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Content last updated: 08-10-2019

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  • Merger Control Regime
  • Merger Screening
  • Merger Filing

1. Overall description of merger control regime

1.1 Supranationality

1.1.1 Is the jurisdiction a member of/party to a supranational jurisdiction?

Estonia is a Member State of the European Union.

1.1.2 Is the jurisdiction itself a supranational jurisdiction?

No.

1.1.3 If the answer to Section 1.1.1 and/or 1.1.2 above is in the affirmative, what are the implications hereof?

The EU Merger Regulation is based on a "one-stop-shop" principle. This implies that if the thresholds under the EU Merger Regulation are met, the transaction will only have to be notified to the European Commission.

Consequently, the national authorities of the Member States will as a general rule be precluded from applying their own merger control rules to the transaction.

2. Nature of merger control regime

2.1 Mandatory or voluntary

2.1.1 Is filing mandatory or voluntary?

Filing is mandatory if the thresholds described in Section 2.3.1. under the Merger Screening Schedule are met.

2.2 Suspensory effect

2.2.1 Must completion of the transaction await clearance by the relevant authorities?

As a general rule, parties to the merger may not implement (including the acquisition of shares or assets under the terms of the transaction) a merger that is subject to merger control before permission has been obtained from the Estonian Competition Authority.

However, this does not prevent the implementation of a public offer or a series of transactions in securities, including those convertible into other securities admitted to trading on a securities market, by which control is acquired from different sellers, provided that the concentration is notified to the Estonian Competition Authority without delay, and the acquirer does not exercise the voting rights attached to the securities in question or does so only to maintain the value of its investments.

Furthermore, upon a reasoned request, the Estonian Competition Authority may grant an exception from the restriction to implement the merger or the exercise of voting rights.

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

Full mergers, acquisitions of majority shareholdings, acquisitions of controlling minority shareholdings, and any other transactions or agreements that change the control structure of an undertaking are caught by the merger control rules. Furthermore, contractually granted rights (for example, veto rights granted under the terms of a restructuring or debt obligation) are also caught by the merger control rules if they give (sole/joint) control rights.

Purely internal reorganizations (i.e. within the same control group) are not notifiable.

1.2 Joint ventures

1.2.1 What types of joint ventures are caught by the merger control rules?

Only the establishment of a “full function” joint venture is a notifiable transaction. A full function joint venture is one which “performs on a lasting basis all the functions of an autonomous economic entity.”

Establishing a new legal entity as a preparatory step for a new joint venture is not notifiable, but clearance must be obtained before assets or personnel are transferred by the parents.

If a joint venture is determined not to be full-function, the national merger notice regime does not apply and a filing is not required.

1.3 Definition of "control"

1.3.1 How are the concepts of "control" and "change of control" defined?

“Control” is defined as the opportunity for one undertaking (or natural person) or several undertakings (or natural persons) jointly to exercise direct or indirect influence on another undertaking (based on purchase of shares or other contractual set-up), which may consist of a right to:

a) exercise significant influence on the composition, voting or decision-making of the management bodies of the other undertaking; or

b) use or dispose of all or a significant proportion of the assets of the other undertaking.

Control is frequently summarized as the ability to decide, or block, an undertaking’s budget, business plan, or the appointment, removal or terms of employment of senior management (typically members of the management and/or supervisory board).

“Change of control” is defined as obtaining control, as defined above, either via a share purchase agreement or by other means.

Only transactions that bring a lasting "change of control" to the undertakings concerned and in the structure of the market are covered by the merger control rules.

1.4 Minority shareholdings

1.4.1 Are minority and other interests less than control caught by the merger control rules?

Minority shareholdings and other interests (e.g. through negative control by the minority shareholder) may be subject to merger control rules if they establish joint control or if a particular right enables its holder to carry out de facto control.

There is no percentage shareholding below which it is safe to assume that control will not arise (in the absence of other structural links between the parties). Even a single share, or ‘decisive influence’ without a shareholding, may amount to control.

2. Establishing jurisdiction for notification of mergers

2.1 Merging parties/undertakings concerned

2.1.1 Which undertakings are considered parties to the merger ("undertakings concerned") in the various types of transactions identified under Section 1.1.1 and 1.2.1.

In a merger, the “undertakings concerned” are each of the merging entities.

In an acquisition of control, the undertakings concerned are:

a) the natural person or undertaking who acquired control of an undertaking or a part thereof or several undertakings or parts thereof;

b) the natural persons or undertakings who jointly acquire control of an undertaking or a part thereof or several undertakings or parts thereof;

c) the undertaking which is the subject of the acquisition of control or whose part is the subject of the acquisition of control.

