Bundeskartellamt considers Meta/Kustomer merger to be subject to notification

Meta Platforms Inc., Menlo Park/USA (formerly Facebook, Inc.) has announced that it intends to acquire the company Kustomer Inc. Kustomer is a company based in New York (USA) which offers its business customers a cloud-based customer relationship management platform.

Andreas Mundt, President of the Bundeskartellamt: “In our view the planned acquisition falls under the scope of German merger control and has to be notified to the Bundeskartellamt. Our preliminary examination has shown that Kustomer is also active in Germany and the acquisition will have effects in Germany. Meta should now submit without delay the relevant documents for an examination of the project under merger control. Effective merger control is the most powerful instrument we have to prevent too much market power from falling into the hands of only a few companies. We already see particularly strong market concentration in the digital economy. Stringent merger control is therefore absolutely necessary.”

In a separate proceeding the Bundeskartellamt established that the proposed acquisition reaches the so-called transaction value threshold in German merger control. Since 2017 mergers involving the acquisition of a company whose turnover achieved in Germany is low, but whose operations in Germany are substantial, are nevertheless subject to merger control by the Bundeskartellamt where the overall value of the purchase price exceeds 400 million euros. Based on this provision the Bundeskartellamt can also examine mergers that are intended to establish or strengthen the market dominance of large incumbents by acquiring young, innovative companies with a high economic value.

The proposed merger between Meta and Kustomer is currently also being examined by the EU Commission in a parallel second phase proceeding after the case had been referred to it by the Austrian competition authority. Germany did not join the application for referral to the EU Commission because in the Bundeskartellamt’s general practice a referral requires a merger to be subject to notification under national competition law, which still had to be clarified in the present case.