Merger control and FDI: Key developments in Germany

The sectors attracting most scrutiny include semiconductors, AI, and other sensitive technologies. Defence-related reviews remain particularly sensitive, focusing on supply security for the Bundeswehr and preventing know-how leakage or armament of non-allied states.

Investors primarily originated from the US (112 cases), the UK (29 cases), and China (27 cases), reflecting the diverse nature of foreign capital flows. Importantly, restrictive measures continued to decline, dropping from 5% in 2023 to 3% in 2024, signalling Germany’s effort to strike a balance between safeguarding national security and maintaining an open investment climate.

The steady rise in screening procedures - particularly under the EU cooperation mechanism - combined with a more robust regulatory framework, underscores a growing emphasis on transparency and risk mitigation. At the same time, the slight reduction in acquisition-restrictive measures suggests a pragmatic approach: ensuring security without unnecessarily deterring foreign investment. These trends highlight Germany’s evolving strategy to manage investor diversity and adapt its screening process to global economic dynamics.

Recent developments

As German lawmakers continue preparing a new Investment Screening Act, a draft is expected in the coming months to align with the upcoming harmonizing of the EU-Screening Regulation. The legislative push responds to growing criticism that the current framework creates uncertainty, leading to an excessive number of filings even for low-risk transactions.

The Ministry also plans to expand the scope of the Act to include asset deals, licenses, intra-group reorganisations, and greenfield investments, while introducing more precise case groups for mandatory filings in critical sectors such as semiconductors and AI.

Recent rulings by the Administrative Court of Berlin have set clear boundaries for the Ministry’s authority, forcing a procedural clean-up to clarify notices, hearings, and unilateral case closures, as well as adjustments to penalties. A possible redefinition of “foreign investor” based on nationality rather than residence is under consideration.

With 450 cases already logged this year and a record 600 reviews expected, the reform aims to reduce unnecessary filings, strengthen legal certainty, and ensure deal security for cross-border M&A - while safeguarding Germany’s technological sovereignty and national security.

Merger Control

In 2024 the German Federal Cartel Office (FCO) reviewed around 870 mergers. Nine of these mergers were closely examined in second phase proceedings. Four notifications examined in the second phase were withdrawn, and only one was ultimately prohibited.

Andreas Mundt, President of the FCO, recently stressed again that merger control is vital for effective competition. Current economic challenges, he added, are not caused by too much competition.

Nonetheless, plans for the twelfth amendment to the German Act against Restraints of Competition (ARC) stalled after the German government collapsed at the end of 2024. The (early) proposal for such amendments, inter alia, aimed at raising the formal thresholds for mandatory merger filings.

After two major recent reforms - the introduction of Sec. 19a ARC in 2021 to regulate companies of paramount cross-market significance and digital platforms as well as the implementation of a fourth pillar in German competition law, new powers to order remedial measures following a sector inquiry ("new competition tool"), in 2023 - there is currently no perceived need for fundamental changes to the current law in force.

Recent case law

In its recent Meta/Kustomer ruling of June 2025, the German Federal Court of Justice (FCJ) confirmed that transactions exceeding the EUR 400 million deal value threshold can fall under German merger control even if the target has minimal domestic turnover.

The FCJ clarified that “significant domestic activity” may include factors such as processing German user data for foreign clients, and not just sales. For data-driven deals, non-financial indicators like data access and innovation potential are decisive. Some perceptible market impact is still required, but the threshold must be interpreted broadly - only negligible effects are excluded.

Following the FCJ's ruling, in the coming months, the FCO is expected to revise and clarify its guidelines on the assessment of the significant domestic activity. 

The FCO separately provided guidance on a German peculiarity; an acquisition of a minority shareholding below 25% may constitute a concentration under German merger control if the acquisition comes along with a competitive significant influence.

TPG’s planned acquisition of a shareholding below 25% in Techem was deemed outside German merger control, though TPG had notified the transaction as a precaution because it already controls Aareon Group, which – like Techem – provides property management for companies.

Aeron Group and Techem have been in a cooperation since 2006 which had been terminated shortly before the acquisition of the shares. Taking also into account the views from competitors, the authority found no (establishment) of a significant competitive influence:

"Whether the acquisition of a minority stake enables the acquirer to exert a material competitive influence is assessed based on the circumstances of the individual case. The decisive question is whether the target company is expected to take into account its acquirer’s interests to a relevant extent in its future market behaviour. Overall, this was not the case here, among other reasons because no significant additional rights for the acquirer could be identified. Most importantly, the cooperation agreement which had been in place between Aareon and Techem since 2006 had been terminated. […] In the context of its investigations, the Bundeskartellamt also received comments from competitors, which it took into account in its assessment."