Co-authored by Robin Sachs
The German waste management sector has been under close antitrust scrutiny for years, and the German Federal Cartel Office (FCO) has now taken the next step. For the first time, the regulator has issued a decision under Section 32f (2) German Competition Act (GWB), imposing extended merger-notification obligations on the Rethmann Group (Rethmann), which includes Remondis, Germany’s leading waste management company. This is a perfect opportunity to take a closer look at the relevant provision, the waste management sector, and what might come next.
Section 32f (2) GWB in a nutshell
At the heart of the Rethmann decision lies Section 32f (2) GWB. The provision is designed to tackle a perceived problem: Successive smaller, below-threshold acquisitions can escape merger review altogether and cumulatively change market structures, resulting in structural competition concerns. This “dark-field” problem became even more pronounced after the notification thresholds in Germany were raised to EUR 50 million and EUR 17.5 million in domestic turnover. For many sectors with highly fragmented or regional markets – such as waste management – this meant that many deals were not subject to merger control at all.
Section 32f (2) GWB, introduced in its current form at the end of 2023, is the legislator’s answer to that “gap”. Section 32f (2) GWB gives the FCO a tool to intervene before problematic concentrations of market power arise by ordering a company to also notify mergers of smaller companies. However, such an order has certain prerequisites: First, Section 32f (2) GWB presupposes that the regulator has conducted a sector inquiry into the economic sector in question. Second, there must be objectively comprehensible indications that future mergers by the company could significantly impede effective competition in Germany. Third, the company must have generated domestic turnover of more than EUR 50 million, and the target more than EUR 1 million.
The Rethmann Case: How we got here and what the FCO decided
The Rethmann decision is the result of a lengthy process that started with two major sector inquiries into municipal waste – one published in 2021, the next in 2023.
In both inquiries, the FCO found that the “Rethmann Group is the clear market leader”: It holds substantial market shares with a significant lead over its competitors in all major waste fractions, with the next-largest players at least 10 percentage points behind. On the back of an almost nationwide market presence, the group – according to the FCO – enjoys strong access to regional procurement and sales markets and, thanks to considerable financial strength, can finance acquisitions that smaller rivals could not and to put competitors under pressure through its pricing policy. The markets concerned are at the same time characterised by high barriers to entry – requiring significant investments in vehicles and infrastructure, complex logistics and lengthy planning and permitting procedures – and by ongoing consolidation, driven not least by Rethmann’s own acquisition activity. The FCO holds that in the collection of municipal waste in particular, the number of bidders in tenders by municipalities and dual systems has steadily declined, another clear sign of weakening competitive pressure.
Against this backdrop, the FCO has now ordered Rethmann to notify future acquisitions prior to their implementation in two market areas:
- the collection of
normalnon-hazardous household waste, and - the treatment of hollow glass,
provided that the target company has at least EUR 1 million in domestic turnover, of which at least EUR 100,000 were generated in the two market areas covered by the decision.
In regulatory terms, the EUR-1-million threshold reflects the general statutory minimum under Section 32f (2) GWB, while the EUR-100,000 figure is a case-specific de minimis filter chosen by the FCO to exclude truly marginal activities in the relevant waste management segments. That is of course significantly lower than the usual threshold of EUR 17.5 million.
The notification obligation applies for three years and can, in principle, be renewed up to three times if the underlying competitive concerns persist.
Implications and outlook
The debate around Section 32f (2) GWB remains ongoing. The FCO’s own Working Group on Competition Law recently criticized the provision for its heavy administrative burden and long procedures, suggesting that abstract statutory criteria and broader FCO discretion might be preferable to long sector inquiries. Whether the Rethmann decision supports such criticism – or rather demonstrates that the current approach is workable – remains to be seen.
The implications for the German waste management sector are, however, immediate. Any expansion strategy in lines of business covered by the decision will now be subject to greater scrutiny, even where the target is a smaller local player (that nonetheless plays an important role for competition in regional markets). The resulting increase in transaction costs and uncertainty surrounding future acquisitions might slow – or at least reshape – an expansion strategy. At the same time, the decision is not yet legally binding; Rethmann can still appeal to the Higher Regional Court of Düsseldorf.
According to the FCO, the results of the latest sector inquiry into waste management provided reason to examine whether the prerequisites for a notification obligation particularly, but not only, with regard to Rethmann were met. However, no notification obligations proceedings against any other player have become public so far.
Looking ahead, waste management is likely only the beginning. In recent years, the FCO has also conducted sector inquiries into charging stations for electric vehicles (2024) and the refinery and fuel wholesale sector (2025). Beyond that, healthcare markets, too, remain a consistent focus. The FCO already conducted a sector inquiry into hospitals in 2021. Later, Andreas Mundt, the President of the FCO, explicitly warned, with regard to medical practices, health centres and clinics, that “there is a risk of concentrated power structures arising underneath the Bundeskartellamt’s radar”. (In the same vein, a recent study in the United States also identified anti-competitive concentration trends below the applicable merger-control thresholds in the regional healthcare sector.)
The real question therefore is: Who will be next to face extended merger notification obligations?
Co-author Robin Sachs studies law in Bonn and currently works at ROCAN as an intern.
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