Merger control: Beware of the prohibition of enforcement
- Immo Schuler
- Mar 10, 2024
- 2 min read
Assessment of the merger and the transaction value thresholds
In order to trigger a notification obligation under merger control law, a merger must be deemed to exist and the requirements of the transaction value thresholds must be met. Using the example of the partnership between Microsoft and OpenAI, the German Federal Cartel Office commented on this in a case report dated November 15, 2023.[1]
Examination of the partnership between Microsoft and OpenAI
Sam Altman, OpenAI, Microsoft...hardly a day goes by for two weeks without news about Sam Altman, OpenAI and Microsoft. Currently, Sam Altman has officially been CEO of the GPT developer OpenAI again for two days. Back in November 2023, the German Federal Cartel Office published a case report on the examination of a possible merger control notification requirement for the partnership between Microsoft and OpenAI.
Interaction of the merger and transaction value threshold
In the opinion of the German Federal Cartel Office, Microsoft's participation in OpenAI and its cooperation do not (yet) trigger a merger control notification obligation in Germany. The simultaneous existence of a merger (Section 37 ARC) and the requirements of the transaction value threshold (Section 35 (1a) ARC) have not yet been met.
It is true that Microsoft already gained a significant competitive influence over OpenAI in 2019 (at the latest in 2021), which is sufficient under German law to constitute a concentration. However, the requirements of the transaction value threshold were not met at that time due to OpenAI's lack of significant domestic activity.
Following the launch of ChatGPT in November 2022, OpenAI now has significant domestic activities. Since then, however, there has been no further deepening of Microsoft's existing significant competitive influence on OpenAI, so there was no merger.
Caution with changes in influence
This means for the future: Should Microsoft further expand its influence on OpenAI, a notification obligation could be affirmed due to OpenAI's now considerable domestic activity.
In the event of a deepening of a partnership between companies, it should therefore always be noted that this may constitute a merger and consequently trigger a notification obligation under merger control law.
March 10, 2024
Immo Schuler, LL.M. (UNC)
Immo Schuler advises on all questions of German and European antitrust law.
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[1] Bundeskartellamt, Case Report – Examination of a merger control notification obligation of the partnership between Microsoft and OpenAI (November 15, 2023).
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