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)
The statutory procedure following notification of a concentration is as described below:
A copy of the submitted documentation is immediately forwarded to the Minister of ECI. The Service then prepares an announcement pronouncing the receipt of the notification which is published in the Government Gazette and uploaded on the Commission’s website.
The next step involves the carrying out of a preliminary evaluation by the Service, entailing an assessment of the submitted documentation for the purposes of ascertaining whether the notification fully complies with the Law and specifically, the requirements of Section III thereof (please refer to question 13 above).
In case the Service considers that the notification provided does not fully comply with the statutory requirements and thus cannot be duly assessed, it prepares a questionnaire which it forwards to the notifying party requesting the missing information. The Service has the discretion to forward more than one questionnaire or ask for clarifications, as the case may be, with a view to gathering all necessary information for its preliminary evaluation. The statutory time limits provided under question 12 above are in such an event extended and commence from the time that all relevant information has been duly submitted by the notifying party.
Once the Service is satisfied that all required information has been provided, it proceeds with the assessment of the notified merger and prepares a written report to the Commission in which it elaborates on the matters relevant to the concentration and states its reasoned opinion thereon.
The Commission considers the concentration in the light of said report and issues its final decision thereon, as follows:
(a) where it concludes that the concentration notified does not fall within the scope of the Law and/or within the meaning of a concentration, issues a decision to that effect, or
(b) where it finds that the concentration notified, although falling within the scope of the Law and within the meaning of a concentration, does not raise serious doubts as to its compatibility with the functioning of competition in the market, decides not to oppose it and declares it compatible with the functioning of competition in the market, or
(c) where it finds that the concentration notified falls within the scope of the Law and the meaning of a concentration and raises serious doubts as to its compatibility with the functioning of competition in the market, decides to initiate full investigation proceedings and invite the undertakings under the obligation for notification to pay the fee of €6,000.
Clearance is effected either by a notice of approval forwarded by the Service to the notifying party or, at the expiration of the statutory time limits without such notice having been so forwarded.
The decision is published in the Government Gazette in its non-confidential version, that is, after any confidential information or business secrets have been omitted from the text. The non-confidential version is also uploaded on the Commission’s website.
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)
20. What are the main factors that the Commission investigates during an assessment?
(Schedule I of the Law)
The Commission investigates whether a notified transaction has the potential of giving rise to, or strengthening, a dominant position in the relevant market (ie, the substantive test described under question 19 above).
The relevant product and geographic markets determine the scope within which the market power of the participating undertakings is assessed. The undertakings under the obligation to notify should provide data in accordance with the definitions of the relevant product and geographic markets, as defined in Schedule I of the Law.
The Commission’s assessment consists of determining whether the notified transaction has the potential of giving rise to any affected markets. These consist of all the relevant product and geographic markets as well as the plausible interchangeable relevant product and geographic markets in the territory of the Republic, where:
(a) two or more of the parties to the concentration are engaged in business activities in the same product market (horizontal relationship), and where the concentration will lead to a combined market share of fifteen per cent (15%) or more; or
(b) any of the parties to the concentration are engaged in business activities in a product market which is upstream or downstream to a product market in which any other party to the concentration is engaged (vertical relationship) and provided any of the individual or combined market shares of these undertakings is twenty five per cent (25%) or more regardless of any existing supplier-customer relationship between the parties to the concentration.
Irrespective of the above, the notified concentration may have significant implications in other markets as well, for instance when:
(a) Any of the participating entities has a market share of more than twenty five per cent (25%) and any other participating party is a potential competitor in the said market. An undertaking may be considered as a potential competitor if it plans to enter into the market or has developed or pursued such plans during the last three (3) years;
(b) any of the participating entities has a market share of more than twenty five per cent (25%) and any other party holds important intellectual property rights in the said market;
(c) any of the participating entities is active in a neighbouring product market which is closely related to a product market, which is a neighbouring market closely related to a product market in which any other participating party is active and the individual or combined market shares of the parties in any of the said markets is at least twenty five per cent (25%). The product markets are closely related neighbouring markets if the products are complementary to each other or if they belong in a spectrum of products which are generally purchased by the same group of customers for the same end use.
21.Is it possible to remedy competition concerns, by giving divestment undertakings or other remedies?
(Sections 22, 25, 26, 27 & 28 of the Law)
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)