On 9 March 2009, almost four years after it cleared a concentration in the construction materials sector, the Federal Cartel Office imposed subsequent conditions on the acquiring party after a change in the Federal Supreme Court’s jurisprudence. The Federal Cartel Office argued that, if a clearance decision is subject to court proceedings in which the decision can be overturned, the acquirer cannot rely on the protection of legitimate expectations.
The German Act against Restraints of Competition (ARC) contains a de-minimis exception, excluding certain concentrations from the scope of German merger control. The de-minimis exception provides, inter alia, that the merger control regime is not applicable to concentrations affecting a market whose total volume was below EUR 15 million in the calendar year preceding the concentration (de-minimis markets).
The Federal Cartel Office cleared the concentration in August 2005. The affected regional markets for mastic asphalt were not assessed in the clearance decision, owing to the fact that these markets were subject to the de-minimis exception (as it was interpreted in 2005) and thus out of scope of German merger control. Mastic asphalt is a material used for special purposes in the construction of roads and bridges, in hydraulic engineering and for pavements. It is sold within Germany in regional de-minimis markets. A competitor contested the clearance decision before the Düsseldorf Higher Regional Court.
In July 2006, the case law changed when the Federal Supreme Court ruled that the de-minimis exception was not applicable to neighbouring de-minimis markets which jointly exceed the EUR 15 million volume threshold. Neighbouring de-minimis markets can therefore be added together, so that the threshold is met on an aggregate basis. In particular, the court stated that no further consideration of the macroeconomic significance of the concentration is necessary once the EUR 15 million threshold is met on an aggregate basis.
As the aggregate volume of the de-minimis markets for mastic asphalt in Germany amounts to EUR 24 million, the Federal Cartel Office conducted a further market investigation into these markets and found that the markets had to be added together and that the concentration led to a dominant position on certain markets. Accordingly, in a supplementary process, the Federal Cartel Office amended its clearance decision and imposed further conditions in order to prevent a dominant position. Pursuant to these conditions, the acquirer must sell certain mastic asphalt business units.
Surprisingly, the Federal Cartel Office did not base this subsequent imposition of conditions on the special rules of the ARC but relied on the general provisions for public authorities of the German Act on Administrative Proceedings (AAP). According to the arguments of the Federal Cartel Office, the provisions for changes to and revocation of a clearance decision set out in the ARC were inapplicable to the present case. However, the Federal Cartel Office held that, despite the inapplicability of the ARC, it was not barred from subsequently changing its clearance decision as the decision was subject to ongoing court proceedings, which could in any event have led to an annulment.
Consequently, the Federal Cartel Office referred to the provisions in the AAP according to which an administrative act (i.e. the clearance decision) can be revoked or changed without observance of any time periods, as long as the administrative act in question is subject to court proceedings. The Federal Cartel Office argued that the subsequent imposition of conditions was permissible in order to expedite the proceedings. It had to be expected that the original clearance decision would be overruled by the court, which would lead to the merger control proceedings being restarted – a result which would contradict the principle of expedition of proceedings.
The decision is both remarkable for its legal basis and for the long period of time after which the clearance decision was amended. Additionally, in the present case it was the acquirer who requested that the Federal Cartel Office amend its decision, in order to mitigate the risk that it would be overruled in full by the court.