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Content last updated: 05-09-2019

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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?

Not applicable.

1.1.2 Is the jurisdiction itself a supranational jurisdiction?

The European Union is a supranational jurisdiction for the 28 EU member states and the three EFTA members Iceland, Liechtenstein and Norway (the "Member States").

The EU merger control rules are enforced by the Directorate General for Competition of the European Commission (the "European Commission").

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 described in Section 2.3.1. under the Merger Screening Schedule are met, the transaction shall be notified only to the European Commission; the national authorities of the respective 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 exceeded.

2.2 Suspensory effect

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

Completion of notifiable transactions must await clearance by the European Commission.

Transactions shall be notified to the European Commission prior to their completion and following the conclusion of the agreement, the announcement of a public bid, or the acquisition of controlling interest.

A notification may also be submitted where the notifying parties to the transaction demonstrate a good faith intention to conclude an agreement or, in the case of a public bid, where they have publicly announced an intention to make a bid, provided that the intended agreement or bid would result in a notifiable transaction to the European Commission.

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?

A transaction is caught by the merger control rules if it brings a change of control on a lasting basis resulting from:

(i) the merger of two or more previously independent undertakings or parts of undertakings; or

(ii) the acquisition, by one or more persons already controlling at least one undertaking, or by one or more undertakings, whether by purchase of securities or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings.

1.2 Joint ventures

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

The creation of joint ventures performing on a lasting basis all the functions of an autonomous economic entity resulting in permanent structural market change, i.e. a so-called "full function" joint venture. 

1.3 Definition of "control"

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

"Control" over an undertaking is defined as the possibility of exercising decisive influence on an undertaking by rights, contracts or any other means, either separately or in combination, having regard to the considerations of facts and law involved.

The assessment of whether there is a possibility of exercising decisive influence over an undertaking has to be decided on the facts in each case. Control can be established on either a de jure or de facto basis.

De jure control is normally acquired on a legal basis by the acquisition of a majority of the voting rights or through special rights, while de facto control may be acquired by any other means, such as for example based on the size of the shareholding, the historic voting pattern at previous shareholders' meetings and the position of other shareholders.

Only transactions that bring a lasting "change of control" to the undertakings concerned and in the structure of the market are covered by the EU merger control rules. Thus, transactions resulting only in a temporary change of control, such as for instance a transitory transaction, are not covered.

1.4 Minority shareholdings

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

Acquisitions of a minority or other interests that do not lead to an acquisition of control do not fall within the EU merger control rules and will not be considered by the European Commission.

However, a minority interest entailing a possibility of exercising control over the undertaking concerned, e.g. due to veto rights related to certain strategic commercial decisions of the undertaking, will be caught by the EU merger control rules - regardless of whether control has actually been exercised. 

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 may vary depending on the characteristics of the transaction:

In case of acquisition of sole control, the undertakings concerned are the acquiring undertaking consisting of all entities belonging to the same group (i.e. parent, subsidiaries, sister companies etc.) and the target undertaking (i.e. not including the seller).

In case of acquisition of joint control of a newly created joint venture, the undertakings concerned are each of the undertakings jointly acquiring control. The same applies where one undertaking contributes a pre-existing subsidiary or a business (over which it exercises sole control) to a newly created joint venture.

- In case of acquisition of joint control over a pre-existing undertaking or business, the undertakings concerned are each of the undertakings acquiring joint control and the target (the joint venture).

In case where a pre-existing, full-function joint venture acquires control over another undertaking, the undertakings concerned are the joint venture (i.e. not including the parent companies, although their turnover should be included in the turnover calculation) and the target undertaking. Where a joint venture is mere acquisition vehicle, the undertakings concerned are in such situation the parent companies to the joint venture and the target undertaking.

In case of change from joint control to sole control, the undertakings concerned are the undertaking acquiring the sole control and the target. The "existing" shareholder(s) (i.e. the seller(s)) is not considered an undertaking concerned.

2.2 Date for establishing jurisdiction

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

Whichever date is earlier of the date of conclusion (i.e. signing) of the binding legal merger agreement; the announcement of a public bid or the acquisition of a controlling interest or the date of the first notification to the European Commission or a Member State authority.

2.3 General thresholds

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

If either of the two alternative sets of thresholds is exceeded, the transaction will have to be notified to the European Commission:

The first threshold:

a) the combined aggregate global turnover of all the undertakings concerned is more than EUR 5,000 million; and

b) the aggregate EU-wide turnover of each of at least two of the undertakings concerned is more than EUR 250 million,

unless each of the undertakings concerned achieves more than 2/3 of its aggregate EU-wide turnover within one and the same Member State (i.e. all in the same Member State).

