PARAGUAY

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Content last updated: 15-06-2020

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  • Merger Control Regime
  • Merger Screening
  • Merger Filing

1. Supranationality

1.1 Membership of Supranational Organization

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

Yes, MERCOSUR.

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?

Unlike the EU, there is no merger control regulation at a MERCOSUR level.

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 below are met.

2.2 Suspensory effect

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

Filing is ex post under Paraguayan merger control rules.

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 about 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.

1.2 Joint ventures

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

The creation of joint ventures on a lasting basis is caught by the Paraguayan merger rules. Temporary joint ventures are not caught by the merger control rules.

1.3 Definition of "control"

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

“Control” is defined as the ability of exercising decisive influence. There are no further guidelines in the applicable laws that explain how one could determine the existence of “decisive influence”.

There is also control when an undertaking holds shares in such a way or percentage that it ensures the decision making of the undertaking (holds majority vote).

The concept of “change of control” is not defined in Paraguayan law. Whether there has been a change of control must be based on an assessment of what is stated in the above two paragraphs.

1.4 Minority shareholdings

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

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

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, the undertakings concerned are the acquirer and the target.

In a joint venture, the undertakings concerned are the acquirer and the target.

Notwithstanding this, from our experience, the Paraguayan Commission has a comprehensive approach on who the “undertakings concerned” may be. Having said this, during the notification, the Paraguayan Commission may require information on entities belonging to the same group (i.e. parent companies, subsidiaries, etc.).

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 of the binding legal agreement, the announcement of a public bid or the acquisition of a controlling interest.

However, the Paraguayan Commission had issued a non-binding consultation where it has stated that the transaction should be cleared ex ante, but there are no fines in the event this is not complied with.

2.3 General thresholds

2.3.1 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 met, the transaction will have to be notified to the Paraguayan Commission:

The first alternative threshold:

  • The undertakings concerned acquire, or increase to, a share equal to or higher than 45% of the national market of a given product or service or of a geographic market defined within the same national market; or

Second alternative threshold:

  • The gross turnover in Paraguay of at least one of the undertakings concerned is of at least 100,000 minimum legal wages. 

According to Presidential Decree N° 2046/2019 dated June 28, 2019, 1 minimum legal wage equals PYG 2,192,839, making the above threshold PYG 219,283,900,000.

Each year by June 30, the Executive Branch, upon the proposal of the Consejo Nacional de Salarios Mínimos (National Council of Legal Wages), should evaluate the adjustment of the minimum legal wage according to the inter-annual variation of the Consumer Price Index and its impact in the national economy.

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

Yes. If at least one of the parties in the transaction meets any of the thresholds, then it triggers the filing before the Paraguayan Commission.

Given that the first threshold is independent of turnover, it will trigger if only one party has at least 45% market share.

The second threshold can be triggered even if only one of the undertakings concerned has local turnover (at least 100,000 minimum wages).

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

Given that the first threshold is independent of turnover, if any of the parties have at least 45% of the local market without having any local turnover (as defined under Paraguayan law), then this threshold will be triggered.

To the contrary, the second alternative threshold cannot be triggered without any of the undertakings concerned having local turnover.

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 Paraguayan Commission.

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 not sector-specific or other ex ante merger control rules under Paraguayan law.

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 meeting the above thresholds have to be notified to the Paraguayan Commission if the transaction has effects in Paraguay, regardless of whether the undertakings concerned are domiciled outside of Paraguay.

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 is the net turnover related to the sale of goods and services in the ordinary course of business from the last fiscal year, exclusive of reductions or discounts on sales, value-added tax (VAT), selective tax on consumption and other taxes directly related to the size of business.

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

The only guideline set out in law is that which is described in section 3.1.1 above.

3.2 Relevant period for calculation of turnover

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

The turnover figures should be calculated based on the latest financial/fiscal year.

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?

This is not regulated under Paraguayan law.

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?

In a merger, the "undertakings concerned" whose turnover is taken into account are each of the merging entities.

In an acquisition, the undertakings concerned whose turnover is taken into account are the acquirer and the target entities.

In an acquisition of a joint venture, the undertakings concerned whose turnover is taken into account are the acquirer and the target.

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 turnover.

3.4 Geographical allocation of turnover

3.4.1 The principles for the geographical allocation of turnover?

The turnover must be allocated within Paraguay.

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)?

No other rule or principle applies to the calculation of the turnover of the undertakings concern, other than the mentioned in Section 3.1.1 above.

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?

In case of acquisition of sole control of the whole or part of an undertaking, the acquirer is responsible for filing.

In case of acquisition of joint control or a merger creating a new entity, the notification must be jointly submitted.

1.2 Deadlines for filing

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

The notification must be filed within 10 business days counted from the following day of the written 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?

There is no express sanction for late filings. However, under local merger control laws, the Paraguayan Commission may impose sanctions due to breach of its provisions.

1.3 Early filing

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

Yes. The same procedure set forth for ex-post-merger notifications will apply.

1.4 Filing fees

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

Yes. The filing fee is 0.005% to 0.1%, which will vary according to the value of the transaction in Paraguay.

1.4.2 When must the filing fee must be paid?

Fees must be paid upon submission of the filing. The settlement of the fees should be done by the notifying parties. However, the Paraguayan Commission may adjust the settled fees at a later time.

1.5 Publicity

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

The Paraguayan Commission will publish on its official website the final decision with exclusion of confidential data.

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 Paraguayan Commission will abstain from commenting on active cases in the media. It does not send press releases either.

1.5.3 Will third parties be able to review the notification?

Filing information is restricted to the parties involved in the transaction. The law provides that the Paraguayan Commission’s decision be made public without disclosing confidential information.

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?

No.

2.2 Procedural stages (cf. timetable below)

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

The law sets forth a period of 90 days as a maximum term, counting from the date that the Department of Concentration declares that the filing is complete, and all required documents were filed.

The evaluation is divided into two phases.

The Paraguayan Commission may issue a clearance decision during Phase 1 if the concentration does not lead to a significant impediment to effective competition.

Phase 2 applies to those concentrations that require more in-depth analysis and to those that were not resolved during Phase 1.

The maximum term for Phase 1 is 30 days and Phase 2 has a maximum duration of 60 days.

If the Paraguayan Commission issues a request for information (“RFI”) during Phase 1, then the parties must respond within a maximum of 5 days. If the RFI is sent during Phase 2, then the parties should respond within 15 days (this term may be extended once for the same period of days).

The Paraguayan Commission has 5 days for each RFI, to determine whether the documents submitted are complete.

All terms should be counted as business days.

An opening of Phase 2 is normally ordered due to the complexity of the transaction, but this does not mean that a competition concern has arisen.

From our experience, all concentration filings were extended to Phase 2, regardless of the complexity of the case.

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

Pre-notification contact with the Paraguayan Commission is not obligatory but is encouraged. As the Paraguayan Commission has been recently created, so far, we are not able to determine if pre-notification contact is customary or not.

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

See section 1.2.2.

2.3 Timetable (cf. timetable below)

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

The law sets forth a period of 90 days as maximum term, counting from the date that the Department of Concentration declares that the filing is complete and all required documents were filed.

The maximum term for Phase 1 is 30 days and Phase 2 has a maximum duration of 60 days.

If the Paraguayan Commission issues a request for information, the parties must respond within 15 days (this term may be extended once for the same period of days). The Paraguayan Commission then has 5 days to determine whether the documents are complete. The Paraguayan Commission can issue one request for information per phase.

All terms should be counted as business days.

Moreover, please note that the opening of Phase 2 is normally ordered due to the complexity of a transaction, but this does not mean that a competition concern has arisen.

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

The issuance of a request for information stops the clock for the terms of the filing.

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

See Section 2.2.2 above. It may depend on a case-by-case assessment.

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?

So far, the Paraguayan Commission has not yet issued any forms or merger notifications control guidelines.

There is a draft of a filing form that is currently under study. It was disclosed during the first days of October 2019. However, there are no official deadlines as to when this form will be in force.

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 power of representation must be legalized or apostilled at origin.

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?

Yes. If documents or information are not complete, the Paraguayan Commission will grant a period of 5 business days to complete such information, under penalty of declaring the notification not valid (only affects the initial filing and parties may again notify the operation).

3.4 Language

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

The notification must be made in Spanish and all documents filed must be translated into Spanish by a local sworn translator.

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

See Section 3.4.1 above. Since translations must be done by a local sworn translator, there is no need for further certification or apostillation.

Statutory timetable

Step Description Time
1

Pre-notification

Pre-notification contact with the Paraguayan Commission is not obligatory but is encouraged. As the Paraguayan Commission has been recently created, so far, we are not able to determine if pre-notification contact is customary or not.

It may depend on a case-by-case assessment.

2

Phase I

The Paraguayan Commission may issue a clearance decision during Phase I if the concentration does not lead to a significant impediment to effective competition.

The law sets forth a period of 90 days as a maximum term, counting from the date that the Department of Concentration declares that the filing is complete, and all required documents were filed. 

The maximum term for Phase I is 30 days. 

If the Paraguayan Commission issues a request for information (“RFI”) during Phase I, then the parties must respond within a maximum of 5 days. The Paraguayan Commission has 5 days for each RFI, to determine whether the documents submitted are complete. The Paraguayan Commission can issue one request for information per phase. 

All terms should be counted as business days.

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

3

Phase II

An opening of Phase II is normally ordered due to the complexity of the transaction, but this does not mean that a competition concern has arisen.

From our experience, all concentration filings were extended to Phase II, regardless of the complexity of the case.

The law sets forth a period of 90 days as a maximum term, counting from the date that the Department of Concentration declares that the filing is complete and all required documents were filed.

Phase II has a maximum duration of 60 days.

If the Paraguayan Commission issues a request for information, the parties must respond within 15 days (this term may be extended once for the same period of days). The Paraguayan Commission then has 5 days to determine whether the documents are complete. The Paraguayan Commission can issue one request for information per phase.

All terms should be counted as business days.

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
  • 60 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 15-06-2020 by
Contact Person
Paola Sapienza, Senior Associate
Contact Person 2
Cecilia Vera, Senior Associate
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