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Freshfields Transactions

| 5 minutes read

Revised guidance on the Austrian and German transaction value threshold

Shortly before the end of 2021, the Austrian Federal Competition Authority (Bundeswettbewerbsbehörde, BWB) and the German Federal Cartel Office (Bundeskartellamt, BKA) published revised guidance on the interpretation of the transaction value-based thresholds in Austrian and German merger control law. The revised guidance does not bring about fundamental changes, but incorporates key developments in the decisional practice on the question of when a “significant domestic activity” can be assumed.  In summary, the assessment of the notifiability of transactions under the transaction value threshold continue to increase in complexity, particularly given the authorities’ willingness to rely on factors such as indirect customers and data processing activities. While the revised guidance now provides more transparency on the approach the authorities are likely to take in the future, on substance, it leads to businesses needing to navigate an even broader interpretation of the significant domestic activity criterion.

Development of the transaction value threshold

As a brief recap, in 2017, Austria and Germany had adopted a transaction value-based merger control threshold in addition to the traditional revenue-based thresholds. In recent years the focus on companies’ turnover had been perceived by authorities and policy makers as too narrow, especially in cases where the authorities consider the target company may be a promising start-up that does not yet generate (significant) revenues but may have high competitive potential. Austria and Germany had introduced very similar transaction value-based thresholds. These thresholds are triggered under the following conditions:



The parties’ aggregate worldwide revenue exceeds

500m EUR

300m EUR

The parties’ aggregate domestic turnover exceeds

50m EUR in Germany

15m EUR in Austria

The value of consideration for the concentration exceeds

400m EUR

200m EUR

The target company is active to a significant extent in



While traditional, revenue-based merger control thresholds are fairly clear, the transaction value-based threshold contains criteria that are much more open to interpretation, namely the “value of consideration” and, in particular, the “significant domestic activity” criterion. In an effort to provide some legal clarity, the Austrian BWB and the German BKA initially published joint guidance on the interpretation of the transaction value threshold in July 2018 which laid out the authorities’ understanding of the threshold back at that time.

Practical experiences with the transaction value threshold have since been mixed.

  • First, as the Austrian BWB acknowledged, most transactions that had been notified under the transaction value threshold related to “traditional industries”, rather than transactions in the digital space which the threshold was originally intended to catch. Also, the German Federal Ministry for Economics and Energy acknowledged in a report to the German parliament in January 2021 that the majority of the transactions notified under the threshold from its introduction to January 2021 do not relate as expected to the IT sector.
  • Second, while the authorities’ new guidance has clarified a number of points, such as the fact that R&D activities can constitute a significant activity, this at the same time underlines that the authorities would assume a broad understanding of the “significant domestic activity” criterion (e.g. where a research team is active in Austria/Germany without generating any revenues this can give rise to a filing obligation). As such, the authorities have also engaged in consultations on such jurisdictional questions.

The practical effect of the vague legal criterion of “significant domestic activity” and its broad jurisdictional interpretation by the authorities has often left (and leaves) merging parties with a substantial degree of uncertainty, and the risk that the authorities may follow a different interpretation (and ultimately claim jurisdiction). This can lead to a situation where the authorities send out information requests later in the transaction process or initiate proceedings due to a failure to file in case the relevant transaction has already closed.

In an effort to provide further legal certainty, the authorities have recently published a revised version of the guidelines.

Key take-aways from the revised guidelines

The BWB and BKA recently updated their joint guidance relating to the transaction value-based thresholds.  Some of the most notable updates relating to the “significant activity” criterion include the following:

  • The guidance now explicitly states that indirect users of a digital service can be relevant to assume a “significant domestic activity”. Notably, the authorities will not only look at the direct customers of a digital service (e.g. the users of an app) to determine whether it is active to a “significant extent”, but also at whether the digital service’s offering was included in the offering of other digital services (i.e. there are third parties incorporating or reselling the target’s offering), and whether this other digital service had customers in Austria or Germany. Such indirect users of the target’s digital offering can be considered by the authorities to determine that the significant activity criterion is met.
  • Data-related activities relating to domestic consumers can also determine that the significant activity criterion is met, including where the target may only process data of domestic consumers. According to the BKA, the mere fact that a company has access to the data of its customers’ (e.g. online retailers’) customers (German consumers) can amount to a significant activity in Germany, thereby leading to a very wide interpretation of the domestic significant activity criterion.
  • Whether an activity is significant has been considered to depend on the authorities’ perception of the target’s importance to the acquirer. For example, where there is a significant discrepancy between the target’s sales and the purchase price leading to a high sales multiple, the BKA has argued that this underlines that the acquirer considers the target’s activities as significant in terms of its economic and competitive potential – particularly where the BKA considers the target’s data as also being significant for the acquirer. The “significance” criterion may therefore be determined by the BKA’s perception of high purchase price and the target’s importance to the acquirer. This indicates its willingness to claim jurisdiction based on a “subjective” assessment of the target’s significance for the acquirer, rather than an “objective” assessment of the target’s activities and whether those give rise to significant domestic activity. This is a novel view which has not been adopted previously.
  • The target’s market share is an indicator to assess whether a domestic activity is significant, including where the target company has, for example, a market share of 5-10% in Austria. The guidance now states that if the target’s Austrian market share exceeds 10%, a significant activity in Austria can “definitely” be assumed.
  • Finally, the guidance now states that the BKA will exclude, and the BWB will “regularly” exclude, a significant activity in Germany or Austria, in cases where the target’s revenues are below 17.5m EUR in Germany, or below 1m EUR in Austria and these revenues adequately reflect the target’s market position and competitive potential. This amendment reproduces the recent introduction of a second domestic turnover threshold in Austria last autumn (see our blog post), and the increase of the second domestic turnover threshold to 17.5m EUR in Germany in early 2021. In light of the sector agnostic application of the transaction value thresholds by the authorities, this should in principle be considered to apply both to “traditional markets” and the digital space or pharma markets (provided that the existing turnover adequately reflects the target’s market position and competitive potential). But given their broad understanding of a “significant activity”, the authorities may still consider user data or the significant uptake potential of a drug on the market relevant even where the target’s revenues are below these thresholds.


antitrust and competition, corporate, europe, merger control, mergers and acquisitions