In February 2025, the Higher Regional Court of Düsseldorf issued two parallel decisions overturning filing fee decisions for proceedings initiated by the German Federal Cartel Office (FCO).^[1] 

The FCO had used the transaction-value-based jurisdiction test to challenge post-closing acquisitions by Adobe (of Magento and Marketo), claiming that despite their low German turnover, their high-purchase prices triggered mandatory filing requirements in Germany, even though the FCO ultimately did not find a significant impediment to effective competition. 

The court rejected this expansive reading and confirmed that the transaction-value threshold is intended to capture only exceptional cases, namely where turnover alone fails to reflect a target’s actual competitive significance in Germany.

The transaction-value threshold

The transaction-value threshold was introduced in 2017 with the 9^th amendment to the Act against Restraints of Competition (ARC) in § 35(1a) ARC. It was inspired by the fact that a target’s competitive significance is not necessarily adequately reflected in its turnover (for example, in the pharmaceutical or technology sectors). However, the exact relationship between the turnover-based and the transaction-value thresholds and the interpretation of central criteria of the transaction-value threshold remain unclear to date. This is notwithstanding the fact that the FCO (together with the Austrian competition authority BWB) published guidance on the transaction-value threshold.

§ 35(1a) ARC sets out five conditions for the application of the transaction-value threshold:

1. The combined turnover of all parties involved exceeds €500 million;
2. The domestic turnover of at least one party involved exceeds €50 million;
3. The domestic turnover of none of the other parties involved exceeds€17.5 million;
4. The transaction value exceeds €400 million;
5. The target has “significant domestic activity“.

The court’s decision

The court provided helpful clarifications in relation to two key aspects of the transaction-value threshold:

• Transaction-value test is a subsidiary threshold: The court underscored that the transaction-value threshold does not create an alternative or parallel path to mandatory merger notification. Instead, it supplements the standard turnover thresholds in rare cases where turnover does not adequately capture a target’s relevancy for competition in Germany. It is designed for cases involving early-stage or innovative targets with significant competitive potential, but limited revenue. In contrast, if a target already generates stable turnover (even if only modest in Germany), that turnover remains the primary basis for assessing jurisdiction, even if a high acquisition price compared to turnover (for example, a multiple of 5-10x) might suggest otherwise as the FCO claimed.
• High valuation does not establish a domestic nexus: The court re-iterated that a “significant domestic activity” requires evidence of actual operations in Germany (for example, local customers, personnel, or other economic activities) at the time of the transaction, that is, abstract market potential or speculative future growth is insufficient. In the cases of Magento and Marketo, both had long-standing global customer bases and established products. However, their activities in Germany were modest and the court considered this insufficient considering the overall size of the German market (for example, low German customer base, almost non-existent local presence, negligible number of local staff compared to the global workforce). The court also rejected the idea that the transaction price could be retroactively broken down to infer a German share. Without concrete valuation data tied to Germany, such an allocation was deemed speculative and legally irrelevant.

Practical implications

The court’s decision confirms that the transaction-value threshold is a narrowly construed exception, not an expansive gateway for reviewing high-value transactions with low German turnover, bringing valuable legal certainty. 

It is a welcome clarification after the court left some of the questions open in its previous decision in Meta/Kustomer (still pending before the Federal Supreme Court). Nevertheless, it remains important that in comparable transactions the acquirer critically assesses whether: 

1. The target’s turnover adequately captures its relevancy for domestic competition; and 
2. It has “significant domestic activity” as clarified by the court. 

The court’s decision should not wrongly lead to the conclusion that there is no potential scope of application for the transaction-value threshold, as evidenced by the FCO’s review in the Thermo Fischer Scientific/Olink and GlaxoSmithKline/CureVac cases in the biotech and pharmaceutical sectors last year. Even based on the court’s decision, it is unlikely that the FCO would have denied its own jurisdiction here given the specific sectors and circumstances for which the transaction-value threshold has been designed.

In recent public comments, the FCO President Andreas Mundt questioned whether the introduction of the transaction-value threshold has been an effective tool to capture so-called “killer acquisitions” in light of the court’s decision. We have seen similar developments in Austria, where the Supreme Cartel Court confirmed that the acquisition of JenaValve by Edwards Lifesciences did not trigger a mandatory notification under the Austrian transaction-value threshold due to limited significant domestic activity by the target.^[2] It remains to be seen whether the legislator in both jurisdictions will amend the legal threshold or move to introduce call-in powers instead as in other jurisdictions.

Footnotes

^[1] Higher Regional Court of Düsseldorf, First Cartel Senate, decision of 26 February 2025, Kart 2/24 (V). Higher Regional Court of Düsseldorf, First Cartel Senate, decision of 26 February 2025, Kart 3/24 (V):. 

^[2] Supreme Cartel Court, decision of Supreme Cartel Court, decision of 26 March 2025, OGH 16 Ok 2/25. The FCO denied jurisdiction for the same transaction which has been notified by the party based on the same issue, namely, lack of significant domestic activity, on 20 February 2025.