2.2 Date for establishing jurisdiction

2.2.1 Which date is relevant for concluding whether the transaction is notifiable?

The date of acquisition of control, i.e. the closing date.

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

Transactions meeting the following thresholds must be notified to the Estonian Competition Authority:

a) the combined turnover in Estonia of the undertakings concerned exceeds EUR 6 million; and

b) each of at least 2 of the undertakings concerned has turnover in Estonia exceeding EUR 2 million.

2.3.2 For each threshold, can the threshold be triggered by only one party having local turnover?

Neither of the thresholds can be triggered without both parties having turnover in Estonia.

2.3.3 For each threshold, can the threshold be triggered without any party having local turnover?

Neither of the thresholds can be triggered without both parties having turnover in Estonia.

2.3.4 Are there any circumstances where transactions falling below these thresholds may be still investigated?

Transactions falling below the above thresholds may not be investigated by the Estonian Competition Authority.

2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)

2.4.1 Relevant thresholds for sector-specific or other ex ante merger control rules?

There are no sector specific thresholds for merger control rules.

2.4.2 Are any such schemes mandatory or voluntary?

Not applicable.

2.5 Foreign-to-foreign mergers

2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?

The jurisdictional thresholds are the same irrespective of whether the concentration is domestic (i.e. the parties are domiciled in Estonia) or foreign-to-foreign.

3. Calculation and allocation of turnover, asset value, transaction value etc.

3.1 Relevant turnover

3.1.1 How is turnover defined (e.g. is income from other sources than "ordinary activities to be included, and how are rebates, taxes, internal turnover etc. treated)?

Turnover corresponding to the “ordinary activities” (exclusive of commercial rebates, value added tax or other taxes directly related to turnover) of the undertaking should be used in determining whether the thresholds are met. Financial income or extraordinary income are generally not included (this should however be reviewed on a case by case basis). Furthermore, the turnover of an undertaking concerned does not include the sale of goods effected between undertakings which belong to the same group.

3.1.2 Identification and link to any official rules, guidance etc. on how to calculate turnover?

Guidelines for calculation of turnover can be found on: https://www.riigiteataja.ee/en/eli/522042016004/consolide

3.2 Relevant period for calculation of turnover

3.2.1 Which financial year(s) is relevant for the calculation of turnover?

The turnover thresholds are to be calculated on the basis of the previous financial year.

If the audited annual reports concerning the previous year are not accessible in their entirety, then the audited reports of the year before the last financial year together with un-audited reports from the last financial year shall be taken as the basis, and the representative of the undertaking shall verify the correctness of such information by a signature.

3.2.2 Should adjustments be made for e.g. divestitures, acquisitions, closings and other changes of the economic reality of the undertaking concerned made after or during the relevant financial year?

In case an undertaking concerned has, as part of a transaction that took place after the financial year, acquired or transferred certain businesses, then the turnover of such businesses should be added to, or deducted from, the relevant turnover.

3.3 Relevant undertakings for the calculation of turnover

3.3.1 The "undertakings concerned", i.e. which parties?

See Section 2.1.1 above.

3.3.2 The undertakings whose turnover is taken into account?

For calculating the turnover of the undertakings concerned, it is necessary to take account of the turnover of the acquiring undertaking and its group companies and the turnover of the target and the undertakings controlled by it.

If a subsidiary is only partially owned, its revenue is taken into account only if a party to the concentration exercises control over it (for a definition of ‘control’, see Section 1.3.1 above). If that is the case, the total of the revenue of the subsidiary is taken into account.

If control is acquired over some of the assets of an undertaking, only the turnover deriving from those assets is taken into account.

Where a joint venture is created, only the turnover of the parents of the joint venture is relevant.  

3.3.3 Shall the turnover of the existing seller be included in the target's group turnover?

The seller’s turnover shall not be included in the target’s group turnover.

3.4 Geographical allocation of turnover

3.4.1 The principles for the geographical allocation of turnover?

The turnover accrued in Estonia means the turnover accrued from the sale of goods to purchasers located in the territory of Estonia. Direct sales into the jurisdiction is sufficient for triggering the merger control (if thresholds are met).

3.5 Valuation and allocation of assets

3.5.1 The principles for valuation and allocation of assets?

Not applicable.

3.6 Calculation of other thresholds

3.6.1 The principles for calculation of metrics for other thresholds (e.g. transaction value, market share, share of supply etc.)?

Not applicable.

3.7 Special rules

3.7.1 Do any special rules or principles apply to the calculation, allocation etc. of turnover, assets etc. for specific undertakings (e.g. State-owned undertakings, investment funds, credit and financial institutions, insurance companies, financial holding companies, others)?

