Merger of Companies or Selling a Business
Contents:
1. Legislative framework and competent authority: what is the relevant legislation
2. Scope of legislation: what constitutes a concentration?
3. Are there any exemptions from the rule and are there any rules on particular sectors?
(Sections 6(4) & 5 of the Law)
4. What is the definition of ‘control’?
(Section 6(2) & (3) of the Law)
5. Can a concentration arise from multiple legal acts or in stages?
(Sections 7 & 8 of the Law)
6. What are the statutory thresholds for notification and are there any exceptions?
(Sections 3 & 5 and Schedule II of the Law)
7. Is filing mandatory or voluntary? If mandatory, do any exceptions exist?
(Sections 10 & 13 of the Law)
8. Filing formalities: what are the deadlines for filing?
(Section 10 of the Law)
9. Which parties are under the obligation to file a notification and do any filing fees apply?
(Sections 10 & 12 and Schedule III of the Law)
10. Do foreign-to-foreign concentrations have to be notified?
(Sections 3 & 6 of the Law)
11. Does implementation of the transaction have to be suspended prior to clearance?
(Sections 11, 24(2) & 29 of the Law)
12. What are the waiting periods?
(Sections 23, 24, 27, 29 & 30 of the Law)
13. Documentation: What is the level of detail required in the preparation of a filing?
(Schedule III of the Law)
14. Investigation procedure and timetable: What are the typical steps phases of the investigation?
(Sections 10, 15, 16, 17, 22 & 24 of the Law)
15. Can concentrations be cleared temporarily?
(Sections 31 & 32 of the Law)
16. What are the sanctions for pre-clearance implementation of the concentration or for any other infringment of the Law?
(Section 40 of the Law)
17. Are there any sanctions for supplying wrong or missing information?
(Section 40 of the Law)
18. What is the procedure followed in case of an infringement of the Law?
(Section 34 of the Law)
19. What is the substantive test for clearance and is there a special substantive test for joint ventures?
(Section 19 of the Law)
The substantive test for clearance is for the Commission to ascertain that the notified transaction will not lead to a concentration that would significantly impede effective competition in the Republic or in a substantial part thereof, particularly as a result of the creation or the strengthening of a dominant position.
The criteria taken into account for the appraisal of concentrations are as follows:
(a) the need to maintain and develop conditions of effective competition within the relevant markets, in view, among other things, of the structure of the affected markets, the structure of other markets where the notified concentration might have significant implications and the actual or potential competition from undertakings located either in the Republic or abroad;
(b) the market position of the participating undertakings and of the undertakings connected thereto1 the economic and financial power of said undertakings, the alternative supply sources of the products and services which are the commercial object in the affected markets and/or in other markets where the notified concentration might have significant implications and their substitutes.
Furthermore, the Commission takes into account the supply and demand trends for all the products and services, any entry barriers with respect to the affected markets and/or other markets where the notified concentration might have significant implications, the interests of the intermediate and ultimate consumers of the relevant products and services and any contribution to technical and economic progress, provided it’s to the consumers' advantage and does not form an obstacle to competition.
To the extent that the object or effect of a joint venture constituting a concentration pursuant to the provisions of the Law, is the coordination of the competitive behaviour of undertakings that remain independent, such coordination shall be appraised in accordance with the criteria of sections 3 and 4 of the Protection of Competition Law2, with a view to ascertaining whether or not the operation is compatible with the functioning of competition in the market.
The appraisal specifically takes into account: (a) Whether two or more parent companies retain, to a significant extent, activities in the same market as the joint venture or in a market which is downstream or upstream therefrom or in a neighbouring market closely related to such market; (b) whether the coordination which is the direct outcome of the joint venture affords the participating undertakings the possibility of eliminating competition in respect to a substantial part of the products or services in question.
1. The connections between undertakings that fall under the scope of the Law are indicated in Schedule II thereof.,
2. Section 3 of the Protection of Competition Law provides the following: “3.−(1)Subject to the provisions of sections 4 and 5, all agreements between undertakings, all decisions by associations of undertakings and any concerted practices which have as their object or effect the prevention, restriction or distortion of competition within the Republic, shall be prohibited, and in particular those which− (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development or investments; (c) Share markets, geographically or otherwise, or sources of supply; (d) apply dissimilar conditions to equivalent transactions thereby placing certain undertakings at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by other parties of supplementary 10 obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. (2) Subject to the provisions of sections 4 and 5, agreements, decisions and concerted practices mentioned in the provisions of subsection (1) of this section, shall be void ab initio, with no prior relevant decision by the Commission being required”.
Section 4 of the Protection of Competition Law provides the instances where any agreement or decision falling within the scope of section 3(1), shall be permissible and valid, with no prior relevant decision by the Commission being required
20. What are the main factors that the Commission investigates during an assessment?
(Schedule I of the Law)
21.Is it possible to remedy competition concerns, by giving divestment undertakings or other remedies?
(Sections 22, 25, 26, 27 & 28 of the Law)
Where the Commission decides to initiate full investigation proceedings, inviting at the same time the participating entities to pay the statutory fee for full investigation, it issues relevant instructions to the Service which in turn informs the participating undertakings and the Minister ECI accordingly.
In addition to the above, the Service shall, without delay:
(a) obtain from the notifying party or from other participants in the concentration or from third persons, any additional information as deemed necessary for the completion of the investigation,
(b) notify the participating undertakings that they may modify the concentration or offer commitments, in order for the doubts as to the compatibility of the notification with the requirements of the market to be lifted, that must be submitted to the Service within the set time-limit,
(c) in light of any additional information obtained and any suggested modifications and/or commitments/remedies, the Service examines: (i) whether and to what extent the doubts as to the compatibility of the concentration with the functioning of competition in the market have been lifted, and (ii) if not, should the Service find that any changes or modifications in the circumstances giving rise to the concentration have the potential of lifting such doubts, commences negotiations with the participating entities.
In the course of the above procedure the Service may, following relevant application by persons who may be affected directly by the decision of the Commission but do not participate in the concentration, afford them suitable opportunity to express their views on the concentration.
Upon completion of its work, the Service shall prepare a report of findings to the Commission to the following effect: (a) whether the doubts identified by the Commission have been removed or may be removed as a result of: (i) any additional information that was obtained and/or any amendments to the concentration and/or the suggested commitments in accordance with the provisions of the Law, and/or (ii) any negotiations undertaken in accordance with the provisions of the Law, or, (b) whether such doubts still remain.
The Commission examines the report of findings submitted by the Service and: (a) either declares the concentration in question as compatible with the functioning of competition in the market, subject to any specific terms and relevant commitments made by the participants in the concentration for the observance of these terms, or (b) declares the concentration as incompatible with the functioning of competition in the market.
Prior to the issue of its decision declaring the concentration as incompatible with competition in the market, the Commission compiles a report notifying the participating entities on the doubts that were raised in respect to the incompatibility of the concentration with the functioning of competition in the market.
22. What are the basic provisions applicable to a divestment or other remedy?
(Section 25 and Schedule IV of the Law)
23. What publicity is given to the process and how is confidential information protected from disclosure?
(Sections 22, 28 & 48 of the Law)
24. Cross-border regulatory cooperation: does the Commission cooperate with antitrust authorities in other jurisdictions?
(Section 54 of the Law)
25. Available avenues: What are the opportunities for appeal or judicial review?
(Section 146 of the Constitution)