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The Düsseldorf Court of Appeals (“DCA”) has now published its full reasoning rejecting the Federal Cartel Office’s (“FCO”) expansive interpretation of Germany’s transaction value-based test in Adobe’s acquisitions of Magento (e-commerce software) and Marketo (B2B marketing automation software).[1]  The decisions clarify that the transaction value-based threshold is a subsidiary test, triggered only where the target’s limited domestic turnover does not reflect its actual market position or competitive potential. They also offer valuable guidance on how to apply the “significant domestic activities” requirement.

The German transaction value threshold

The transaction value-based test[2] was introduced to capture deals where the target does not meet the standard turnover thresholds but may still raise substantive competition concerns due to its innovative strength or market relevance.  The test is met when:

  1. The combined worldwide turnover of the parties exceeds €500 million;
  2. One party’s German turnover exceeds €50 million;
  3. No other party’s German turnover exceeding €17.5 million;
  4. Transaction value exceeding €400 million; and
  5. The target having “significant domestic activities” in Germany.

Prior to the DCA’s Adobe decisions, the FCO often treated the transaction value-based test as an alternative – rather than subsidiary – route to asserting jurisdiction.  Its expansive interpretation of the “significant domestic activities” created uncertainty for high-value acquisitions of targets with limited German revenues. 

The Adobe cases

In February 2025, the DCA overturned the FCO’s decision requiring Adobe to bear the costs of the post-closing intervention (Entflechtungsverfahren).  The FCO had initiated these proceedings on the basis that the acquisitions, though not notified, should have been notified under the transaction value-based test  in the first place.   

The DCA’s now-published rulings clarify both (i) the limited – and subsidiary – scope of application of the transaction value-based test, and (ii) the strict interpretation of the “significant domestic activities” criterion.

The subsidiary nature of the transaction value-based test

The DCA emphasized that the transaction value-based test is not designed to bypass the €17.5 million domestic turnover requirement (the “second domestic turnover threshold”).  Where a target’s turnover reflects its competitive position, the standard thresholds remain decisive, and no filing is required.  

The transaction value threshold applies only when the target’s current turnover fails to reflect its competitive potential and market position, such as in cases involving pipeline products or emerging technologies that have not yet been commercialized.  This was not the case here: Magento and Marketo had long offered monetized software solutions with substantial global revenue. 

The DCA also rejected the FCO’s attempt to use a “turnover multiple” (Umsatzmultiplikator) – a valuation metric dividing transaction value by annual turnover – as evidence of a mismatch between turnover and competitive potential.  The DCA noted that such metrics lack evidentiary value, particularly where the deal’s economic center of gravity lies outside Germany (here: in the US), where similar multiples (here: 5-10x) are not uncommon in the industry in question (here: tech), and where purchase prices are influenced by a variety of factors.  The DCA also dismissed attempts to retroactively construct a Germany-specific deal value where no such allocation had been made in the first place.  

“Significant domestic activities” criterion

The DCA also rejected the FCO’s claim that the targets had “significant domestic activities”.  The DCA provided valuable insights on several connecting factors, finding that each of them individually and collectively were insufficient to establish the requisite significance in the cases at hand:

  • Customer base.  The targets’ German customers numbers (135 for Magento and 55 for Marketo) were deemed insignificant against the total addressable market of approximately 550,000 online shops and 150,000.  Notably, the DCA dismissed the FCO’s qualitative arguments about relative customer importance and size, highlighting the practical difficulty in assessing the relative significance of individual clients when targets serve businesses across various market segments.
  • Local presence.  Neither Magento’s German subsidiary (which did not specifically pursue any actual business activities in Germany) nor Marketo’s office (closed shortly after acquisition) were sufficient to establish significant domestic activities.
  • Staff.  Magento’s seven German employees (hired through a personnel leasing agency) represented just c. 1% of the company’s global workforce and served the entire DACH region (Germany, Austria, and Switzerland), not just Germany.  Marketo’s German staffing was similarly inconsequential relative to its worldwide operations.
  • German-language offerings.  The DCA explicitly rejected the notion that German-language websites or interfaces alone could establish significant domestic activity without additional substantive market engagement.

The DCA further rejected using proportionality metrics – comparing German activities to global operations – as a jurisdictional determinant, noting that (i) deal valuation included no geographical allocation, and (ii) even if considered relevant, the targets’ German activities remained negligible relative to their global operations.

Conclusion

The DCA’s rulings mark a significant recalibration of the FCO’s approach and severely limits the FCO’s ability to assert jurisdiction over deals that do not meet the legacy turnover-based test, in particular US-centric, high-value acquisitions with only limited German revenues.  The FCO’s subsequent decision to cede jurisdiction in the Edwards/JenaValve case suggests that it is adjusting its enforcement stance accordingly.[3]  This trend extends beyond Germany: Austria’s Cartel Appeals Court similarly blocked the Federal Cartel Authority’s bid to review the Edwards/JenaValve deal under the Austrian transaction value-based test, citing a lack of sufficient domestic nexus.[4]

These cases demonstrate that, even amid increasing scrutiny of below-threshold deals, national courts are willing to check regulatory overreach and uphold a principled application of jurisdictional test.  Further guidance is expected later this year when the German Supreme Court rules on the Meta/Kustomer case.

[1]           Cases VI Kart 2/24 (V) and VI Kart 3/24 (V).

[2]           Section 35(1a) of the German Act against Restraints of Competition.

[3]           See Bundeskartellamt – Homepage – Fusionsverfahren JenaValve/Edwards eingestellt.

[4]           Decision of the Cartel Appeals Court of 26 March 2025 (16 Ok 2/25t).

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