The second threshold

a) the combined aggregate global turnover of all the undertakings concerned is more than EUR 2,500 million; and

b) in each of at least three Member States, the combined aggregate turnover of all the undertakings concerned is more than EUR 100 million; and

c) in each of at least three Member States included for the purpose of point (b), the aggregate turnover of each of at least two of the undertakings concerned is more than EUR 25 million; and

d) the aggregate Community-wide turnover of each of at least two of the undertakings concerned is more than EUR 100 million,

unless each of the undertakings concerned achieves more than two-thirds of its aggregate EU-wide turnover within one and the same Member State (i.e. all in the same Member State).

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

Neither of the alternative sets of thresholds can be triggered by only one party to the transaction having turnover in the EU.

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 at least two undertakings concerned having turnover in the EU.

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

Transactions falling below the thresholds may not be investigated by the European Commission.

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

2.4.1 What are the relevant thresholds for sector-specific or other ex ante merger control rules?

There are no sector-specific or other ex ante merger control rules on an EU-level.

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?

Transactions exceeding the above thresholds have to be notified to the European Commission, regardless of whether the undertakings concerned are domiciled outside of the European Union.

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)?

The relevant turnover to be taken into account is the net turnover derived from the sale of products and the provision of services falling within the undertakings' ordinary activities after deduction of (i) rebates; (ii) value added tax and other taxes directly related to the sales; and (iii) group internal turnover from sales to group related undertakings.

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

Guidance to the calculation of turnover can be found in the European Commission's Consolidated Jurisdictional Notice under Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings:

http://ec.europa.eu/competition/mergers/legislation/draft_jn.html

3.2 Relevant period for calculation of turnover

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

The most recent financial year for which audited annual accounts exist.

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?

Adjustments must be made to account for permanent changes in the economic reality of the undertakings concerned, such as acquisitions or divestments, which have occurred after the date of the latest audited accounts and are thus not fully reflected in the accounts used in the calculation of turnover. 

Turnover stemming from such divested or acquired assets should consequently be excluded or included, respectively, in the turnover calculation. 

3.3 Relevant undertakings for the calculation of turnover

3.3.1 Who are the "undertakings concerned", i.e. which parties?

See Section 2.1.1 above.

3.3.2 Who are the undertakings whose turnover is taken into account?

See the definition of the "undertakings concerned" in Section 2.1.1 above.

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

In general, the seller's turnover shall not be included in the target's group turnover. The only exception is when the seller post-merger will retain (joint) control with the target.

3.4 Geographical allocation of turnover

3.4.1 What are the principles for the geographical allocation of turnover?

Turnover is allocated to the location where competition with alternative suppliers takes place. In general, turnover generated from sale of products/services is allocated to the location where the product was delivered, or the service provided (typically the location of the customer).

Investment income and interests are allocated to the jurisdiction where the income is received.

Note that the turnover allocation does not follow IFRS, GAAP or other accounting standards. Revenue allocated according to these standards cannot be used for the assessment.

3.5 Valuation and allocation of assets

3.5.1 What are the principles for valuation and allocation of assets?

Not applicable.

3.6 Calculation of other thresholds

3.6.1 What are the principles for calculation of metrics for other relevant 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)?

Specific rules apply to the calculation of turnover for investment funds; state-owned undertakings; financial institutions and insurance undertakings, which can be found in the European Commission's Consolidated Jurisdictional Notice under Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings:

https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:095:0001:0048:EN:PDF

3.7.2 Does any exemptions apply?

Not applicable.

1. Practical information

1.1 Responsibility for filing

1.1.1 Who are the parties responsible for filing?

In principle, all undertakings involved are responsible for filing, i.e. the merging parties in full mergers; the acquirer and the target company in acquisitions of control; and the parent companies in the formation of a full-function joint venture. This also includes the shareholders who are not involved in the present transaction, but who will maintain 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 European Commission 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?

Notification may be made where the undertakings concerned demonstrate to the European Commission a good faith intention to conclude an agreement or, in the case of a public bid, where they have publicly announced an intention to make such a bid, provided that the intended agreement or bid would result in a notifiable transaction.

1.4 Filing fees

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

There are no filing fees.

1.4.2 When must the filing fee must be paid

Not applicable.

1.5 Publicity

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

The European Commission publishes a short non-confidential notice (press release) of the fact that it has received a notification, inviting third parties to comment on the proposed transaction.

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.?

The European Commission will send out the above-mentioned press release and a press release following the adoption of a decision. In general, the European Commission will abstain from commenting on active cases in the media.

1.5.3 Will third parties be able to review the notification?

The European Commission will not publish the parties' notification on its website.

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?

The European Commission allows transactions to be notified pursuant to a simplified procedure, if the undertakings concerned are not operating in the same or related markets, or if they have only very small market shares not reaching specific market share thresholds.

The European Commission's Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No. 139/2004 (2013/C 366/04) specifies the categories of transactions, which will in principle may qualify for a simplified procedure:

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52013XC1214(02)&from=EN

1. Transactions that do not involve horizontal overlaps or vertical connections between the undertakings concerned.

2. Transactions in which (i) the undertakings concerned are active in the same market(s), i.e. horizontally overlapping, but their aggregate market share(s) is less than 20% in any market; and (ii) where the undertakings concerned are connected vertically, but their individual or combined market shares is/are less than 30%.

3. Transactions where a party acquires sole control of an undertaking over which it already has joint control.

4. Transactions in which two or more undertakings acquire joint control of a joint venture with no, or negligible, actual or foreseen activities within the EEA. This is the case where (i) the total value of any transferred assets to the joint venture is less than EUR 100 million within the EEA; or (ii) the turnover of the joint venture and/or the turnover of the contributed activities is less than EUR 100 million in the EEA.

The European Commission may also apply the simplified procedure to transactions where (i) the combined market share of all the parties to the concentration that are horizontally overlapping is less than 50%, and (ii) the increment (delta) of the HHI resulting from the concentration is below 150.

2.2 Procedural stages

2.2.1 What are the various stages of (i) a simplified procedure and (ii) a normal procedure?

In general, all merger procedures before the European Commission (both simplified and normal) are initiated by a pre-notification period.

This pre-notification period may involve inter alia discussions with the European Commission about the case and timing; submission of draft notification; fact-finding exercises from the European Commission; and requests for additional information and documents.

When the European Commission has accepted and declared the notification as complete, the regulatory timeframe for the case team's Phase I investigation starts.

Starting from the first working day after the complete filing, the case team has to decide whether to clear the transaction in Phase I or open a Phase II investigation.

During the Phase I investigations, the case team will start by sending a market test questionnaire to the largest customers, competitors and suppliers of the notifying parties.

The European Commission will also publish an information page about the case on its website and a notice in the EU Official Journal inviting third parties to submit their observation and comments to the transaction within a specified period.

As part of the investigation, the case team may also send requests for information and engage in discussions and meetings with the notifying parties.

If the transaction cannot be cleared unconditionally in Phase I, the European Commission will hold a meeting with the notifying parties where inter alia remedies will be discussed. If the notifying parties propose remedies, the European Commission will proceed to market test and assess the remedies.

The European Commission will then either adopt a decision clearing the transaction conditionally (i.e. with the remedies) or initiate a Phase II investigation, if the competition law concerns have not been removed by the remedies. 

When initiating the Phase II investigation, the European Commission will issue a confidential decision explaining in detail its findings and conclusions. Following the decision, the notifying parties will normally submit written comments hereto and hold a meeting with the European Commission.

The European Commission will then normally continue its investigations and contact third parties in the market and send further requests for information to the notifying parties.

If the competition law concerns have not been met, the European Commission will proceed to work on a so-called "Statement of Objections" ("SO"), which entails a detailed examination of its findings and conclusions.

Before issuing the SO, the European Commission will invite the notifying parties to a meeting, if they are willing to propose remedies to meet the concerns expressed in the SO. If the notifying parties are not willing to do so, the European Commission will proceed and issue a confidential SO to which the notifying parties may reply in writing or orally.

The notifying parties can then either propose remedies meeting the concerns in order to get a conditional clearing decision, withdraw the notification or receive a prohibit decision.

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

Pre-notification contact to the European Commission is customary and a standard part of most (if not all) merger proceedings, including transactions following a simplified procedure.

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

Not applicable.

2.3 Timetable

2.3.1 What are the statutory timetable/deadlines for review of a notification?

Pre-notification: There is no set period for pre-notification, but for simple cases it can be as short as a 1-2 weeks, while for complex cases it can be several months. In simple cases pre-notification can be completed within 3-4 weeks.

Phase I - Maximum of 35 working days

1. Starting from the first working day after the complete filing has been submitted by the notifying parties, the European Commission has 25 working days to decide whether to clear the transaction in Phase I or open a Phase II investigation.

2. If the notifying parties propose remedies before the expiry of the 20th working day, the European Commission will extend the Phase I period by 10 working days.

Phase II - Maximum of additional 125 working days

1. The Phase II investigation period is 90 working days, which starts to run from the end of the Phase I period.

2. This period can be extended to 105 working days, if the notifying parties propose remedies before the 55th working day of the period.

3. Furthermore, the Phase II period may be extended by up to 20 working days upon an agreement with or a request by the notifying parties, if such request is submitted before the 15th working of the period.

The maximum total review period is 160 working days (approx. 8 months) from the submission of a complete notification to the European Commission, excluding pre-notification and any suspensions of the review period.

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

The statutory timetable/deadlines can be suspended, if the European Commission's investigation is impeded due to circumstances attributable to the notifying parties.

2.3.3 If pre-notification contact with the relevant authorities 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?

The European Commission has mandatory notification forms for simplified (Short Form CO) and normal procedures (Form CO), which are attached as Annex I and II to the European Commission Regulation (EC) No. 802/2004:

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02004R0802-20140101

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

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

Not applicable.

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?

The notification can be made in any of the official EU languages.

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

Not applicable.

Statutory timetable

Step Description Time
1

Pre-notification

In general, all merger procedures before the European Commission (both simplified and normal) are initiated by a pre-notification period.

This pre-notification period may involve inter alia discussions with the European Commission about the case and timing; submission of draft notification; fact-finding exercises from the European Commission; and requests for additional information and documents.

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 I

When the European Commission has accepted and declared the notification as complete, the regulatory timeframe for the case team's Phase I investigation starts.

Starting from the first working day after the complete filing, the case team has to decide whether to clear the transaction in Phase I or open a Phase II investigation.

During the Phase I investigations, the case team will start by sending a market test questionnaire to the largest customers, competitors and suppliers of the notifying parties.

The European Commission will also publish an information page about the case on its website and a notice in the EU Official Journal inviting third parties to submit their observation and comments to the transaction within a specified period.

As part of the investigation, the case team may also send requests for information and engage in discussions and meetings with the notifying parties.

If the transaction cannot be cleared unconditionally in Phase I, the European Commission will hold a meeting with the notifying parties where inter alia remedies will be discussed. If the notifying parties propose remedies, the European Commission will proceed to market test and assess the remedies.

The European Commission will then either adopt a decision clearing the transaction conditionally (i.e. with the remedies) or initiate a Phase II investigation, if the competition law concerns have not been removed by the remedies. 

Maximum of 35 working days.

1. Starting from the first working day after the complete filing has been submitted by the notifying parties, the European Commission has 25 working days to decide whether to clear the transaction in Phase I or open a Phase II investigation.

2. If the notifying parties propose remedies before the expiry of the 20th working day, the European Commission will extend the Phase I period by 10 working days.

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

3

Phase II

When initiating the Phase II investigation, the European Commission will issue a confidential decision explaining in detail its findings and conclusions. Following the decision, the notifying parties will normally submit written comments hereto and hold a meeting with the European Commission.

The European Commission will then normally continue its investigations and contact third parties in the market and send further requests for information to the notifying parties.

If the competition law concerns have not been met, the European Commission will proceed to work on a so-called "Statement of Objections" ("SO"), which entails a detailed examination of its findings and conclusions.

Before issuing the SO, the European Commission will invite the notifying parties to a meeting, if they are willing to propose remedies to meet the concerns expressed in the SO. If the notifying parties are not willing to do so, the European Commission will proceed and issue a confidential SO to which the notifying parties may reply in writing or orally.

The notifying parties can then either propose remedies meeting the concerns in order to get a conditional clearing decision, withdraw the notification or receive a prohibit decision.

Maximum of additional 125 working days.

1. The Phase II investigation period is 90 working days, which starts to run from the end of the Phase I period.

2. This period can be extended to 105 working days, if the notifying parties propose remedies before the 55th working day of the period.

3. Furthermore, the Phase II period may be extended by up to 20 working days upon an agreement with or a request by the notifying parties, if such request is submitted before the 15th working of the period.

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

The maximum total review period is 160 working days (approx. 8 months) from the submission of a complete notification to the European Commission, excluding pre-notification and any suspensions of the review period.

  • Step 1 1
  • Step 2 2
  • Step 3 3
  • Not defined
  • 25 + 10 days
  • 90 + 15 + 20 days

Checklist

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

Supporting documentation

This content was delivered
and last updated on 05-09-2019 by
Daniel Barry, Partner, Head of EU and Competition Law
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