Germany's 12th GWB Amendment: A Paradigm Shift for Merger Control or Just Catching Up?

On 4 June 2026, the German Federal Ministry for Economic Affairs and Energy published the long-awaited draft 12th Amendment to the Act Against Restraints of Competition ("ARC" or "GWB"). The draft bill ("Referentenentwurf") implements the coalition agreement between CDU, CSU, and SPD for the 21st legislative period, which committed the new government to ensuring the effective application of competition law while making proceedings faster and more efficient. Although presented as a measured, targeted reform, a closer look reveals that the draft bill reshapes core elements of Germany's merger control architecture — raising thresholds, expanding the transaction value threshold, introducing a novel streamlined notification procedure, and granting the Federal Cartel Office ("FCO") new procurement screening powers. This post examines the key changes and their practical implications.

1. Higher Merger Control Thresholds: Significant Relief for Businesses

The draft proposes a substantial increase in all three turnover-based filing thresholds in Section 35(1) ARC. For the first time in the history of the GWB, all three thresholds are raised simultaneously:

·       The worldwide combined turnover threshold increases from EUR 500 million to EUR 750 million (a 50% increase);

·       The first domestic turnover threshold rises from EUR 50 million to EUR 75 million (also 50%); and

·       The second domestic turnover threshold increases from EUR 17.5 million to EUR 20 million (approximately 14%).

The government's explanatory memorandum provides a clear policy rationale: corporate turnover generally grows over time due to both nominal price increases and real economic growth. Constant filing thresholds therefore lead to a creeping expansion of merger control that is not driven by competition policy considerations (ICN, Recommended Practices for Merger Notification and Review Procedures, RP I „Notification Thresholds“). This phenomenon has been observed across jurisdictions and was already addressed in Germany by the 10th GWB Amendment in 2021, which significantly raised the two domestic thresholds (from EUR 25 million to EUR 50 million, and from EUR 5 million to EUR 17.5 million). The 12th Amendment continues this trajectory.

The government estimates that the higher thresholds will reduce annual merger filings by approximately 13–14%, corresponding to roughly 120 fewer Phase I proceedings and one fewer Phase II investigation per year. The government proudly states that the associated cost savings for businesses are estimated at EUR 2.8 million annually, taking into account both FCO filing fees and internal compliance costs.

However, the real-world significance of these changes deserves scrutiny. First, the increase to the second domestic threshold from EUR 17.5 million to EUR 20 million is remarkably modest at only 14%. This is the threshold that matters most in practice for determining whether both parties have a sufficient nexus to Germany. Given that this threshold was already raised dramatically from EUR 5 million to EUR 17.5 million by the 10th Amendment in 2021, the additional EUR 2.5 million increase feels more like a cosmetic adjustment than a meaningful reduction in filing burdens. Companies operating on regional markets — where even modest turnover can cross the EUR 20 million mark — will see little change in their compliance obligations.

Second, the headline figure of EUR 2.8 million in annual savings sounds impressive in a press release but is negligible relative to the overall transaction costs borne by the German M&A market. With approximately 870 annual notifications at present, the "saving" amounts to roughly EUR 23,000 per eliminated filing — a fraction of what companies actually spend on merger control compliance when external counsel fees are realistically accounted for. The government's estimate of EUR 15,000 in external legal costs per Phase I proceeding appears to significantly underestimate the actual expenditure for most transactions involving international parties.

Third, the reform of the transaction value threshold (discussed below) will bring "back in" at least some of the transactions that would no longer require a notification under the turnover thresholds, partially offsetting the deregulatory effect.

2. The Transaction Value Threshold: Codifying and Expanding the Meta/Kustomer Legacy

The most technically complex and doctrinally significant reform concerns the transaction value threshold, originally introduced by the 9th GWB Amendment in 2017 to capture so-called "killer acquisitions", i.e., high-value acquisitions of innovative, low-turnover companies by established market players. This threshold requires a notification where the transaction value exceeds EUR 400 million and the target has "significant domestic activity" in Germany.

The problem: Persistent legal uncertainty

Since its introduction, the transaction value threshold has generated considerable litigation and legal uncertainty. The pivotal question has consistently been: what constitutes "significant domestic activity"?

