Legislation and jurisdictionRelevant legislation and regulators
What is the relevant legislation and who enforces it?
The main legislation on Faroese merger control is contained in the Faroese Competition Act (No. 35 of 3 May 2007, as amended on 27 April 2012). The Faroese Competition Act has been modelled on the Danish Competition Act, with the intention to also ensure conformity with competition law in the European Union and EEA. An English version of the Faroese Competition Act can be accessed on the Faroese Competition Authority’s website: www.kapping.fo.
The Faroese Competition Council is the principal enforcer of competition law in the Faroe Islands. It consists of a chairman and four members appointed by the Minister of Trade and Industry. The Council must have comprehensive insight into public as well as private enterprise activity, including expertise in legal, economic, financial and consumer-related matters. The chairman and two members of the Council must be independent of commercial and consumer interests. In practice, however, the Competition Authority, which is the secretariat of the Competition Council, is in charge of the day-to-day administration of the Competition Act and prepares the decisions of the Council.
The decisions of the competition authorities are subject to appeal before the Competition Appeals Council, which is made up of four members appointed by the Minister of Trade and Industry. The chairman and the vice chairman of the Appeals Council must be qualified lawyers.Scope of legislation
What kinds of mergers are caught?
The provisions on merger control apply to ‘concentrations’ where either:
- two or more previously independent undertakings merge (amalgamate); or
- one or more persons already controlling at least one undertaking, or one or more undertakings, acquire, whether by purchase of securities or assets, or by contract or any other means, direct or indirect control of the whole or parts of one or more other undertakings.
What types of joint ventures are caught?
The creation of a full-function joint venture (ie, a joint venture performing all the functions of an autonomous economic entity on a lasting basis) also constitutes a merger. Non-full-function joint ventures are not encompassed by the Faroese Competition Act. The distinction between full-function joint ventures and non-full-function joint ventures is made in accordance with EU competition law.
Is there a definition of ‘control’ and are minority and other interests less than control caught?
Control is constituted by rights, contracts or any other means that, either separately or jointly, confer the possibility of exercising decisive influence over the operations of an undertaking. Minority shareholdings are caught if the possibility of exercising decisive influence over the operations of an undertaking is conferred upon a minority shareholder.Thresholds, triggers and approvals
What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?
The merger control provisions apply to concentrations where the participating undertakings have a total turnover of 75 million kroner in the Faroe Islands and at least two participating undertakings have a turnover of at least 15 million kroner in the Faroe Islands, or at least one of the participating undertakings has a turnover of 75 million kroner in the Faroe Islands and at least one other of the participating undertakings has a turnover of 75 million kroner worldwide. The Competition Authority does not have the power to investigate transactions falling below the thresholds.
The Minister of Trade and Industry has issued Executive Order No. 9 of 11 March 2008 laying down detailed rules on the notion of a concentration and the calculation of turnover.
Official guidelines have been published in the Faroese language only.
Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?
Filing a merger notification is mandatory if the turnover thresholds are met. Clearly unproblematic mergers may be notified by short notice, the rules of which are laid down in accordance with EU competition law.
Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?
Foreign-to-foreign mergers are caught, if at least one of the parties to the transaction is active in the Faroe Islands. Where no actual effects on the market can be shown, the merger can generally be notified - and approved - by short notice.
Are there also rules on foreign investment, special sectors or other relevant approvals?
There are no special merger control rules relating to foreign investment. The fishing industry is subject to specific antitrust rules, which are stricter than the merger control regime under the Faroese Competition Act. Mergers that are permissible under the specific fishing industry rules are therefore generally also permissible under the Faroese Competition Act. Such mergers may be notified by short notice.
Notification and clearance timetableFiling formalities
What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?
Concentrations falling within the threshold must be notified to the Competition Authority no later than one week after:
- the conclusion of the merger agreement;
- the merger is publicly notified; or
- the acquisition of control over the target company.
Fines may be imposed for implementation before clearance.
The Faroese and Danish languages are of equal status in the Faroe Islands. Filing can therefore be made in either language. It may also be possible on a case-by-case basis to make arrangements with the Faroese Competition Authority to file in other languages (such as English).
Which parties are responsible for filing and are filing fees required?
In principle, all the parties involved in a concentration are responsible for filing. No filing fees apply.
What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?
The implementation of the transaction is suspended prior to clearance. The parties can ask for dispensation from this rule. The Competition Authority has the power to make dispensations conditional upon specific terms.Pre-clearance closing
What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?
Fines may be imposed for implementation before clearance. Where the Competition Council finds that the merger will significantly impede effective competition, the Competition Council has the power to annul the merger, and issue an order demanding the undertakings already merged to separate their businesses. Furthermore, the Competition Council is entitled to make approval of the merger subject to conditions.
Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?
To date, no sanctions have been applied in foreign-to-foreign mergers.
What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?
So far, there has not been an opportunity to test under which circumstances a dispensation (see question 11) may be obtained.Public takeovers
Are there any special merger control rules applicable to public takeover bids?
The Competition Act does not prevent the implementation of a public bid that has been notified to the Competition Authority.Documentation
What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?
The level of detail depends on the filing form. For a merger that can be filed by short notice, the level of detail is less than when the merger must be filed by ordinary notice. The provisions on whether a merger can be filed by short or by ordinary notice are in Executive Order No. 2 of 17 May 2012, section 3.
With the permission of the Faroese Competition Authority, the participating undertakings can omit information from a notice. The competition authorities will then assess the short-form notification, and may require a full notification if the merger has an impact on the Faroese market.Investigation phases and timetable
What are the typical steps and different phases of the investigation?
