GUERNSEY

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Content last updated: 24-04-2020

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1. Supranationality

1.1 Membership of Supranational Organization

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

No.

However, the competition laws in Guernsey are modelled on the competition provisions in the Treaty on the Functioning of the EU. Guernsey’s Competition Ordinance provides that the Guernsey Competition and Regulatory Authority and the Royal Court must take into account take into account the principles laid down by and any relevant decisions of the European courts in respect of corresponding questions arising under EU competition law.

The formal relationship between Guernsey and the EU is enshrined in Protocol 3 of the UK’s 1972 Accession Treaty and confirmed in what is now Article 355 (5) (c) of the EU Treaties. Under Protocol 3, Guernsey is part of the Customs Union and is essentially within the Single Market for the purposes of trade in goods but is a third country (i.e. outside the EU) in all other respects, including competition policy (although normal conditions of competition in trade in agricultural products apply). When the UK leaves the EU, Protocol 3 will no longer apply.

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?

Not applicable.

2. Nature of merger control regime

2.1 Mandatory or voluntary

2.1.1 Is filing mandatory or voluntary?

Mandatory.

2.2 Suspensory effect

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

Yes, completion of transaction must await approval by the Guernsey Competition and Regulatory Authority.

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?

The following types of transactions are caught by the merger rules:

- Direct or indirect acquisition of control by one undertaking (or a person who controls an undertaking) of another undertaking, or the business of another undertaking, or the substantial parts of the assets of another undertaking;

- A statutory merger, amalgamation or combination of two or more undertakings; and

- The creation of a joint venture, by partnership or otherwise.

1.3 Definition of "control"

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

“Control” is defined as arising when decisive influence is capable of being exercised in respect of the business or undertaking. When determining whether decisive influence exists, the competition authority and the Royal Courts take into account all relevant facts and circumstances, and not merely the legal effect of acts or agreements.

The concept of “decisive influence” is also used in the EU Merger Regulation to identify when a notifiable merger should take place. There is a great deal of precedent of the European courts and guidance of the European Commission regarding the interpretation of this phrase, and the competition authority has close regard to that precedent when applying the merger provisions in the Guernsey laws.

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.

An undertaking is an undertaking concerned if:

-  it is being acquired by another undertaking;

-  it is acquiring another undertaking;

-  it is entering into a joint venture with another undertaking;

-  it is the joint venture of other undertakings, or

-  it is involved in an amalgamation or other combination with another undertaking.

In Guernsey competition law, the undertakings concerned are called “undertakings involved”. The EU Merger Regulation (Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, Article 1) incorporates a concept of “undertakings concerned” in a merger, which is similar. The Guernsey competition authority will have regard to the guidelines produced by the European Commission (Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings, 2008/C95/01, 16 April 2008, at paragraphs 129-153) when applying the Guernsey M&A Regulations on this point.

2.3 General thresholds

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

Merger filing is need if:

  • the combined turnover of the undertakings concerned exceeded GGP 5,000,000 in the Channel Islands (i.e. Guernsey and Jersey) in the last financial year, and the turnover of each of at least two of the undertakings concerned exceeded GGP 2,000,000 in Guernsey in the last financial year.

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

The first threshold can be triggered without any of the undertakings concerned having local turnover, i.e. in Guernsey, if they have turnover in Jersey.

The second threshold can only be triggered by at least two of the undertakings concerned having local turnover.

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

The first threshold can be triggered without any of the undertakings concerned having local turnover, i.e. in Guernsey, if they have turnover in Jersey.

The second threshold can only be triggered by at least two of the undertakings concerned having local turnover.

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 sector-specific rules in the following sectors:

  • Utilities;
  • Postal services;
  • Telecommunications.

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 applicable turnover of an undertaking, other than a credit institution, financial institution, insurance undertaking, or an association of undertakings, is the amounts derived by the undertaking from the sale of products and the provision of services falling within the undertaking’s ordinary activities after deduction of sales rebates, value added tax and other taxes directly related to turnover, wheresoever arising, excluding intra-group turnover resulting from the sale of products or the provision of services between connected undertakings as defined in Section 3.3.2 below.

For sector-specific definitions of turnover see Section 3.7.1 below.

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

Guidance on the calculation of turnover can be found in the Competition (Calculation of Turnover) (Guernsey) Regulations, 2012:

http://www.guernseylegalresources.gg/CHttpHandler.ashx?id=76596&p=0

3.2 Relevant period for calculation of turnover

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

The applicable turnover of an undertaking is the turnover for the financial year preceding the date on which the decision of the Guernsey Competition and Regulatory Authority is taken or, if figures are not available for that financial year, the one immediately preceding it.

Where there is any period in respect of which there is no preceding financial year then the applicable turnover shall be the turnover for that period.

3.3 Relevant undertakings for the calculation of turnover

3.3.2 The undertakings whose turnover is taken into account?

The turnover to be taken into account is that of the following undertakings:

a) the undertaking concerned,

b) those undertakings in which the undertaking concerned, directly or indirectly

(i) owns more than half the capital or business assets,

(ii) has the power to exercise more than half the voting rights,

(iii) has the power to appoint more than half the members of the supervisory board, the administrative board or bodies legally representing the undertakings, or

(iv) has the right to manage the undertakings' affairs,

c) those undertakings which have in the undertaking concerned the rights or powers detailed in subparagraph (b),

d) those undertakings in which an undertaking as referred to in (c) has the rights or powers detailed in subparagraph (b),

e) those undertakings in which two or more undertakings as referred to in (a) to (d) jointly have the rights or powers listed in (b).

Undertakings referred to in paragraphs (b) to (e) are "connected undertakings".

3.4 Geographical allocation of turnover

3.4.1 The principles for the geographical allocation of turnover?

The place in which an undertaking’s turnover arises in respect of undertakings other than credit institutions, financial institutions, or insurance undertakings is determined by the location of the customer to whom the products are sold or the services provided.

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)?

The geographical place in which an undertaking’s turnover arises

(i) in respect of undertakings that are credit institutions or financial institutions is determined by the place in which the income items listed in regulation 4 of the Turnover Regulations are received by the institution or a branch or division thereof, and

(ii) in respect of insurance undertakings is determined by the place in which the gross premiums are received by the undertaking or a branch or division thereof.

 

The applicable turnover of a credit institution or financial institution is the sum of the following income items received by that institution after deduction of any taxes directly related to those items:

a) interest income and similar income,

b) income from securities (including shares and other variable yield securities, participating interests, and shares in affiliated undertakings),

c) commissions receivable,

d) net profit on financial operations, and

e) other operating income.

The applicable turnover of an insurance undertaking is the value of gross premiums received which comprises all amounts received and receivable in respect of insurance contracts issued by or on behalf of the undertaking, including outgoing reinsurance premiums, and after deduction of taxes and parafiscal contributions or levies charged by reference to the amounts of individual premiums or the total volume of premiums.

The turnover of an association of undertakings is the aggregate applicable turnover of the undertakings that are members of the association.

There are sector-specific rules in the following sectors:

  • Utilities;
  • Postal services;
  • Telecommunications.
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