The Federal Court of Justice's landmark ruling of 17 June 2025 in Meta/Kustomer (Case KVR 77/22) provided important clarifications but also left open questions. The case concerned Meta's acquisition of Kustomer, a US-based CRM software provider with minimal direct German turnover. The FCO argued that Kustomer's processing of data belonging to German end-consumers on behalf of its business customers constituted significant domestic activity. The Higher Regional Court of Düsseldorf initially disagreed, holding that only the direct business customers — not end-users — were relevant for assessing Kustomer's competitive significance.

The BGH overturned this ruling, establishing several key principles:

·       The assessment of domestic activity must focus on competitive effects in Germany, not on the formal location of contractual customers;

·       Data processing involving German end-users can constitute domestic activity, even absent direct contractual relationships with those users;

·       The threshold for "significance" should be set low — only marginal domestic activities are excluded;

·       Turnover-based criteria are generally not relevant in determining whether domestic operations are substantial, since the very rationale of the transaction value threshold is that turnover may not reliably reflect competitive potential.

However, the BGH consciously left open whether processing German end-user data on behalf of exclusively foreign clients (with no German business customers) would also suffice. This residual uncertainty, combined with the Düsseldorf Court of Appeal's contrasting narrower approach in the Adobe cases of February 2025, left the legal landscape fragmented.

The legislative response: Three key changes

The 12th Amendment addresses this uncertainty through three interconnected reforms:

First, the draft integrates the transaction value threshold into the main notification provision (Section 35(1) ARC) by eliminating the previous separate subsection (Section 35(1a)). This structural change clarifies that the transaction value threshold stands on a co-equal footing alongside the turnover thresholds and that there is no subsidiarity. This resolves the ambiguity that had allowed arguments that the transaction value threshold was merely a fallback mechanism applicable only in exceptional cases (Steinvorth/Wiedemann, Handbuch des Kartellrechts, 5th ed. 2026, § 19 paras. 130, 132 (describing § 35(1a) GWB as a “subsidiary” threshold)

Second, and most significantly, the draft expands the scope of "domestic activity" by adding a forward-looking element. Under the proposed Section 35(1) No. 2(b), a filing obligation is triggered where the target "is active to a significant extent in Germany or is expected to become so" ("voraussichtlich tätig werden wird"). This closes the gap that prevented the FCO from reviewing transactions such as Microsoft/Inflection AI and Microsoft/OpenAI, where the target had not yet commenced operations in Germany at the time of the transaction. The explanatory memorandum explicitly references these cases, along with the Monopoly Commission's longstanding recommendation to weaken or eliminate the domestic activity requirement.

The proposed forward-looking test would capture targets that, while not yet operating in Germany, are likely to offer products or services on German markets or significantly expand their user base in Germany in the near future. The explanatory memorandum gives examples from both the digital and pharmaceutical sectors — digital platforms preparing for a German "roll-out" and pharmaceutical companies developing novel medicines expected to be marketed internationally. Importantly, purely theoretical future activities would not suffice; there must be a high probability of future domestic activity.

Third, the draft codifies the principle (already articulated by the BGH in Meta/Kustomer) that turnover-based criteria are generally not suitable for assessing domestic activity under the transaction value threshold. The explanatory memorandum expressly endorses the BGH's reasoning and takes it one step further by legislating the expansion to future activities that the court left open.

Critical assessment: New uncertainty replaces old uncertainty?

While the draft purports to increase legal certainty, the introduction of the forward-looking "expected to become active" criterion may achieve the opposite. Assessing whether a target company will in the future be active in Germany to a significant extent requires precisely the kind of speculative, forward-looking analysis that dealmakers cannot perform with confidence at the time of signing. Internal business plans may suggest future German market entry, but plans change — and the question of what level of probability satisfies the "voraussichtlich" (expected/likely) standard is inherently uncertain (BVerwG, Urteil vom 28.05.2021, 7 C 8.20, [ECLI:DE:BVerwG:2021:280521U7C8.20.0]).

