Germany and Austria: Post-Covid Collaboration is on the Rise in this Key Economic Sector

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The health and life sciences sector, which includes the pharmaceutical sector, is one of the most important economic sectors in Germany, accounting for approximately 12 per cent of economic output and employing roughly 16 per cent of the total working population.[2] However, when it comes to published merger decisions by the German Federal Cartel Office (FCO), the sector is under-represented in terms of its market size. The same cannot be said for foreign direct investment (FDI) screening in the life sciences sector in Germany, in which it is the second most reviewed sector. There have been legislative changes as well as strategic changes by the respective competent authorities in both merger control and FDI in recent years, impacting the pharmaceutical sector in particular.

The pharmaceutical sector in Austria has also experienced significant legislative changes in merger control law. The Austrian Cartel and Competition Law Amendment Act (the Austrian Cartel Act), aimed at strengthening the competition authorities and adapting Austrian competition law to ‘modern economic life’, came into force in September 2021. The Act introduced a new turnover threshold and put in place the significant impediment of effective competition (SIEC) test.

Regulatory developments and covid-19 response

German competition law is mainly governed by the Act against Restraints of Competition (GWB). Among other things, the GWB contains a prohibition of agreements restricting competition (Section 1 et seq.) and provisions on abuse of dominance (Section 18 et seq.) and merger control (Section 35 et seq.). The relevant authority tasked with protecting competition in Germany is the FCO. In the past couple of years, the FCO has published no relevant merger control decisions linked to the pharmaceutical sector.

For decades, the pharmaceutical industry has adopted and endorsed a fierce competitive strategy, which has fuelled pharmaceutical companies’ ambitions to earn high profits by getting ahead of their competitors.

The covid-19 pandemic has, however, led to remarkable changes in the attitude of major players. The former antagonistic mindset was substituted with a solidarity outlook.

Since the beginning of the pandemic, key pharma players have revised their strategies to evolve and advance into a new era of cooperation and collaboration to jointly achieve business efficiency and tackle health challenges.

The alliance of Pfizer and BioNTech is an exemplification of cross-border partnerships that emerged to fight the crisis and develop solutions in response to the medical emergency. At the same time, competition between pharmaceutical companies is not expected to disappear and still influences the behaviour of market players.

In addition to some striking trends in the biotech sector and the new vision on patent injunctions, the German legal system and the German market are experiencing a wave of covid-19 after-effects combined with transformations in the regulatory field.

The pandemic showed that the most effective instrument to overcome new challenges and ensure a well-functioning and resilient biopharma industry is willingness to adapt the existing legal framework, including the distribution of powers, combined with financial support.

The developments in the Austrian pharma sector are relatively similar to the German pharma sector. Any differences are mainly a consequence of the low price level for pharmaceuticals in Austria compared to Germany and most other EU jurisdictions, with the exception of Greece.

In Austria, the share of parallel imports has been rising continuously for several years: in 2021, it amounted to 3.28 per cent in the retail market (compared with 0.12 per cent in 2010) and 2.01 per cent in the hospital market.[3] Pharmaceuticals for nervous system and oncology treatments are particularly affected. However, Austria is predominantly affected by parallel exports due to its low price level compared to the rest of the EU. In some cases, this leads to problems in supplying patients domestically despite the marketing authorisation holder’s proven ability to deliver. For this reason, an ordinance on securing supply was issued to enable the regulator to enforce a temporary parallel export ban for products with sales restrictions.

Main merger control developments


The definition of the relevant market plays an important role in merger control, irrespective of the economic sector. Market definitions dictate the size and extent of the relevant market as well as the market shares of the respective undertakings, which is essential for the competitive assessment of an acquisition. The FCO and the German courts define the relevant market on the basis of the demand market concept, which is mainly based on the substitutability of products from the perspective of the immediate customer.[4]

Under established German case law, the markets for pharmaceutical products are, according to the demand market concept, primarily defined in line with the Anatomical Therapeutic Chemical classification system, whereby the substitutability is assessed based on the perspective of the treating physician, as the physician is responsible for the prescription, and as such, indirectly, the consumption, of the pharmaceutical product. The geographic scope of the market is defined as national.[5] Ultimately, German decisional practice concerning pharmaceutical products adheres closely to European Commission practice.[6]

German merger control has a very wide scope and routinely covers more than 1,000 merger notifications per year. The 3rd Decision Division of the FCO is specifically assigned to notification proceedings in the health and pharma sectors, as well as in the chemicals sector.

