The European Union merger control regime coexists with national merger control regimes in almost all of the 28 EU Member States. Depending on the parties’ turnover and market shares, the filing and clearance of transactions by one or more national competition authorities or the EU Commission may be required. This Alert summarizes recent changes in merger control rules in Europe.
Netherlands – New thresholds adjusted for inflation
On August 1st, 2014, the first threshold concerning the aggregate worldwide turnover of all concerned companies was raised from €113.45 million to€150 million. The second threshold applying to the individual turnover of at least two concerned companies at national level remains at €30 million.
Denmark – July 2015, the amendments to the Competition Act have come into effect
Before July 2015, the Danish Competition and Consumer Authority (DCCA) was strictly allowed 25 working days from the time of receipt of a complete notification to either approve a merger or to launch a Phase 2 investigation in order to further the assessment. Under the modified Act, this time limit can now be extended to 35 working days if the companies involved in the merger offer commitments during the Phase 1 review.
Since July 2015, mergers taking place in the electronic telecommunications sector are subject to a specific regime. Indeed, the filing of a notification is mandatory for all mergers involving two or more Danish telecom operators and if the aggregate turnover of companies involved exceeds DKK900 million. A notification must be sent to the Business Authority which transfers the merger to the DCCA if it restricts competition.
Poland – More efficiency in merger control
An Amendment of the Act on Competition and Consumer Protection, aimed at increasing merger control efficiency, entered into force on January 18th, 2015.
This amendment introduces a two-stage merger review process and reduces the maximum duration of Phase 1. Mergers which do not raise competition concerns must be cleared within a month from notification.
A new de minimis threshold was introduced for mergers and joint ventures alongside the aggregate turnover thresholds of €1 billion worldwide and €50 million in Poland. Such transactions are no longer subject to notification if the companies involved or the parent companies have achieved in Poland, during the two preceding financial years, an individual turnover which did not exceed €10 million. The same de minimis threshold already applied to the the target undertaking’s turnover for operations involving the acquisition of controlling interest.
An obligation of notification was also introduced where successive mergers occur between the same groups of companies within a period of two years and where the total turnover of the acquired targets exceeds the de minimis exemption thresholds.
The rules on implementation of commitments have also been changed. A company which is given a deadline to implement a structural commitment, such as a divestment, can now request the Office for Competition not to disclose such deadline within the decision. Thanks to this amendment, prospective acquirers will not be able to use this information to their advantage in the negotiation of a business sale.
Ireland – The implementation of the new Competition Act
On October 31st, 2014, a new Competition Act was adopted and brought about several changes in merger control rules.
The Irish Competition Authority merged with the National Consumer Agency to form the Competition and Consumer Protection Commission which has the responsibility of merger control.
Regarding notification conditions, the requirement regarding the concerned companies’ presence on the island of Ireland was removed and turnover thresholds have been revised.
Mergers must now be notified where the aggregate national turnover of the concerned companies exceeds €50 million, and if the individual national turnover of each of two or more of the concerned companies is no less than €3 million.
Where these thresholds are met, notification of the merger is mandatory. Also, it is expressly prohibited for companies to implement the concentration before the Commission’s approbation.
However, it is not necessary for the companies to have reached a formal agreement on the merger or takeover. They are now entitled to file a notification as soon as they can demonstrate intention in good faith to conclude an agreement ( e.g. on the basis of a letter of intention) or where one of the companies involved has publicly announced an intention to make a public bid, or a public bid has been made but not yet accepted, or in the case of a recovery or restructuring plan, where the offer has been communicated to shareholders.
The time limits for Phase 1 (30 working days) and Phase 2 (120 working days) have not changed but they can be extended by 15 days if the parties involved offer commitments.
However, a Phase 2 investigation can last longer, as the Commission is given a new power ‘to stop the clock’ by issuing a Request for Information (RFI) within 30 days of its decision to open an in-depth investigation.
Cyprus – Enactment of a new Law on Concentrations
On June 20th, 2014, the new Law on Concentrations was enacted and introduces the following changes.
A concentration is now deemed to be of major importance and therefore must be notified to the Service of the Cyprus Commission for the Protection of Competition (CPC) when at least two of the participating companies generate turnover in the territory of Cyprus and when at least two of the involved companies have a worldwide turnover exceeding €3,5 million and the aggregate turnover of all companies involved exceeds €3,5 million in Cyprus.
Also, the merger has to be notified prior to its implementation.
Contrary to the previous regulation, notification can also be filed earlier, where the participating companies can prove their intention in good faith to conclude the relevant agreement or, in the case of a takeover offer, following a public announcement of such takeover.
The substantive test of compatibility has been widened and consists in assessing not only whether the merger creates or strengthens a dominant position, but more generally whether the concentration does substantially obstruct competition in any other way (SIEC test).
UK – New rules for mergers in the water industry
Once in effect (probably in November 2015), the new Water Act 2014 will remove the Competition and Markets Authority’s obligation to refer all merger in the water sector for an in-depth Phase 2 investigation. The Authority’s decision may authorize the merger after a Phase 1 review.