Pre-notification consultations with the Competition Authority may and should take place. Very often these consultations can have a significant impact on the outcome and provide the undertakings concerned with the opportunity to address possible competition concerns in the notification - with the effect that the procedure is accelerated. To initiate this informal procedure, a briefing paper is often delivered to the Competition Authority.
What is the statutory timetable for clearance? Can it be speeded up?
Within 30 working days of the Faroese authorities’ receipt of a complete filing submission, the Competition Council will notify the participating undertakings if further investigations are required, or alternatively whether the merger can be approved. If the authorities have not given this notification within the 30-day time limit, the authorities can no longer annul the merger. Merger notifications submitted by short notice are generally approved before the expiry of the 30-day period.
The Competition Council must make its final decision within 90 working days of the above-mentioned notification being sent to the participating undertakings. This deadline can be extended by up to 20 working days when commitments are proposed, and again by up to 20 working days with the parties’ consent.
Substantive assessmentSubstantive test
What is the substantive test for clearance?
Section 15 of the Faroese Competition Act applies the substantial impediment of effective competition (SIEC) test.
Is there a special substantive test for joint ventures?
There is no special substantive test for full-function joint ventures.Theories of harm
What are the ‘theories of harm’ that the authorities will investigate?
A concentration that will not significantly impede effective competition, in particular as a result of the creation or strengthening of a dominant position, will be declared compatible with the Faroese Competition Act. The creation or strengthening of a dominant position alone is therefore not a sufficient reason to prohibit a concentration, nor is it a requirement to prohibit a concentration. In its substantive assessment, the Competition Authority also considers the likely impact of the concentration on third parties and the affected markets in general. In that respect, documented efficiency gains that will be passed on to the consumers can speak in favour of approving the concentration.
In connection with the Competition Authority’s assessment of the market, it should be considered whether the market is open for potential international competition.
Due to the application of the SIEC test and the intention to ensure conformity with competition law in the European Union and EEA, the Faroese Competition Council relies heavily on the case law of the European Courts and the administrative practice of the European Commission.Non-competition issues
To what extent are non-competition issues relevant in the review process?
The Competition Council is expected to apply the above substantive test without taking into account non-competition issues.Economic efficiencies
To what extent does the authority take into account economic efficiencies in the review process?
There is no express efficiency defence. However, section 15 of the Competition Act provides that the SIEC test is applicable. Furthermore, the Faroese Competition Authority has stated that documented efficiency gains that are passed on to consumers can have an exempting effect on a concentration that otherwise would have been prohibited.
Remedies and ancillary restraintsRegulatory powers
What powers do the authorities have to prohibit or otherwise interfere with a transaction?
The transaction may be approved unconditionally, conditionally or prohibited.Remedies and conditions
Is it possible to remedy competition issues, for example by giving divestment undertakings or behavioural remedies?
If the competition authorities assess that the concentration cannot be approved without conditions, the Competition Council may attach conditions to their approval of the concentration.
What are the basic conditions and timing issues applicable to a divestment or other remedy?
The Faroese Competition Authority has stated that an approval of a concentration can be made subject to certain conditions, including:
- divestments of companies or parts of companies;
- dissolving of cooperation with other companies on the market; and
- admission of third-party access to, for example, distribution systems, production systems or other systems of strategic importance for the participating undertakings.
What is the track record of the authority in requiring remedies in foreign-to-foreign mergers?
No practice is available on this issue.Ancillary restrictions
In what circumstances will the clearance decision cover related arrangements (ancillary restrictions)?
The merger control provisions in the Faroese Competition Act do not contain any regulation on ancillary restraints. However, the Faroese Competition Authority has confirmed that reasonable necessary ancillary restraints that do not have a harmful effect on competition can be accepted. The Faroese Competition Authority uses the rules laid down in Council Regulation No. 139/2004 and the Commission Notice No. 2008/C 95/01 as guidelines.
The Faroese Competition Authority has considered several cases where competition clauses have been modified. In one particular case, the Competition Council has confirmed that competition clauses should be limited to no more than two years where goodwill is the subject of the transfer, and no more than three years if both know-how and goodwill are included.
Involvement of other parties or authoritiesThird-party involvement and rights
Are customers and competitors involved in the review process and what rights do complainants have?
The Faroese authorities have not promulgated any procedures on this issue. However, it is likely that customers and competitors will be heard in connection with the Competition Authority’s review.
So far, the Competition Authority has only involved customers in the review process.Publicity and confidentiality
What publicity is given to the process and how do you protect commercial information, including business secrets, from disclosure?
The Faroese Competition Authority and the Council publish all decisions with the exception of sensitive information, business secrets and the like, which are redacted. The authorities can also allow the merging parties to exclude other information.Cross-border regulatory cooperation
Do the authorities cooperate with antitrust authorities in other jurisdictions?
The Faroese Competition Authority maintains close cooperation with the competition authorities in the other Nordic countries, and according to the Faroese Competition Act, the Authority can also cooperate with other jurisdictions, such as in relation to the exchange of information. Knowledge-sharing is common practice.
Judicial reviewAvailable avenues
What are the opportunities for appeal or judicial review?
Generally, the Competition Council’s decisions may be appealed to the Competition Appeals Council and its decisions may in turn be appealed to the ordinary courts.
There are currently no cases where this has occurred.Time frame
What is the usual time frame for appeal or judicial review?
To date, no merger decisions have been subject to judicial review.
Enforcement practice and future developmentsEnforcement record
What is the recent enforcement record and what are the current enforcement concerns of the authorities?
There has only been one case in 2015, and there is no recent practice in relation to foreign-to-foreign mergers.Reform proposals
Are there current proposals to change the legislation?
The Faroese Competition Act was amended as of 27 April 2012. There are no current proposals for any further changes.
Update and trendsKey developments of the past year
What were the key cases, decisions, judgments and policy and legislative developments of the past year?No updates at this time.