In 2017, the scope of the German merger control regime was expanded with the introduction of the new transaction value threshold, which was explicitly executed with reference to the pharmaceutical sector.[7] The aim of the new threshold was ‘to cover cases where current turnover and the purchase price for the company differ to a disproportionate extent’, especially as high purchase prices can often be ‘an indication of innovative business ideas with great competitive market potential’.[8]

Traditionally, the German merger control thresholds had focused on revenue alone. However, the legislator realised that, particularly in the technological and pharmaceutical sectors, it was necessary to also assess the market potential of undertakings, as low revenues did not necessarily indicate a lower competitive significance of an undertaking.[9]

Following the introduction of the new transaction value threshold, as provided by Section 35(1a) of the GWB, a merger filing is also required if, in the business year preceding the concentration:

  • the combined aggregate worldwide turnover of all the undertakings concerned was more than €500 million;
  • the domestic turnover of one undertaking concerned was more than €50 million and neither the target undertaking nor any other undertaking concerned achieved a domestic turnover of more than €17.5 million;
  • the value of consideration for the acquisition exceeds €400 million; and
  • the target undertaking has significant operations in Germany.

According to the joint Guidance on Transaction Value Thresholds of the FCO and the Austrian Federal Competition Authority (BWB), the value of consideration ‘encompasses all assets and other monetary benefits that the seller receives from the buyer in connection with the merger in question’ and can include securities and intangible assets, as well as ‘fixed and variable purchase price components’ (e.g., ‘payments that are conditional on milestones agreed between the parties involved, such as the achievement of specific steps in a drug approval process’).[10]

The factors and criteria for assessing the significance of a domestic operation can vary between different economic sectors; however, the FCO will likely find ‘there is no significance if the target company generated a turnover below €5m in Germany and if this turnover adequately reflects its market position and competitive potential’.[11] The important role of the pharmaceutical sector in the introduction of the new threshold is further indicated by the fact that the FCO and BWB give specific examples on how to assess the significant presence of companies active in the pharmaceutical sector. For example, in the case of the acquisition of a German company offering a newly approved drug, the stage of commercialisation has to be taken into account, as a low turnover in the initial stage may not ‘accurately reflect its competitive potential’.[12] Also, according to the FCO and the BWB, when assessing the acquisition of a domestic company developing a drug that has just entered Phase III clinical trials, turnover actually may not be considered at all to determine the significance of operations. Rather, due to the involvement ‘of an ingredient/drug in an advanced phase of clinical trials . . . significant domestic activity can be presumed to exist’.[13]

As a result, when it comes to determining merger filing requirements with respect to transactions with targets active in the pharmaceutical sector, it is now necessary to assess the criterion of significance on a case-by-case basis, requiring a thorough evaluation, where previously only a comparison of turnover figures was necessary.

Following the introduction of the new threshold, the FCO reported a surprisingly high number of notified pharmaceutical merger cases in its 2019/2020 annual report, although, interestingly, none of these led to an in-depth Phase II investigation or a prohibition decision.[14] In general, the FCO acknowledges that the health sector, which includes the pharmaceutical sector, constitutes one of the most important economic sectors in Germany. Most of the recent FCO decisions in the health sector have concerned mergers of hospitals (2020 and 2019) or medical product markets, such as hearing aid manufacturing (2016), pre-filled syringes (2012) and blood transfusion technology (2012). Apart from these decisions, however, the FCO has published no relevant merger control decisions linked specifically to the pharmaceutical sector in the past couple of years.[15] One reason for this could be that, given the typical size of mergers in the pharmaceutical sector, all relevant decisions have been made by the European Commission.

