The first half of the year was characterized in particular by the increased use of relatively new instruments by the Federal Cartel Office and, in keeping with the current major sporting events, produced a number of decisions on the subject of sport. Although there were no major fines, the developments in cartel damages law and sustainability agreements kept gaining momentum.

I. Merger Control

1. Pharmaceutical Transactions Caught by Transaction Value Threshold

In the first half of the year, the FCO cleared four high value pharmaceutical transactions. None of the transactions would have been notifiable under the German turnover thresholds, but were recognized solely via the transaction value threshold, as the purchase price exceeded EUR 400 million in each case:

Back in March, the FCO gave its green light to the acquisition of all shares in Germany’s MorphoSys AG by the Swiss Novartis AG in Phase I. The takeover bid for the biotechnology company MorphoSys amounted to approximately EUR 2.7 billion. In terms of substance, the review focused on research and development concerning active ingredients against a certain form of leukaemia. Here, MorphoSys was on the verge of obtaining marketing authorization for a new active ingredient that is to be used in combination with one of Novartis’ already marketed products. Ultimately, the authority did not have competition concerns, since a large number of potential alternative active ingredients are currently being developed for combination or second-line therapy and generic products are expected to enter the market during the forecast period.

In April, the FCO cleared the takeover of the German company Cardior Pharmaceuticals GmbH by Denmark’s Novo Nordisk A/S for a purchase price of approx. EUR 1 billion in the first phase. Cardior is a biotech company specializing in heart diseases. It does not yet have any authorized products, but has an active ingredient in the development pipeline to treat heart failure following a heart attack. As Novo Nordisk's research and development activities in the field of heart failure are aimed at other patient groups and competition from alternative active ingredients and biosimilars or generic products can be expected, the FCO did not raise any concerns.

In May, the FCO approved the acquisition of all shares in US-based Shockwave Medical by Johnson & Johnson for approx. USD 13.1 billion in Phase I. Although the acquisition of an innovative medtech company by one of the world's largest pharmaceutical and medical technology group gave by itself reason for closer scrutiny, the authority ultimately had no objections. Shockwave Medical develops technologies for the treatment of cardiovascular diseases and sells products based on these technologies. Although Johnson & Johnson's portfolio also includes cardiovascular technology, it does not comprise any products substitutable with those of Shockwave, meaning that there was no direct overlap.

The acquisition of Swedish biotech Olink Holding by Thermo Fisher Scientific Inc. for approx. EUR 2.8 billion was cleared in June following a Phase II review. Olink offers analysis systems and services in the field of proteomics, in particular human proteins and has a superior position in the field of proprietary technology for protein analyses. Thermo Fisher has a strong position in a neighboring technology market. Although the two technologies are sometimes used in a complementary manner, the authority defined distinct product markets due to different customer groups. In addition, the FCO ruled out conglomerate effects in the form of bundling due to the diverging technology, procurement processes and prices. Finally, it found that there were sufficient alternatives in the innovative growth markets, which made the joint position of the merged entity contestable.

The decisions show that the transaction value threshold has become an integral part of the German decision practice. However, due to a lack of direct overlaps, the cases under review did not pose any significant competition problems, even where the development pipeline and innovation competition was concerned.

2. Withdrawal of Notification in erfal/Hunter Douglas

In order to avoid a prohibition, Hunter Douglas withdrew its notification of the acquisition of erfal GmbH & Co KG in April after the Federal Cartel Office had investigated the case for over a year. Hunter Douglas is the leading manufacturer of systems for interior sun protection (e.g. pleated blinds, venetian blinds or roller blinds). erfal is active on the downstream market and assembles these systems individually according to end customer’s specifications.

While the transaction only led to minimal horizontal overlaps, the FCO had concerns regarding the vertical effects of the merger. According to the FCO, there was a possibility and an incentive for input foreclosure. In view of Hunter Douglas' almost monopolistic market position of over 90% in the pleated blind systems market, other manufacturers would not have had sufficient alternatives to source input. At the same time, Hunter Douglas would have been able to increase its profits by diverting demand on the downstream market to erfal.

3. Market Delineation in the Retail Sector

In April, in the run-up to the approval of the acquisition of the insolvent SportScheck GmbH by Cisalfa Sport S.p.A. (including Sport Voswinkel), the FCO again dealt with questions of market definition between online and brick-and-mortar retail as well as the concept of product assortments, but left these, as in previous decisions, ultimately open.

On the one hand, this applies to the scope of the product assortment. Following a broad approach, this could be defined as encompassing the entire range of sports and outdoor clothing, footwear and equipment. Under a narrower market definition, on the other hand, there could be separate product markets for each of these categories. In addition, the FCO did not take the opportunity to take a general decision on the delineation between brick-and-mortar and online retail business. In any case, as in other retail markets, the authority will take into account the competitive pressure exerted by online retail on the stationary retail of sports and outdoor products.

As a result, the FCO cleared the merger because there was a diverse and lively competitive landscape with other retailers such as Decathlon, JD Sports, Intersport or Sport 2000 both at a national level and in the affected regional brick-and-mortar retail markets.

4. Joining a Cooperative as a Concentration

During the reporting period, the FCO considered the accession of an independent retailer to the EDEKA group to be a merger subject to merger control for the first time. The transaction cleared in May was the accession of Konsumgenossenschaft Leipzig eG to EDEKA Nordbayern-Sachsen-Thüringen eG.

The authority had already previously regarded the multi-level EDEKA group, including the independent retailers, as a single economic unit, since the EDEKA head office provides the members of the eight regional EDEKA cooperatives with far-reaching business policy and strategic guidelines. Due to the special contractual structure, the FCO also assumed an acquisition of control by the EDEKA group in the case in question, although entering a cooperative is not typically considered a concentration.

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This client information contains only a non-binding overview of recent developments in German competition law and is not meant to replace legal advice. In case of comments or questions, please contact:

Hans-Joachim Hellmann
Dr. Stephanie Birmanns
Dr. Christina Malz
Sebastian Gröss
Fabian Ast
Niklas Jacobi