Merger control & the failing-firm defence

Once a merger exceeds certain turnover thresholds (roughly, in Germany: combined worldwide turnover of all parties above €500m, domestic turnover of one party above €50m and of another party above €17.5m, § 35 GWB), it must be notified to the Bundeskartellamt before it can be completed. Where EU-wide turnover thresholds are met, the European Commission reviews it instead under the EU Merger Regulation. For smaller insolvency asset deals this is usually irrelevant — but for strategic buyers already holding meaningful share in the same market, clearance can become a time-critical closing condition.

The standstill obligation applies even out of insolvency: until the authority clears the deal, it may not be completed — signing the agreement is unproblematic, but the transfer of assets and control (closing) must wait. Review typically takes about a month (Phase I), or several months if an in-depth Phase II review is opened — a significant time-pressure factor for insolvency deals that are urgent by nature.

One form of relief is the so-called failing-firm defence (Sanierungsfusion), developed in EU case law in Kali+Salz: if the notifying party can credibly show that (1) the target would exit the market absent the merger, (2) the acquirer would capture the target's market share regardless, and (3) no less anti-competitive buyer is available, the authority can clear the merger despite market shares that would otherwise raise concerns. For insolvency buyers, early coordination with antitrust counsel pays off — the burden of proving all three criteria sits with the notifying party, and a late start jeopardises the already-tight timeline of the bidding process.