Additionally, the FCO supported the cooperation and collaboration of pharma companies during the covid-19 pandemic by permitting pharmaceutical wholesalers to participate in the ‘VCI Emergency Platform for Vaccination Equipment’, which allowed for efficient coordination of companies in the supply of vaccination equipment to German vaccination centres. This was approved under the condition that no sensitive information, such as information on pricing, was shared over the platform and that the platform’s operation was time-limited.[16]

Major changes have also been made to the German foreign direct investment (FDI) screening regime during the covid-19 pandemic.

In 2020 and 2021, the legislator significantly expanded the scope of the FDI regime by increasing the number of relevant sectors from eight to 27, which now includes manufacturers and developers of vaccines and antibiotics, personal protective equipment, medical goods for the treatment of highly contagious diseases and in vitro diagnostics. The legislator explicitly pointed out that the pharmaceutical and healthcare sector was the focus of the amendment.[17]

The competent authority, the German Federal Ministry for Economic Affairs and Climate Action, seems to have taken a major interest in transactions in these sectors. In 2021, the Ministry reviewed 66 transactions related to the biotechnology and healthcare sector, making it the second most reviewed sector overall.[18]

As at 1 July 2021, the regulator had reviewed more than 900 FDI transactions and had prohibited only two transactions since 2004.[19] However, on 27 April 2022, it prohibited the acquisition of Heyer Medical AG, a German medical equipment manufacturer (primarily ventilators), by a Chinese company, making it only the third prohibition decision since 2004.[20]


At the beginning of 2022, significant changes in merger control law came into force in Austria. The Austrian Cartel Act served, in particular, to implement the ECN+ Directive,[21] which aimed to strengthen competition authorities and to adapt Austrian competition law to ‘modern economic life’.[22]

The aim of merger control is to prevent a company from gaining too much market power, therefore exerting pressure on the market. This is generally determined by entities exceeding legally defined turnover thresholds worldwide and domestically. One of these thresholds – which has remained unchanged since 2006 – is a domestic turnover of merging parties of more than €30 million in the previous financial year. The individual turnover of an involved undertaking in Austria has been irrelevant to date. Thus, the acquisition of an undertaking with only marginal or no turnover in Austria could have been subject to Austrian merger control. To avoid this scenario, the legislator has introduced a second domestic turnover threshold.

The new threshold requires that at least two of the involved undertakings have achieved a turnover of more than €1 million each in Austria in the previous financial year.[23] This focus on the individual domestic turnover of the participants is common practice internationally (e.g., in Italy and France).[24]

This new threshold was implemented to reduce the number of merger filings. In particular, the amendment will exclude most cases of acquisition of sole control where the target company achieved insignificant domestic turnover in Austria (unless the transaction falls under an alternative regulation). The BWB expects a decline in filings of more than 40 per cent.

Following the amendment, filing obligation exists if the companies involved have reached the following turnover thresholds in the financial year prior to the merger:

  • combined worldwide turnover of the concentrated companies (usually the purchaser group and the target group) exceeds €300 million;
  • combined Austrian domestic turnover of the concentrated companies exceeds €30 million and at least two of the companies achieved a turnover of more than €1 million each; and
  • at least two of the companies achieved a turnover of more than €5 million each worldwide.

However, the transaction value threshold remains unaffected by the amendment. For the transaction value threshold, it is still sufficient that the joint turnover threshold of €15 million is reached in Austria by only one of the companies involved (provided other conditions are met).

Another important change is the anchoring of the SIEC test as an additional standard of review for mergers in the Austrian Cartel Act. The adoption of the SIEC test is based on European practice. The aim is to create a ‘level playing field’ within the European Union. The Austrian Cartel Act also led to the increase of the merger filing fee, which has been raised from €3,500 to €6,000.