Moreover, the expansion creates an asymmetry of information: the acquirer may have visibility into the target's German expansion plans through due diligence, but the target's own plans may be tentative, contingent, or contradictory. At what stage does a PowerPoint slide about "potential European expansion" become a trigger for German merger control jurisdiction? The draft provides no quantitative safe harbors or de minimis thresholds for future activity, leaving parties to navigate this assessment without clear guideposts.

Practitioners may also question whether Germany is creating a jurisdictional overreach problem. If a US-based AI company with no current German operations can be pulled into German merger control because it might expand into Germany, this could deter innovative transactions or push deal structuring into less transparent forms. The draft's reliance on the Monopoly Commission's recommendation to weaken the domestic activity requirement does not fully grapple with the fact that several other jurisdictions — including Austria (who continue to rely on the 2022 Guidance Paper, see (www.bwb.gv.at/fileadmin/user_upload/Leitfaden_Transaktionswert-Schwellen_fuer_die_Anmeldepflicht_von_Zusammenschlussvorhaben_____35_Abs._Aa_GWG_und____9_Abs._4_KartG_.pdf), where a domestic turnover of less than EUR 1m regularly excludes a notification requirement — have deliberately maintained stricter local nexus tests precisely to avoid regulatory overreach.

Finally, the elimination of subsidiarity between the turnover and transaction value thresholds means that even acquisitions where the target already generates significant German turnover (but below EUR 20 million) and where the transaction value exceeds EUR 400 million will now automatically trigger the transaction value threshold — even though these are the very "mature market" cases where the Düsseldorf Court of Appeal reasoned the threshold should not apply.

3. The "Phase 0" Notification Procedure: An Innovation in German Merger Control

Perhaps the most novel procedural element of the draft is the introduction of a streamlined preliminary notification ("Anzeige") procedure for transactions caught solely by the transaction value threshold. This creates what the explanatory memorandum calls a mandatory "Phase 0" that precedes the existing Phase I and Phase II review periods.

Under the proposed Sections 39(7) and (8), the procedure works as follows:

·       Parties to a transaction triggered by the transaction value threshold must first submit a brief notification ("Anzeige") containing significantly reduced information compared to a full filing — essentially limited to identification of the parties, a description of existing horizontal and vertical overlaps, and the strategic and economic rationale for the transaction;

·       The FCO then has two weeks from receipt of the complete notification to determine whether a full merger filing is required;

·       If the FCO does not communicate within this period that a full notification cannot be waived, the merger is deemed cleared by operation of law;

·       If the FCO does communicate that a full filing is needed, the standard Phase I and Phase II review timelines apply.

The design is deliberately asymmetric. The threshold for the FCO to require a full filing is intentionally low: a full notification is required unless a Phase 1 investigation is "manifestly excluded." The explanatory memorandum clarifies that the Phase 0 window allows only a rough screening ("Grobsichtung") for obviously unproblematic transactions, given the limited information and the compressed two-week timeline. Any residual doubts must be resolved in the regular procedure.

The government estimates that, of approximately 32 transactions per year caught by the transaction value threshold going forward, the FCO will request a full filing in only about two cases per year. The remaining 30 would be cleared through the streamlined Phase 0 procedure. The estimated compliance burden for a Phase 0 notification is 20 hours of internal work plus EUR 5,000 in external legal costs compared to 60 hours and EUR 15,000 for a Phase I proceeding.

This innovation serves a dual purpose. It reduces the burden on companies for transactions that are unlikely to raise concerns, while simultaneously eliminating the phenomenon of precautionary filings, i.e., notifications submitted by risk-averse parties who were unsure whether their transaction met the domestic activity test. By making the streamlined notification mandatory and creating a deemed clearance mechanism, the system pushes transactions that clearly raise no concerns out of the review pipeline quickly.

Practical concerns: Will Phase 0 work as intended?

The Phase 0 procedure raises several practical questions. First, the two-week window is extremely short for any meaningful substantive assessment. The FCO must review the brief notification, identify potential overlaps, assess the target's current and — under the new rules — future domestic activity, and decide whether concerns are "manifestly excluded." In practice, this timeline may be challenging for the FCO's case teams, particularly given that transactions caught by the transaction value threshold often involve complex digital or pharmaceutical markets where competitive dynamics are not immediately obvious.

