On January 12, 2021, the FCJ dismissed CTS Eventim’s appeal against a decision of the DCA , thus confirming the FCO prohibition of CTS Eventim’s acquisition of Four Artists. In its landmark decision, the FCJ clarified that under German merger control law, any strengthening of a dominant position, even if it is not appreciable, can constitute a significant impediment to effective competition (“SIEC”) and serve as grounds for prohibiting a transaction.
CTS Eventim—the operator of Germany’s largest ticketing system—intended to acquire 51% of the shares in the booking and concert agency Four Artists. In 2017, the FCO blocked the deal on the grounds that the vertical integration of Four Artists into the CTS group resulting from the merger would have strengthened CTS Eventim’s already dominant position in the downstream market for ticketing services in Germany. CTS Eventim appealed to the DCA mainly based on the argument that Four Artist’s minimal market share (less than 1.5% of all concert tickets sold in Germany) would not have significantly strengthened CTS
Introduction Of The SIEC Test In Germany
In 2013, the German legislator introduced the significant impediment to effective competition (“SIEC”) test—which has already been the relevant substantive test under the EC Merger Regulation since 2004. Since then, the substantive test under German merger control rules has been whether a transaction would “significantly impede effective competition”, which was to be the case in particular if the transaction was “likely to create or strengthen a dominant position”. However, it has been unclear whether every strengthening of a dominant position requires a prohibition or whether the “strengthening effect” must also be “significant”.
Separate Determination Of Significance Not Required For A Strengthening Of A Dominant Position
The FCJ found that the strengthening of a dominant position as a presumptive example always constitutes a significant impediment to competition. This is true even if the strengthening of the dominant position itself was not significant or even appreciable. The FCJ based this in particular on the following grounds:
- The wording of the German SIEC test does not provide any indication for a separate assessment of significance if a transaction is expected to create or strengthen a dominant position. Rather, a prohibition is justified “in particular” if a dominant position is In this respect, the wording of the German SIEC test differs from the SIEC test of the EC Merger Regulation, according to which transactions “which would significantly impede effective competition, […], in particular as a result of the creation or strengthening of a dominant position” (emphasis added) are to be prohibited. Because of the different wording of the two tests, the EC Merger Regulation allows for a different interpretation of the prohibition requirements, according to which—unlike under German law—not every strengthening of a dominant position can be sufficient.
- The intention of the legislator also speaks for this result. The German SIEC test was introduced to further expand the FCO’s room for maneuvering and to fill suspected “enforcement gaps”. In doing so, the legislator had cases in mind in which—according to the traditional German dominance test—the conditions for dominance were not met, but the transactions nevertheless had a negative impact on competition in the However, it cannot be concluded from this circumstance that a significant impediment to effective competition must always be established separately, which would be tantamount to restricting merger control.
Further, the FCJ clarified that the substantive assessment of a transaction cannot merely rely on market shares. Rather, it had to be examined whether the structural changes resulting from the transaction created a more favorable competitive situation for the dominant undertaking. If certain changes in the factors determining market power are so minor that they do not justify the conclusion that competitive conditions have deteriorated, the criterion of strengthening a dominant position is not met. If, on the other hand, a further reduction of the balancing effect of competition, in particular—as in the case at hand—through even more unfavorable conditions for downstream competition, is to be feared, the strengthening of the dominant position necessarily leads to a significant impediment to effective competition.
It remains to be seen how the FCO will apply this test in practice—in particular, with regard to non- vertical cases.
 CTS Eventim/Four Artists (KVR 34/20), FCJ judgment of January 12, 2021, only available in German here. See Ticketvertrieb (VI-Kart 3/18 (V)) for the DCA’s decision December 5, 2018, only available in German here. An English summary of the DCA’s decision can be found in the German Competition Law Newsletter March – April 2019, p. 8 et seq., available here.
 Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation).