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- Merger Control Regime
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2. Nature of merger control regime
2.1 Mandatory or voluntary
2.1.1 Is filing mandatory or voluntary?
If a transaction exceeding the jurisdictional threshold is not notified, the competition authority may investigate the concentration within five years following the closing of the transaction.
2.2 Suspensory effect
2.2.1 Must completion of the transaction await clearance by the relevant authorities?
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?
The following types of transactions are caught by the merger control rules:
- the merger of two or more previously independent undertakings or parts of undertakings; or
- the acquisition, 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.
- acquisitions of assets or businesses;
- incorporation of a common company by two or more previously unrelated undertakings where the transaction has the effect of economic concentration and the incorporated company performs on a permanent basis the functions of an independent economic entity;
- any concentration of companies, divisions or parts of companies, businesses or production assets, by any other action, including contracts, judicial adjudication, voluntary or compulsory liquidation of assets and estates.
2. Establishing jurisdiction for notification of mergers
2.3 General thresholds
Filing is needed if:
- The combined turnover of the undertakings concerned exceeded 120,000 tax units in Venezuela in the previous financial year.
Given the recent levels of hyperinflation in Venezuela, any transaction would be notifiable. Inflation in 2019 was 9,585.5% and 130,060% in 2018.
A tax unit – unidad tributaria – (“TU”) is a financial unit established by the Organic Tax Code in 1994 and is inflation adjusted annually. The National Integrated Service of Customs and Tax Administration (the "Revenue Service") adjusts the TU based on the variation of the National Consumer Price Index published by the Central Bank of Venezuela for the prior year and must seek approval of the Permanent Commission of Finance of the National Legislative Assembly.
In January 2019, the Revenue Service adjusted the value of the TU from 50 Sovereign Bolivars ("VES"), as the new currency is called, to VES 1,500 but did not publish the Administrative Guidelines in the Official Gazette until 13 March 2020. Like recent cases, the Revenue Service did not obtain the National Legislative Assembly's approval.
On 1 July 2020, the above threshold equalled 120,000 TU x 1,500 VES/TU = VES 180,000,000 = USD 892.
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?
Transactions must have sufficient local nexus to be caught by the merger control rules in Venezuela, i.e. the undertakings concerned must have a presence in Venezuela, either directly or through third parties, to be subject to merger control.
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)?
Turnover is defined as total sales of goods and provision of services, after deduction of discounts, value added tax and other taxes directly related to the volume of business and intra-group transactions.
3.3 Relevant undertakings for the calculation of turnover
3.3.1 The undertakings whose turnover is taken into account?
Turnover is calculated on a group level.
3.3.2 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 group turnover.
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 below applies to the calculation of turnover for certain industries:
Banks or other financial institutions: 1/10 of the assets to the date of the economic concentration transaction.
Insurance companies: The value of the premiums issued during the last year paid, including those pending payment by the insured.
and last updated on 26-05-2020 by
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