Second, the deliberately low threshold for the FCO to demand a full filing (anything where a Phase II investigation is not "manifestly excluded") risks rendering the Phase 0 procedure less effective than the government projects. If case handlers adopt a cautious approach — as bureaucratic incentives would suggest — the proportion of cases receiving Phase 0 clearance may be lower than the projected 30 out of 32. The absence of any obligation for the FCO to provide reasons when demanding a full filing further reduces accountability and makes it difficult for parties to challenge or predict outcomes.

Third, there is a timing and deal certainty problem. The Phase 0 notification must be submitted before the formal filing. If the FCO requests a full filing after two weeks, the standard Phase I clock only starts running upon receipt of the complete filing. This means that the Phase 0 procedure could add up to two weeks to the overall merger control timeline for transactions that ultimately require full review — precisely the cases where timing is likely most critical. Deal agreements will need to account for this additional procedural step.

Fourth, the information required for the Phase 0 notification — while reduced — still includes a description of all horizontal and vertical relationships and the "strategic and economic rationale" for the transaction. Parties may be reluctant to provide detailed strategic rationales at such an early stage, particularly in competitive auction processes where confidentiality is paramount.

4. Procurement Bid-Rigging Screening: A New Enforcement Tool

The draft introduces a new Section 32h ARC granting the FCO the power to systematically screen public procurement data for indicators of bid-rigging. This represents a significant expansion of the FCO's enforcement toolkit in cartel enforcement.

Contracting authorities above EU procurement thresholds will be required to transmit data on all bidders — including unsuccessful ones — to the Public Procurement Data Service (Datenservice Öffentlicher Einkauf). The FCO may then access this data and analyze it without requiring prior suspicion of wrongdoing. The data includes bidder names and addresses, tax identification numbers, and offered prices.

The rationale is straightforward. Academic research consistently finds that bid-rigging cartels inflate public procurement costs by 15–20%. With Germany's infrastructure and climate neutrality special fund exceeding EUR 500 billion, the financial stakes are enormous. Yet detecting such cartels is extremely difficult without systematic analysis across multiple tender procedures — precisely the kind of analysis that the individual contracting authority lacks the mandate and capacity to perform.

The draft models this approach on existing schemes, e.g., in Denmark (see https://en.kfst.dk/publikationer/kfst-english/2022/20220407-collusion-detection-in-public-procurement-using-computational-methods) , where systematic procurement screening has proven effective in uncovering cartel infringements. The FCO may store the data for up to five years and must delete it thereafter unless it has been incorporated into an active investigation. A four-year evaluation clause ensures legislative review of the instrument's effectiveness.

The screening power, however, also raises concerns. The suspicionless, systematic nature of the data collection represents a departure from the traditional German principle that state investigative measures require at least an initial suspicion of wrongdoing. While the draft provides data deletion timelines, the sheer volume of sensitive commercial data (including offered prices of unsuccessful bidders) being centrally stored and analyzed by a competition authority creates significant data protection and confidentiality risks. Companies participating in public tenders — including those who have done nothing wrong — will need to accept that their pricing strategies are being systematically monitored. This could have a chilling effect on aggressive but legitimate bidding strategies, particularly for smaller companies that fear being flagged by algorithmic screening tools that may generate false positives.

Additionally, the implementation burden on contracting authorities should not be underestimated. While the explanatory memorandum assumes that most data will already exist in electronic form within procurement management systems, the reality of German public procurement — particularly at the municipal level — is more fragmented. The transitional exemption for authorities without procurement management systems (until end of 2027) acknowledges this, but the broader question of data quality and completeness will determine whether the screening tool can actually deliver meaningful results.

5. Additional Reforms

Beyond the headline changes to merger control, the draft contains several further measures of note:

·       Energy sector abuse control: The special regime for energy sector abuse supervision, which was set to expire at the end of 2027, is extended by five years through 31 December 2032. The explanatory memorandum notes that the energy markets continue to exhibit significant competitive deficiencies that justify continued heightened oversight.

·       Advisory powers for vertical agreements: The right of companies to request a formal decision from the FCO confirming that there is no reason for enforcement action — introduced by the 10th Amendment for horizontal cooperations — is now extended to vertical agreements. This is intended to promote legal certainty for innovative and novel business cooperations.

