JERSEY

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Content last updated: 16-10-2020

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  • Merger Control Regime
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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 Jersey are modelled on the competition provisions in the Treaty on the Functioning of the EU. Jersey’s Competition Act provides that so far as possible, questions arising in relation to competition must be dealt with in a manner that is consistent with the treatment of corresponding questions arising under EU competition law.

The Jersey Competition Regulatory Authority generally follows the EU Commission Consolidated Jurisdictional Notice (under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings).

The formal relationship between Jersey 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, Jersey 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 Jersey Competition 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, and whether incorporated or unincorporated.

1.3 Definition of "control"

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

The Jersey Competition Regulatory Authority generally follows the EU Commission Consolidated Jurisdictional Notice (under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings).

“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 Jersey 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.

The Jersey Competition Regulatory Authority generally follows the EU Commission Consolidated Jurisdictional Notice (under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings).

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 pre-existing acquired undertaking.

- In case of entry of a new shareholder in a pre-existing joint venture, which leads to a change in the quality of control for the remaining controlling shareholders, the undertakings concerned are the newly entering controlling shareholder alongside with the remaining controlling shareholders.

- 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) 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 joint venture. The other "existing" shareholder (i.e. the seller) is not considered an undertaking concerned.

2.3 General thresholds

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

The first alternative threshold (horizontal transactions):

Merger filing is needed if:

  • The transaction results in the creation or enhancement of a combined 25% share or more of supply or purchase of goods or services of any description supplied to or purchased from persons in Jersey in Jersey.

The threshold applies whether the undertakings concerned reached the 25% share before or after the transaction, but there must be an increment in the share of supply or purchase in Jersey as a result of the transaction for the threshold to apply, i.e. both acquirer and target must be active in the supply or purchase of similar products or services in Jersey (these need not necessarily be in the same economic product market).

This is not a market share test, and the Jersey Competition Regulatory Authority has a broad discretion as to the category of goods or services that it uses as the frame of reference for assessing whether the share of supply and purchase test is met, and that category may be wider than the relevant economic product market to which the goods or services belong.

The second alternative threshold (vertical transactions):

  • The undertakings concerned have a combined 25% or more share of supply or purchase of goods or services of any description supplied to or purchased from persons in Jersey, and another undertaking involved in the transaction is active in the supply or purchase of goods or services of any description that are upstream or downstream of those goods or services in which that 25% share is held.

The threshold applies irrespective of whether the supply or purchase of goods or services between the undertakings concerned is to or from persons in Jersey and irrespective of whether there is an existing supply or purchase relationship between the parties to the proposed merger or acquisition.

Re “share of supply or purchase” test as opposed to a “market share” test, see the threshold for horizontal transactions above.

The third alternative threshold (“conglomerate mergers”):

Merger filing is needed if:

  • At least one of the undertakings concerned has 40% share or more of the supply or purchase of goods or services of any description supplied to or purchased from persons in Jersey (even if there is no horizontal or vertical relationship), unless
  • the target(s) has no existing share of the supply or purchase, i.e. no turnover in Jersey, and has no assets in Jersey; or
  • the seller has a 40% share of the supply or purchase, but that share is not subject to the proposed transaction, and the acquirer does not have a share of supply of 40%, and provided that any non-competition, non-solicitation or confidentially clauses included therein do not exceed a period of three years and are strictly limited to the products and services supplied by the undertaking being acquired.

Re “share of supply or purchase” test as opposed to a “market share” test, see the threshold for horizontal transactions above.

The three-year limitation for non-competition and similar clauses is based on the maximum period generally allowed for such clauses under relevant EU guidelines. Parties may propose non-competition or similar clauses for a period of longer than three years; however, the inclusion of such a clause in an agreement means that the merger cannot qualify for the exemption in the third bullet above.

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:

  • Air and sea ports;
  • Postal services;
  • Telecommunications.

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

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.)?

Share of supply is determined on a group level.

When determining which undertakings are relevant for calculation of share of supply or purchase, the Jersey Competition Regulatory Authority generally follows the EU Commission Consolidated Jurisdictional Notice (under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings). See the definition of the "undertakings concerned" in Section 2.1.1 above. In short, the undertakings whose share of supply or purchase is taken into account include 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).

The seller's share is not included in the target's group share, apart from when applying the second exception under the third alternative threshold (conglomerate transactions).

The Jersey Competition Regulatory Authority has a broad discretion as to the category of goods or services that it uses as the frame of reference for assessing whether the test is met. In particular, the Jersey Competition Regulatory Authority will not – for the purposes of assessing whether it has jurisdiction – carry out a detailed assessment of the relevant economic market. Rather, it will consider the scope of products or services which appear to be broadly comparable, and potentially substitutable, with the products or services of the merging parties. That category may be considerably wider than the proper relevant economic product market to which the goods or services belong and can include captive (intra-group) sales. Where more than one measure is available, for example, turnover, volumes, floor space etc., and any of them results in the threshold being exceeded, the parties should apply for approval.

Supply is defined as:

(i) in relation to goods: supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase; and

(ii) in relation to services: provide, grant or confer.

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)?

There are sector-specific rules in the following sectors:

  • Air and sea ports;
  • Postal services;
  • Telecommunications.
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