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- Merger Control Regime
- Merger Screening
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1.1 Membership of Supranational Organization
1.1.1 Is the jurisdiction a member of/party to a supranational jurisdiction?
The Faroe Islands is an autonomous territory within the Kingdom of Denmark but is a member of neither the European Union nor the European Economic Area (EEA).
Denmark’s merger control laws do not apply in the Faroe Islands.
1.1.2 Is the jurisdiction itself a supranational jurisdiction?
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?
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 Faroese Competition Council unless a prior exemption has been granted. The Competition Council may impose conditions and remedies when exemptions are granted.
1. What type of transactions are caught by the merger control regime?
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:
a) the merger of two or more previously independent undertakings or parts of undertakings; or
b) 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.
The merger control rules do not apply in the case of:
- credit institutions, other financial undertakings or insurance undertakings whose ordinary business includes transactions and trade in securities on their own or others’ account and who temporarily possess shares which they have acquired for the purpose of resale in so far as they do not exercise the voting rights attached to the shares for the purpose of determining the competitive behavior of the undertaking or exercise that voting right solely for the purpose of preparing the full or partial disposal of that undertaking or its assets or divestment of such shares, and divestment of the shares happen within one year of the acquisition; or
- when control is acquired by a person who, according to the law on bankruptcy etc. may dispose of the business
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 capability of decisive influence being exercised 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 capability of decisive influence being exercised 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 Faroese merger control rules. Thus, transactions resulting only in a temporary change of control, such as for instance a transitory transaction, are not covered.
In practice, the Faroese Competition and Consumer Authority will generally apply the European Commission’s Consolidated Jurisdictional Notice for interpretation of the notion of control ("Jurisdictional Notice"):
1.4 Minority shareholdings
1.4.1 Are minority and other interests less than control caught by the merger control rules?
Acquisition of a minority interest or other interests less than control is not caught by the Faroese merger control rules.
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.
2.3 General thresholds
Merger filing is needed if:
The first threshold:
- the combined aggregate turnover of the undertakings concerned exceeded DKK 75,000,000 in the Faroe Islands in the last financial year, and the aggregate turnover of each of at least two of the undertakings concerned exceeds DKK 15,000,000 in the Faroe Islands in the last financial year.
The second threshold:
- The aggregate annual turnover of at least one of the undertakings concerned exceeds DKK 75,000,000 in the Faroe Islands in the last financial year, and the aggregate annual global turnover of at least one of the other undertakings concerned exceeds DKK 75,000,000 in the last financial year.
2.3.2 For each threshold, can the threshold be triggered by only one party having local turnover?
The second threshold mentioned in Section 2.3.1 above can be triggered even if only one of the undertakings concerned has turnover in the Faroe Islands.
2.3.3 For each threshold, can the threshold be triggered without any party having local turnover?
2.3.4 Are there any circumstances where transactions falling below these thresholds may be still investigated?
2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)
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?
Foreign-to-foreign mergers satisfying the turnover thresholds are subject to merger control in the Faroe Islands even where no actual effects in the Faroese market can be shown.
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 value added tax and other taxes directly related to the sales and intragroup sales.
3.1.2 Identification and link to any official rules, guidance etc. on how to calculate turnover?
The rules on calculation of turnover can be found in the Competition Council’s Executive Order on the Calculation of Turnover in the Competition Act: (in Faroese)
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 in the turnover calculation.
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?
The turnover is calculated on a group level. In short, the undertakings whose turnover is taken into account comprise the entire group that the acquirer belongs to and the target's group (i.e. target and any of its wholly or jointly owned subsidiaries). 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 The principles for the geographical allocation of turnover?
This is not specified in the Faroese law.
However, the Faroese Competition Act is modelled on the Danish Competition Act and is intended to ensure conformity with competition law in the European Union. Hence, it may be expected that the Faroese Competition Council would apply the principles of geographical allocation of turnover under Danish and EU law for the purpose of calculating turnover, i.e.:
Turnover generated from sale of products/services is allocated to the Faroe Islands if the customer was resident in the Faroe Islands at the time when the agreement was made.
For credit institutions and other financial undertakings, investment income and interests are allocated to the Faroe Islands if they are received by branch or division of the financial undertaking established in the Faroe Islands.
Note that the turnover allocation does not follow IFRS, GAAP or other accounting standards. Revenue allocated according to these standards cannot be used for an assessment under the Faroese Competition Act.
3.5 Valuation and allocation of assets
3.5.1 The principles for valuation and allocation of assets?
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.)?
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 Competition Council’s Executive Order on the Calculation of Turnover in the Competition Act: (in Faroese)
Further guidance can also be found in the Jurisdictional Notice (which is not applicable, but which will serve as guidance):
3.7.2 Does any exemptions apply?
1. Practical information
1.1 Responsibility for filing
1.1.1 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 (the parent company of an acquirer will only be considered an undertaking concerned, if the acquiring entity is a mere acquisition vehicle).
