Update on antitrust law – Extension of examination period for merger control and cooperation between competitors in times of the corona pandemic

1.         Merger control – in the case of mergers, extended examination periods may have to be observed

In response to the COVID-19 pandemic, the German government intends to extend the examination periods for merges which are subject to merger control.

For the so-called Phase I examination the period may be extended from one month to two months. For the so-called Phase II examination, i.e. in the event that the notified merger needs to be examined in depth, the period may be extended from the current four months to six months. The extension shall to apply to mergers which are notified between March, 1st 2020 and May, 31st 2020. The Bundeskartellamt (German Federal Cartel Office) assumes that the extension of the review periods will come into force in June 2020.

If the examanition periods are extended, companies that merge may have to wait longer until the merger is cleared by the Bundeskartellamt. The implementation of a merger subject merger control requieres that the merger is cleared by the Bundeskartellamt. Prior to clearance there is a prohibition to implement. A violation against this prohibition may be punished by a fine and/or lead to unbundling.

In the case of merger projects the Bundeskartellamt’s possible extension of the examination period should therefore be taken into account when planning the project.

2.         Cooperation and exchange of information between competitors may be allowed

The competition authorities stress the sufficient flexibility of antitrust law to allow cooperation and exchange of information between competitors.

Taking into account the COVID-19 pandemic, cooperation or the exchange of information that would be considered problematic under “normal circumstances” might be allowed. This applies in particular cooperation concerning goods and services which are currently of particular importance and in great demand. Such goods and services include, for example, medical protective equipment and medicines.

In a so-called “Comfort Letter”, the European Commission has, for example, judged a cooperation between pharmaceutical companies to be permissible which involves certain forms of coordination between competitors. The cooperation involves determining production capacity and existing stocks and adjusting or reallocating production and stocks on the basis of forecast or actual demand. The cooperation also includes cooperation in distribution.

3.         Abuse will continue to be strictly pursued; monitoring by Competition authorities

All competition authorities point out that they will not tolerate the abuse of market dominance under the guise of the pandemic. Antitrust law and thus also the ban on abuse will remain in force. For example, price increases for relevant goods should be closely monitored and, if necessary, investigated.

For example, following complaints by various reatilers using the platform „Amazon“ the Bundeskartellamt has asked Amazon to explain how it deals with supply bottlenecks and to state which deliveries are given priority or subordinate treatment.

However, not every price increase by a company with a strong market position necessarily constitutes an abuse of a dominant position. The pandemic and its effects may objectively justify price increases, e.g. due to increased production costs. This also applies to unequal treatment of customers, e.g. through refusal to supply resulting from bottlenecks. If unequal treatment of customers by a dominant company in “normal times” were to qualify as abuse, it may be objectively justified under the current circumstances.

4.         Companies must decide for themselves whether a transaction is admissible – the competition authorities can help here

Companies must assess their own behaviour and evaluate whether a particular business decision constitutes an abuse of a dominant position or a cooperation that restricts competition. Measures should therefore be examined closely. The examination and its outcome should be adequately documented.

The competition authorities are available for informal consultations on intended cooperation. With the “Comfort Letter” (European Commission) or so-called “Vorsitzendeschreiben” (Bundeskartellamt) the competition authorities have tools at their disposal which can help companies to achieve a certain degree of legal certainty.

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