In Austria, the following ‘abstract facts of danger’[25] are assessed and considered as merger conditions – in contrast to the ECN+ Directive, which does not consider these facts as merger conditions:

  • reaching (or exceeding) 25 per cent shareholding (even without a controlling influence); if a person or entity does not acquire 25 per cent of the capital, but at least 25 per cent of the voting rights, this also constitutes a merger (the acquisition of 25 per cent of the capital without the simultaneous acquisition of 25 per cent of the voting rights also fulfils the criterion of a merger);
  • reaching (or exceeding) 50 per cent shareholding (even without sole control or joint control); if at least half of the members of the management board or supervisory board in two undertakings are identical, the concrete possibility of influence by these persons is not taken into consideration (‘abstract facts of danger’); and
  • any other combination of companies by virtue of which an entrepreneur has a direct or indirect controlling influence on another company. This can also apply in the case of a shareholding of less than 25 per cent (e.g., if there is a de facto majority of votes in the case of a low presence at a shareholders’ meeting).[26]

2022 has brought significant change to Austrian merger control laws aimed at reducing the number of merger filings and aligning the legal system with European practice.

Main infringement proceedings

Historic court decision on patent injunctions

In law there is nothing permanent except change: the change of regulations, interpretation and court practice. This is as true today as it ever was. Aside from the transformations caused by covid-19, there are still plenty of new developments in the sphere of patent law.

For instance, on 28 April 2022, the European Court of Justice (ECJ) delivered a judgment[27] that is expected to have far-reaching consequences for German court practice in patent infringement proceedings. It is expected that preliminary injunctions in patent disputes will become more common in the German courts.

For years, the German courts have adopted an approach that a preliminary injunction in a patent infringement case can only be granted if the validity of a patent is proven. As a general rule, the patentee could not, therefore, obtain a preliminary injunction unless the patent was confirmed in opposition or invalidity proceedings.

The ECJ, however, did not agree with the German courts’ practice and pointed out that it contradicts European law. It quoted Article 9(1)(a) of the Enforcement Directive,[28] which requires Germany to ensure that judicial authorities, at the request of the applicant, adopt an interlocutory injunction upon examination of features of each case and that provisional measures available must allow an immediate termination of the infringement of an intellectual property (IP) right before a decision on the merits is rendered.

The ECJ believes that the above-described practice of the German courts deprives this provision of any efficacy as national courts are de facto powerless to immediately react and terminate the infringement, even when they consider the patent in question valid. Thus, this state of affairs in German patent proceedings impedes the adequate protection of the patentee’s rights, guaranteed on the European plane.

It follows that owners of IP rights may rely on this decision to effectively enforce their rights and will undoubtedly do so. The German courts are subsequently expected to change their previously consistent practice and cease demanding an additional confirmation of patents’ validity in legal proceedings.

It is questionable how this decision will affect Austrian court practice. According to existing Austrian case law, the validity and correctness of patents can be examined during the provisional proceedings of preliminary injunctions.


The life sciences sector is likely to see further enhancement of the collaboration mechanisms and models along with possible legal framework adjustments to respond to covid-19 challenges and bring national legislation into harmony with EU law. New forms of public–private collaboration, as well as cross-border alliances, involving at least three companies with differing expertise areas may appear on the market to swiftly address healthcare challenges. Consequently, new regulations covering these parties’ rights, obligations and responsibilities, as well as any cross-border features, may be needed. This cooperation may also influence other legal areas, including the increase of multiple patentees and possible mergers or merger-like processes. Against this background, collisions, including patent disputes between pharma giants, could become large scale, multiparty and overwhelmingly complicated.

Regulators will likely learn the lessons taught by the pandemic and adopt a future-oriented approach by putting in place provisions and tools to be activated in time of need. Passing pre-emptive laws, making ‘just in case’ arrangements and entering into contracts to prepare for challenges to come will no longer be considered a ‘waste of funds and resources’, but rather commended as a ‘smart decision’. Also, regulators have shown that they are, to a certain extent, capable of making rapid and flexible decisions in times of crisis. They are expected to make use of international bodies and mechanisms to jointly address the pressing tests of the 21st century.