1.2 Deadlines for filing
1.2.1 Are there any mandatory deadlines for filing, and, if so, how these are calculated?
A transaction must be notified to the Competition Council no later than 1 week after conclusion (i.e. signing) of a binding legal merger agreement; the announcement of a public bid or the acquisition of a controlling interest, whichever date is earlier.
1.2.2 Are there any sanctions for not filing within the deadlines?
Failure to comply is a criminal offence punishable on conviction by a fine of an unlimited amount.
1.3 Early filing
1.3.1 Is it possible to file before the signing of merger agreement?
Subject to the Competition Council's acceptance, a draft notification may 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 Competition Council.
However, a complete notification will only be accepted by the Competition Council when a signed agreement or a public announcement of an intention to make a public bid is in place.
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?
1.5.1 When and in which format will the authority publish receiving a notification?
The Competition Council 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.
The publication includes the names of the participants in the merger, the nature of the merger and the economic sectors concerned.
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.?
1.5.3 Will third parties be able to review the notification?
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 Competition Council allows transactions to be notified pursuant to a simplified procedure in the following situations:
1. Transactions in which two or more undertakings acquire joint control of a joint venture, or create a new fully-functional joint venture, with no significant activities, or projected activities, in the Faroe Island.
2. Change of control by which a joint venture ceases to be subject to joint control and becomes subject to the sole control of one of the undertakings that previously took part in joint control.
3. Transactions that do not involve horizontal overlaps or vertical connections between the undertakings concerned.
4. Transactions in which the undertakings concerned are active in the same market(s), i.e. horizontally overlapping, but their aggregate market share(s) does not exceed 15% in any market.
5. Transactions in which the undertakings concerned are connected vertically, but where their respective market share is below 25% in all of the connected markets.
6. Transactions triggering only the second alternative threshold under Section 2.3.1 of the Merger Screening Schedule.
7. Transactions in which the undertakings concerned have activity governed by the Commercial Fisheries Act (Act No. 28 of March 10, 1994, Second Amendment).
2.2 Procedural stages (cf. timetable below)
2.2.1 The various stages of (i) a simplified procedure and (ii) a normal procedure?
2.2.2 Is pre-notification contact with the relevant authorities customary/obligatory/encouraged/etc.?
2.2.3 Are there any sanctions for not filing within the deadlines?
Please see Section 1.2.2 above.
2.3 Timetable (cf. timetable below)
2.3.1 The statutory timetable/deadlines for review of a notification?
Phase I - Maximum of 30 working days
- Starting from the first working day after the notification is declared complete, the Competition Council has 30 working days to decide whether to clear the transaction in Phase I or refer the case to Phase II;
Phase II - Maximum of 130 additional working days
- The initial Phase II period is 90 working days, which starts to run from the end of the Phase I period;
- This period can be extended by up to 20 additional working days if the notifying parties propose any remedies and at least 70 working days have elapsed from the decision to initiate the Phase II investigation (the extension only applies to ensure that the Competition Council has 20 complete working days to review any proposed remedies.);
- Furthermore, this period may be extended by up to 20 additional working days with the consent of the parties.
The maximum total review period is 160 working days from the Competition Council declaring the notification complete, i.e. 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?
2.3.3 If pre-notification with the relevant authorities contact is possible/customary, how long will the duration of such contact usually be?
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 Competition Council has published on its website a notification template (K2) in Faroe. The form must be completed in full for standard notifications. For simplified notifications only Sections 1 – 10 need be completed.
The templates can be found here on the Competition Council's website: (in Faroe)
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.
Note that it is not a requirement that there be issued power of attorney to representatives of the notifying party/parties.
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?
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?
3.4.1 Which languages may be used for drafting and filing a notification?
Danish and Faroe.
3.4.2 Does translations have to be certified/legalized and apostilled?
Starting from the first working day after the notification is declared complete, the Competition Council has 30 working days to decide whether to clear the transaction in Phase I or refer the case to Phase II.
Maximum of 30 working days.
The initial Phase II period is 90 working days, which starts to run from the end of the Phase I period. This period can be extended by up to 20 additional working days if the notifying parties propose any remedies and at least 70 working days have elapsed from the decision to initiate the Phase II investigation (the extension only applies to ensure that the Competition Council has 20 complete working days to review any proposed remedies.). Furthermore, this period may be extended by up to 20 additional working days with the consent of the parties.
Maximum of 130 additional working days.
The maximum total review period is 160 working days from the Competition Council declaring the notification complete, i.e. excluding pre-notification and any suspensions of the review period.
- Step 1 1
- Step 2 2
- 30 days
- < 130 days
List of the supporting documentation which must as a minimum be submitted along with the notification.
and last updated on 11-05-2020 by
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