and efficiencies

A. Structural remedies

Structural remedies alter the ownership or market structure that would otherwise result from the merger. They may include:

Divestiture of a business unit or subsidiary.

Sale of overlapping assets.

Transfer of intellectual property or other essential assets.

Sale of a viable business to an independent purchaser.

Structural remedies are often preferred where they can restore an independent competitive force and eliminate the identified harm.

B. Behavioural remedies

Behavioural remedies regulate how the merged business operates. Examples include:

Non-discriminatory access to essential inputs.

Interoperability obligations.

Restrictions on tying or bundling.

Information barriers and safeguards against discriminatory treatment.

Commitments to maintain supply or service levels.

Their effectiveness depends on enforceability, monitoring, duration, and whether the authority can reliably detect non-compliance.

C. Efficiencies and failing firms

Under Section 36(1) GWB, the parties may demonstrate that improvements in competitive conditions outweigh the impediment to competition, subject to the statutory requirements.

Under Article 2 EUMR, efficiencies can also form part of the competitive assessment where they are verifiable and sufficiently likely to benefit customers and offset the identified harm.

A failing-firm defence is not automatic. The parties generally need evidence that the firm's competitive position would deteriorate without the transaction, that a less anticompetitive alternative is unavailable, and that the relevant competitive assets would otherwise leave the market or produce a comparable outcome. The precise requirements depend on the applicable legal framework and case law.

9. Emerging challenges in merger control

A. Acquisitions of nascent competitors

Traditional turnover thresholds may fail to capture the significance of innovative start-ups. A target may have little revenue but possess important intellectual property, technical talent, proprietary data, or a credible path to market entry.

The Illumina/Grail litigation demonstrates that jurisdictional solutions must remain within the limits imposed by the governing legislation.

B. Artificial intelligence and data concentration

An AI-related merger may combine:

Proprietary datasets.

Foundation models and inference services.

Computing capacity and cloud infrastructure.

Distribution channels and user relationships.

Complementary software and developer ecosystems.

The assessment should consider whether the transaction removes a potential rival, creates an input bottleneck, reduces model choice, or raises switching costs. Such concerns must be established through evidence rather than presumed merely because the parties operate in AI.

C. Serial acquisitions and cumulative consolidation

A dominant firm may acquire multiple smaller competitors over time. Individual transactions may appear modest, while the cumulative effect reduces independent innovation and entry.

Authorities must distinguish transactions that are independently notifiable from those that require a different legal basis for scrutiny. Existing merger-control powers should not be extended beyond their statutory limits.

D. Digital ecosystems and interoperability

A merger involving complementary services can create incentives to restrict interoperability, make data portability less effective, or disadvantage competing applications.

The legal question is whether the transaction is likely to produce a substantial impediment to effective competition, not simply whether it creates a larger ecosystem.

E. Cross-border regulatory coordination

Multinational transactions may require coordination among the European Commission, the Bundeskartellamt, and authorities outside the EU. Differences in market definition, remedies, procedural deadlines, and theories of harm can complicate global transactions.

The EUMR's one-stop-shop principle reduces duplication for transactions within its jurisdiction, while referrals and cooperation remain important for cases outside or at the boundaries of that jurisdiction.

10. Practical hypothetical

Suppose a leading German cloud-services provider proposes to acquire a competing AI infrastructure company.

The target has relatively low turnover but owns a specialised inference platform, valuable technical personnel, and contracts with several independent AI developers.

The legal analysis would proceed as follows:

Jurisdiction: Determine whether the transaction satisfies Section 35 GWB, the transaction-value rules where applicable, or the EUMR thresholds. Consider referral mechanisms where relevant.

Market definition: Assess whether the relevant markets concern general cloud infrastructure, specialised AI computing, inference services, or narrower segments.

Competitive effects: Examine whether the target is an actual or potential competitive constraint and whether the merger could foreclose rival model developers.

Entry and expansion: Determine whether competitors can obtain equivalent computing resources, data, and technical capabilities within a commercially realistic period.

Efficiencies: Test whether the transaction generates verifiable benefits that could not reasonably be achieved through a less anticompetitive arrangement.

Remedies: Consider whether access, interoperability, or divestiture commitments would effectively address the identified harm.

Decision: Clear, conditionally clear, or prohibit the transaction according to the applicable legal standard and evidential record.

The fact that the target is innovative does not itself justify prohibition. Conversely, low turnover does not establish that the transaction is competitively insignificant.

11. Conclusion

Merger control under the GWB and the EUMR combines preventive scrutiny with a structured assessment of economic evidence. Germany's national system and the EU's centralised system use closely aligned substantive standards, but their jurisdictional thresholds and procedural allocation of authority remain distinct.

The principal lessons from the case law are that authorities must establish credible theories of competitive harm, assess both present and future competitive constraints, and respect jurisdictional limits. The leading decisions—from Continental Can, Kali und Salz, Airtours, and Tetra Laval to CK Telecoms, Illumina/Grail, and the 2026 E.ON/RWE litigation—illustrate the continuing balance between effective enforcement and legal certainty.