Definition and Legal Framework of Ministerial Authorization
The ministerial authorization is a legal instrument in German antitrust law that allows for the subsequent approval of company mergers that have been prohibited under competition law, provided certain conditions are met. The ministerial authorization constitutes an exemption under Section 42 of the Act against Restraints of Competition (GWB). It may be granted if the Federal Ministry for Economic Affairs and Climate Action (BMWK) determines that the public benefits of a merger outweigh any competitive disadvantages.
Regulation in the Act against Restraints of Competition (GWB)
Legal Foundations
The legal basis is found in Sections 42 et seq. GWB. According to these, the BMWK can grant a ministerial authorization upon application by the companies involved if the Federal Cartel Office has prohibited the merger. The ministerial authorization serves to balance competitive disadvantages against overriding public interest concerns.
Requirements for Granting Authorization
The following requirements must all be met for ministerial authorization to be granted:
1. Prohibitive Decision by the Federal Cartel Office
Authorization can only be granted in cases in which the Federal Cartel Office has prohibited a merger under Section 36 GWB.
2. Application by the Companies Involved
The affected companies must apply for ministerial authorization with the BMWK within one month after delivery of the prohibition decision.
3. Overriding Public Interest Concerns
The BMWK examines whether the overall economic advantages of the merger or a compelling interest of the general public in the specific case outweigh the competition restraints associated with the merger. Typical public interest concerns can include safeguarding jobs, security of supply, or the promotion of research and development.
4. Opinion of the Monopolies Commission
Before making a decision, the Monopolies Commission, an independent advisory body, must issue an opinion on the proposed merger and its effects.
Balancing Decision
The BMWK makes a discretionary decision, weighing the overall economic benefits and overriding public interests against the competition restraints identified by the Federal Cartel Office. Ministerial authorization may only be granted if the discussed public interest concerns clearly predominate.
Procedural Sequence of Ministerial Authorization
Application Submission
The application for ministerial authorization must be submitted in writing and with justification to the BMWK within one month after service of the Federal Cartel Office’s prohibition decision. Applicants must explain why they believe public interest concerns outweigh opposing considerations.
Involvement of Additional Parties
After the application is submitted, the BMWK requests an opinion from the Monopolies Commission. Furthermore, it may also hear third parties who might be directly affected by the decision (e.g., competitors, consumer associations, business associations).
Decision of the Federal Ministry for Economic Affairs and Climate Action
The BMWK thoroughly examines the factual and legal situation, considers the recommendation of the Monopolies Commission and other statements, and publishes its decision. The approval may be subject to conditions or requirements to mitigate negative effects on competition.
Legal Remedies
An appeal may be lodged against the BMWK’s decision with the Düsseldorf Higher Regional Court, which as the antitrust senate is responsible for such cases (Section 42 (4) GWB).
Significance and Practical Relevance
Ministerial authorization is a rarely used instrument in Germany and is only employed in business practice for particularly significant mergers whose macroeconomic effects are of substantial importance. Well-known cases include, for example, the ministerial authorization in the Edeka/Kaiser’s Tengelmann case (2016) or in connection with the takeover of Ruhrgas by E.ON (2002). Granting is the exception, not the rule.
Distinction from Merger Control Review
While the Federal Cartel Office as a competition authority judges only the impact of a merger on competition, ministerial authorization also takes into account higher-level social and economic policy considerations. Thus, it supplements antitrust review with a political assessment, without undermining the functional separation between the two.
Legal Consequences of Ministerial Authorization
With the granting of ministerial authorization, the prohibited merger becomes legally effective despite antitrust objections. However, the authorization may be subject to conditions or requirements, for example to further protect specific public interests or to limit negative competition effects.
Criticism and Discussion
Ministerial authorization is regularly debated as a tension between competition freedom and political intervention. Critics see the risk of political influence on corporate decisions and a possible undermining of antitrust protections. Supporters emphasize, by contrast, the need to consider overriding public interests in exceptional cases.
Literature and Further Information
- Act Against Restraints of Competition (GWB)
- Decisions of the Federal Cartel Office and BMWK on Ministerial Authorization
- Opinions of the Monopolies Commission on significant authorization proceedings
Summary:
Ministerial authorization is a special instrument of German antitrust law. In exceptional cases, it allows mergers and acquisitions to proceed despite contrary decisions by the Federal Cartel Office, when overriding public interest justifies it. It is strictly regulated by law and rare in practice, but enables flexibility in balancing economic and social interests.
