German Court Clarifies Scope Of "Substantial Domestic Operations" For Asserting Jurisdiction Under Transaction Value Threshold

Key Takeaways

• The German Federal Court of Justice has confirmed that the Federal Cartel Office was right to conclude that processing of German end-customer data (on behalf of German business customers) constituted "substantial domestic operations" for purposes of the transaction value merger control threshold.
• The activities of the target can be attributed to Germany if the target is capable of having domestic competitive effects given its characteristics, regardless of the location of the target's direct customers. Especially in the digital sector, a service can have potential competitive significance in Germany if it is used by customers in Germany.
• Moving forward, transacting parties will have to grapple with applying the theoretical test set out by the court to a range of different targets with differing activities in Germany, as well as how it differs from tests based on target activities which are applied in other jurisdictions.