·       Term limit for the FCO President: For the first time, the draft introduces an eight-year term limit for the President of the FCO, appointed as a civil servant for a fixed term. Re-appointment is not possible. This reflects a broader trend toward strengthening the institutional independence and accountability of competition authorities.

·       Ministerial authorization appeals: The restrictions on third-party appeal rights against ministerial authorization decisions, introduced by the 9th GWB Amendment, are rolled back. Third parties will again be able to challenge ministerial authorizations on broader grounds, restoring the pre-2017 legal position.

·       Digital merger filings: From 2028, merger notifications must be submitted exclusively through electronic channels. A transitional period until 31 December 2027 allows for continued paper-based filings, giving practitioners and the FCO time to adapt.

·       Modernized fee framework: The fee ceilings for proceedings before competition authorities and procurement tribunals are substantially increased — in some cases by 40% or more — reflecting the increased complexity of modern competition proceedings and the fact that fee ceilings had not been adjusted in over 30 years.

·       Removal of the leave-to-appeal requirement: The draft eliminates the requirement that the court of first instance must grant leave for an appeal on points of law ("Rechtsbeschwerde") to the Federal Court of Justice. This means that parties can appeal directly to the BGH as of right, removing what was often criticized as an unnecessary procedural hurdle that added time without adding value.

6. Assessment and Outlook

The 12th GWB Amendment is presented as a balanced package: deregulation through higher thresholds on the one side, stronger enforcement through an expanded transaction value threshold and procurement screening on the other. In reality, the balance may tilt more toward increased regulatory reach than the government's messaging suggests.

The threshold increases, while welcome, are less transformative than they appear. The worldwide threshold increase from EUR 500 million to EUR 750 million primarily benefits smaller domestic transactions; multinational deals involving large corporates will typically still exceed this threshold. The genuinely impactful second domestic threshold is raised by a mere EUR 2.5 million. And the simultaneous expansion of the transaction value threshold partially claws back the deregulatory gains by capturing transactions that previously fell below the jurisdictional radar.

The transaction value threshold reform is the most consequential element and also the most problematic from a legal certainty perspective. By introducing a forward-looking "expected to become active" standard, the draft replaces one source of uncertainty (what constitutes current domestic activity?) with another (what constitutes probable future domestic activity?). The elimination of subsidiarity, while doctrinally clean, also means that the transaction value threshold will apply to a broader range of transactions, including in mature markets — a result that sits uneasily with the threshold's original policy justification of capturing innovative, pre-revenue targets.

The Phase 0 procedure is conceptually appealing but faces real-world implementation challenges. Its effectiveness depends entirely on the FCO's willingness to actually clear transactions within the two-week window rather than reflexively demanding full filings. Without published guidance on what types of transactions are likely to receive Phase 0 clearance, parties will face the familiar problem of uncertainty — just at an earlier stage of the process. And for deals ultimately requiring full review, Phase 0 adds time rather than saving it.

The procurement screening tool fills a genuine enforcement gap but raises legitimate questions about proportionality and the rights of market participants who have not engaged in any anticompetitive conduct. The absence of any suspicion requirement represents a significant departure from traditional German administrative law principles.

More broadly, this draft reveals a tension at the heart of Germany's current competition policy. The coalition agreement simultaneously promises to reduce bureaucracy and strengthen enforcement. In merger control, these goals are inherently in tension: every expansion of jurisdictional reach creates new compliance burdens, even if individual proceedings become more streamlined. The 12th Amendment tries to square this circle through procedural innovation (Phase 0), but the net effect for the M&A community — particularly for complex international transactions — may be more regulation, not less.

The draft is now expected to undergo consultation and parliamentary debate. Practitioners and the business community should engage actively in this process to address the open questions around the forward-looking domestic activity test, the practical operation of Phase 0, and the data protection safeguards for procurement screening. The legislative process offers an opportunity to calibrate these instruments more precisely — an opportunity that should not be missed.

*The authors are partners in the Antitrust & Competition Law Practice of Jones Day, based in Brussels and Düsseldorf.