For insurance companies, turnover is calculated based on gross premium income. For credit and financial institutions, turnover is the sum of interest income, income from securities, commissions, net profit on financial operations, and other operating income (not deposits or funds transferred by the institution acting as an intermediary).

3.7.2 Does any exemptions apply?

Not applicable.

1. Practical information

1.1 Responsibility for filing

1.1.1 The parties responsible for filing?

The merging party or parties that will have “control” over the target undertaking post-transaction, or the parents of a newly-formed full-function joint venture are responsible for the filing. This includes shareholders who are not involved in the present transaction, but who will continue to have control over the target.

1.2 Deadlines for filing

1.2.1 Are there any mandatory deadlines for filing, and, if so, how these are calculated?

There are no mandatory deadlines for filing.

However, a transaction meeting the above thresholds has to be notified to the Estonian Competition Authority prior to its implementation and following the conclusion of the agreement, the announcement of the public bid, or the acquisition of a controlling interest.

1.2.2 Are there any sanctions for not filing within the deadlines?

Not applicable.

1.3 Early filing

1.3.1 Is it possible to file before the signing of merger agreement?

A filing can be made on the basis of a “good faith intention to conclude an agreement” or a public announcement of an intention to make a public bid. The Estonian Competition Authority may, at its discretion, defer issuing its final decision until signing has occurred (usually the Estonian Competition Authority will not issue a final decision until the signing has occurred).

1.4 Filing fees

1.4.1 Are there any fees for filing, and, if so, please describe how such fees are calculated?

The stamp duty for filing a merger notice is EUR 1,920.

1.4.2 When must the filing fee must be paid?

The stamp duty has to be paid before filing the notice. A document certifying payment of the stamp duty must be annexed to the notice.

1.5 Publicity

1.5.1 When and in which format will the authority publish receiving a notification?

An informative notice is published on the Estonian Competition Authority’s website and in the online official publication, Official Notices, after the notification has officially been filed and the formal procedure initiated. Such notice will state the names of the parties and invite interested parties to submit their comments or objections to the merger. The notice may contain the summary of the merger notification (non-confidential version).

1.5.2 How will the authority in general handle the case publicly, e.g. will it usually comment in the media, send out press releases etc.?

In general, the Estonian Competition Authority will abstain from commenting on active cases in the media.

1.5.3 Will third parties be able to review the notification?

The following documents may be published by the Estonian Competition Authority or revealed to third parties:

a) a summary of the notification (each notification must include a non-confidential summary that can be used for such purpose);

b) other non-confidential parts of the notification;

c) any of the non-confidential supporting documents;

d) any other non-confidential submissions made by the parties.

2. Procedure and timing

2.1 Normal and simplified procedures

2.1.1. Does the regime allow for a simplified (fast track) procedure, and, if so, what are the criteria for using the simplified procedure?

For mergers where there are no horizontally overlapping or vertically connected markets, or if market shares are small, a simplified merger notice can be submitted.

The “simplified procedure” is available when:

a) the parties are not active on the same markets (i.e. are not competitors) or markets upstream or downstream of each other (i.e. potential or actual supplier or customer relationships);

b) the parties are active on the same markets, but the combined market share of all parties to the transaction on all such markets does not exceed 15%;

c) the parties are active in markets upstream or downstream of each other (i.e. potential or actual supplier or customer relationships), but their combined or individual market share on such markets does not exceed 25%;

d) the parties establish a joint venture and the joint venture does not operate and has no intention to operate in Estonia; or

e) a party having joint control over a company acquires sole control over the relevant company.

The simplified procedure is notified on a “Short Form Notification” rather than a full “Full Form Notification”. The Short Form Notification demands significantly less market data.

2.2 Procedural stages (cf. timetable below)

2.2.1 The various stages of (i) a simplified procedure and (ii) a normal procedure?

Phase 1: The formal review period commences, and the Estonian Competition Authority reviews the transaction to determine whether it could give rise to competition concerns (a “substantial impediment to effective competition”) and either approves the transaction or refers it to Phase 2. Most transactions are cleared in Phase 1. Remedies can be offered in Phase 1.

Phase 2: an in-depth review. Following Phase 2 the Competition Authority will grant unconditional clearance, conditional clearance or issue a prohibition.  

2.2.2 Is pre-notification contact with the relevant authorities customary/obligatory/encouraged/etc.?

There is no obligation for pre-notification and no formal rules. Often for simple cases no pre-notification takes place. Complex cases, which require significant information, should be discussed with the Estonian Competition Authority prior to formal notification and pre-notification consultations can be extensive. However, in general the Estonian Competition Authority would expect to see a full filing before it can assess the merger.