When it comes to merger control and FDI screenings in Germany, both legislator and regulators have shown that they will be placing transactions in the life sciences sector under increased scrutiny. This collides with the (potential) necessity of executing in-depth analyses beyond the mere consideration of turnover figures when assessing the merger filing requirements for acquisitions in the pharmaceutical sector in Germany and Austria.

As regards Austria, the amendments to the Austrian Cartel Act strike an appropriate balance between the interests of the competition authorities and those of relevant companies, in particular by introducing the second domestic turnover threshold. The practical relevance of the SIEC test alongside the continued market dominance test remains to be seen. The creation of a purely economic justification option appears expedient but will probably only attain practical significance in some cases.

Technological advances will continue to penetrate into everyday life, reshaping the notion of ‘normality’ in everyday operations of business and governmental institutions.


1 Tobias Maier, Martin Bechtold and Aurelius Freytag are partners, and Karin Köller is a legal director, at Eversheds Sutherland. The authors wish to thank Viktoriia Khilinichenko, Malte Scheel and Maximilian-Philipp Schöps for their help in the preparation of this chapter.

3 Association of the Austrian Pharmaceutical Industry, Facts & Figures 2022, p. 91,

4 Kallmayer, Schwarz and Förtsch, ‘Marktabgrenzung im Pharmasektor’, in Stief and Bromm (eds), Vertragshandbuch Pharma und Life Sciences, Second edition (C H Beck, 2021).

5 Berlin Court of Appeal, decision of 18 October 1993, No. Kart 18/93.

6 Siebert and Pries, ‘Kartellrechtliche Marktabgrenzung im Pharma-Bereich’, 4, PharmR 2007, p. 148.

7 Section 35(1a) of the German Act against Restraints of Competition (GWB).

8 German Federal Cartel Office (FCO) and Austrian Federal Competition Authority (BWB), ‘Guidance on Transaction Value Thresholds for Mandatory Pre-merger Notification (Section 35 (1a) GWB and Section 9 (4) KartG)’, July 2018, p. 1, Explanatory memorandum to the 9th Amendment of the GWB, BT-Drs 18/10207, pp. 70–71,

9 Explanatory memorandum to the 9th Amendment of the GWB, footnote 8, pp. 70–71.

10 FCO and BWB, ‘Guidance on Transaction Value Thresholds for Mandatory Pre-merger Notification (Section 35 (1a) GWB and Section 9 (4) KartG)’, footnote 8, pp. 3–6.

11 id., p. 24.

12 id., p. 27.

13 ibid.

17 15th Regulation amending the Foreign Trade and Payments Ordinance, BT-Drs. 19/19781, p. 10,

18 German Federal Ministry for Economic Affairs and Climate Action (BMWK), ‘Investment Screening in Germany: Facts & Figures’, 24 March 2022,

19 BMWK, ‘Im Fokus: Eine Frage der nationalen Sicherheit’, 1 January 2021,

20 Reuters, ‘Berlin stops Chinese firm from buying German medical device maker – Handelsblatt’, 27 April 2022,; Bundeskabinett – Ergebnisse, dated 27 April 2022,

21 Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market.

22 Explanatory notes on the ministerial draft, 114/ME XXVII. GP, p. 1, (German language only).

23 Special provisions apply to credit institutions and media companies.

24 Konrath and Hufnagl, ‘Neuerungen in der Fusionskontrolle’, Heft 1, Compliance Praxis 2022, 34; Barfuß, Das KaWeRÄG 2021 – Zum Geleit (Ecolex 2021), 564.

25 Abstrakte Gefährungstatbestände.

26 Brugger, ‘Unternehmenserwerb’, Merger Control and Antitrust Law (Manz, 2020),

27 European Court of Justice C-44/21, Phoenix Contact GmbH & Co KG v. Harting Deutschland GmbH & Co KG and Harting Electric GmbH & Co KG, 28 April 2022,

28 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights.


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