Frequently Asked Questions
Who is legally authorized to grant ministerial authorization, and on what legal basis is this done?
Ministerial authorization is an exemption decision in German antitrust law that may only be granted by the Federal Minister for Economic Affairs and Climate Action (BMWK). The legal basis for granting ministerial authorization is Section 42 of the Act Against Restraints of Competition (GWB). According to this, the Minister is empowered to grant ministerial approval if the conditions under Section 42 (2) GWB are met: This may be the case if public interests, particularly significant overall economic benefits, considerably outweigh the disadvantages of a merger restricting competition, or if there is an overriding public interest. The ministerial authorization acts as an exception to the prohibition decisions of the Federal Cartel Office and thus enables mergers that, from a strictly antitrust perspective, would not have been eligible for approval.
What is the procedure for obtaining ministerial authorization and which legal bodies are involved?
The ministerial authorization procedure is multi-stage and follows a clear statutory sequence: After a merger has been prohibited by the Federal Cartel Office, an application for ministerial authorization can be submitted. The Monopolies Commission must then be mandatorily involved in accordance with Section 42 (1) sentence 2 GWB. It prepares an expert opinion, which, however, is not binding for the Minister. The applicant and other parties have the opportunity to present their arguments at a so-called consultation hearing under Section 56 GWB. The Minister’s decision is issued as a reasoned administrative order subject to formal and substantive requirements. Appeals against the ministerial authorization can be lodged with the Higher Regional Court (OLG) Düsseldorf, with further appeal possible to the Federal Court of Justice (BGH).
What legal requirements must be met in order for ministerial authorization to be granted?
The statutory requirements for ministerial authorization are narrowly defined and conclusively set out in Section 42 (2) GWB. The Minister may only issue an exemption if either overall economic benefits clearly outweigh the restrictions on competition, or if there is an overriding public interest. All other statutory requirements must also be met, such as proper application, completion of the antitrust review process, and safeguarding of the procedural rights of those involved. The balancing of interests must be set out in detail and in a comprehensible manner in the Minister’s decision, as a judicial review can take place.
How is the decision of the Federal Minister subject to legal review and what legal remedies are available?
The decision on ministerial authorization is not a purely discretionary act, but is subject to full judicial review in the context of a complaint procedure under Section 63 (1) GWB. Parties involved, such as the applicant or competing companies, may file a complaint with the OLG Düsseldorf within one month after notification. This legal process extends to a comprehensive review of facts and law, so the court may examine both compliance with procedural rules and substantive legal assessment. A further appeal to the Federal Court of Justice is admissible against the decision of the OLG Düsseldorf.
What deadlines must be observed in connection with ministerial authorization?
The ministerial authorization procedure is subject to various statutory deadlines: After prohibition by the Federal Cartel Office, the application for ministerial authorization must be submitted within one month (Section 42 (1) GWB). The Monopolies Commission is usually given a period of up to two months to issue its opinion. Processing by the Ministry is carried out promptly, although there is no fixed deadline prescribed. In cases of granted or refused ministerial authorization, a one-month period applies to file legal remedies with the OLG Düsseldorf (Section 63 GWB).
What binding effect does ministerial authorization have in relation to other official decisions?
The granted ministerial authorization lifts a prior prohibition by the Federal Cartel Office and creates a specific legalizing effect for the merger under GWB. In this respect, it replaces antitrust approval. Other official reviews, such as those under foreign trade law or special regulations, remain unaffected; ministerial authorization only binds the competition authorities. Changes to the relevant facts—for example, through subsequent findings—can lead to revocation or withdrawal (§ 42 (4) GWB).
Under what circumstances can a ministerial authorization that has already been granted be revoked or withdrawn?
Ministerial authorization may be revoked or withdrawn under Section 42 (4) GWB if material facts change afterwards or if the authorization was obtained based on incomplete or untrue information. Doctrinally, revocation is also governed by the general provisions of the Administrative Procedure Act (§§ 48, 49 VwVfG), meaning that the protection of legitimate expectations for the parties involved and the public interest in remedying unlawful situations must be weighed against each other. Revocation is also subject to judicial review.