2.2.3 Are there any sanctions for not filing within the deadlines?

Not applicable.

2.3 Timetable (cf. timetable below)

2.3.1 The statutory timetable/deadlines for review of a notification?

The formal review period for Phase 1 is maximum 30 calendar days from formal notification.

The formal review period for Phase 2 is maximum 6 additional calendar months, i.e.:

a) 4 calendar months from the decision to refer to Phase 2;

b) Extendable by up to 2 additional calendar months if remedies are offered.

If the Estonian Competition Authority does not issue a decision within the relevant review period (including extensions), the transaction is deemed approved.

2.3.2 Can the statutory timetable/deadlines be suspended ("stop-the-clock"), and if so under which conditions?

The Estonian Competition Authority can suspend the review periods at any time if it determines that the parties have not responded to a request for information in a reasonable time.

2.3.3 If pre-notification with the relevant authorities contact is possible/customary, how long will the duration of such contact usually be?

There is no statutory timetable/deadline for the pre-notification period and the duration of such period may vary from a couple of weeks to more than a month, depending on namely the complexity of the specific transaction at hand.

3. Format and content of notification

3.1 Notification forms

3.1.1 Must the notifying parties use any mandatory notification forms, e.g. for simplified and normal procedures, and, if relevant, add a link to the relevant forms?

There are no mandatory notification forms. However, the Estonian Competition Act specifies the mandatory contents of the notification for simplified and normal procedures.

3.2 Supporting documentation

3.2.1 List of the supporting documentation which must as a minimum be submitted along with the notification?

Cf. checklist below.

3.3 Originals, legalization and apostillation (cf. checklist below)

3.3.1 List of all documents which must be submitted in original/legalized versions and whether any documents must be apostilled?

The law formally requires that documents that have been prepared by foreign officials must either be legalized or endorsed by apostille.

In previous practice, the Estonian Competition Authority has accepted documents submitted as non-certified or non-legalized/non-apostilled copies (e.g. registration documents, annual reports, transaction documents, etc.).

3.3.2 If the merger regime has a mandatory filing deadline, must all the documents identified under Section 3.3.1 be submitted within this deadline?

Not applicable.

3.4 Language

3.4.1 Which languages may be used for drafting and filing a notification?

According to the law, the filing and appended documents must be submitted in Estonian. Often the Estonian Competition Authority will accept that appended foreign language documents, particularly in English, remain untranslated on the condition that the most relevant parts of the documents are summarized in the official notification. 

3.4.2 Does translations have to be certified/legalized and apostilled?

The law formally requires that translations must either be legalized or endorsed by apostille. However, the Estonian Competition Authority may grant exemptions to this.

Statutory timetable

Step Description Time
1

Pre-notification

There is no obligation for pre-notification and no formal rules. Often for simple cases no pre-notification takes place. Complex cases, which require significant information, should be discussed with the Estonian Competition Authority prior to formal notification and pre-notification consultations can be extensive. However, in general the Estonian Competition Authority would expect to see a full filing before it can assess the merger.

There is no statutory timetable/deadline for the pre-notification period and the duration of such period may vary from a couple of weeks to more than a month, depending on namely the complexity of the specific transaction at hand.

2

Phase 1

The formal review period commences, and the Estonian Competition Authority reviews the transaction to determine whether it could give rise to competition concerns (a “substantial impediment to effective competition”) and either approves the transaction or refers it to Phase 2. Most transactions are cleared in Phase 1. Remedies can be offered in Phase 1.

The formal review period for Phase 1 is maximum 30 calendar days from formal notification.

Please be aware that "stop-the-clock" is possible (cf. 2.3.2 above).

3

Phase 2

An in-depth review. Following Phase 2 the Competition Authority will grant unconditional clearance, conditional clearance or issue a prohibition. 

The formal review period for Phase 2 is maximum 6 additional calendar months, i.e.:

a) 4 calendar months from the decision to refer to Phase 2;

b) extendable by up to 2 additional calendar months if remedies are offered.

If the Estonian Competition Authority does not issue a decision within the relevant review period (including extensions), the transaction is deemed approved.

Please be aware that "stop-the-clock" is possible (cf. 2.3.2 above).

  • Step 1 1
  • Step 2 2
  • Step 3 3
  • Not defined
  • 30 days
  • 4 + 2 months

Checklist

List of the supporting documentation which must as a minimum be submitted along with the notification.

The following original documents or certified copies must be annexed to the notification upon filing with the Estonian Competition Authority.


Supporting documentation

This content was delivered
and last updated on 08-10-2019 by
Contact Person
Martin Mäesalu, Senior Associate
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