Economic Determinants and Effects of Mergers in West Germany 1964-74

Merger activity in West Germany remained at a low level in comparison with most industrialized countries until the late nineteen-sixties, but has increased very rapidly since then. Mergers notified to the Federal Cartel Office under section 23 of the 1958 Act Against Restraint of Competition (GWB) averaged around 40 per year up to 1968. The number then rose to a peak of 305 during a merger wave which occurred in 1969-71, contemporaneously with similar waves in a number of other countries and especially the USA. Thereafter, despite the introduction of merger controls under GWB from 1974, the merger rate has grown dramatically bringing the annual total to 554 in 1977, nearly twice the level of the previous, 1970 peak. Admittedly these statistics exaggerate the true increase in merger activity for two reasons. First the coverage of the Cartel Office series is complete only after 1973, and was incomplete before 1967, when serious discussion of merger controls began. Secondly, there has been a marked increase in the acquisition of smaller companies since 1973, due to the existence of a size threshold for immunity from control in the merger policy implemented by the 1973 amendment to GWB. Nevertheless it is clear that a significant increase in merger activity has occurred. This was viewed with some concern in the second report of the Monopolies Commission (MK) and a revision of merger controls is expected in the forthcoming (forth) amendment to GWB.