Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

Concentrations shall be notified to the DG prior to their implementation and following the conclusion of the agreement, the announcement of the public bid, or the acquisition of a controlling interest, within 15 working days. For a concentration to be considered as notified, the notification must be carried out in accordance with the rules set out in the schedule to the CCRs and the notification fee specified in the same schedule must be paid on notification. In default, the DG will declare the notification to be incomplete and hence invalid.

Penalties for failure to file a notification before implementation are a fine of between €1,000 and €10,000.

Penalties for putting into effect a concentration before its notification are a fine up to 10 per cent of the turnover of the undertaking that benefits from the transaction.

Where a director, manager, secretary or other similar officer of the aforesaid undertaking is responsible for the premature concentration of his or her undertaking and another undertaking, said person will be deemed to be vested with the legal representation of the undertaking and will be jointly and severally liable for the payment of the fine.

Where the infringement occurred prior to the coming into force of the Malta Competition and Consumer Affairs Authority Act in 2011, the provisions relating to fines and periodic penalty payments as existing prior to the coming into force of the Act are deemed to apply.

Which parties are responsible for filing and are filing fees required?

Notification is to be effected by the person or undertaking acquiring control of the whole or parts of one or more undertakings. This means that in the case of the acquisition of a controlling interest in one undertaking by another, the acquirer must complete the notification; in the case of a public bid to acquire an undertaking, the bidder must complete the notification. However, in the cases where the concentration consists of a merger or the acquisition of joint control, the notification is to be made jointly by the parties to the merger or by those acquiring joint control as the case may be. Each party completing the notification form is responsible for the accuracy of the information that it provides. The notification fee, which was introduced in 2007 by Legal Notice 49 of 2007, must be paid by the notifying party or parties on submission of the duly completed notification form and such fee amounts to €163.06.

It is also relevant to point out that although pre-notification meetings with the DG are not mandatory, they are recommended. In fact, the Form CN explicitly states that pre-notification meetings are extremely valuable to both the notifying parties and the DG in determining the precise amount of information required in a notification and, in the large majority of cases, will result in a significant reduction of the information required. Accordingly, notifying parties are encouraged to consult the DG regarding the possibility of dispensing with the obligation to provide certain information.

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

Following the submission of all the required information, the DG has to take a decision regarding the applicability of the CCRs to a concentration within six weeks. Where he or she finds that the notified concentration falls within the scope of the CCRs, the DG will initiate proceedings. The law, however, allows the extension of this period to two months in cases where at any time during the first five weeks, the undertakings concerned submit commitments aimed at modifying the concentration in such a way as to make it compatible with the CCRs. Up until the fifth week, the notifying party may also request a moratorium of three weeks to discuss and present substantially revised commitment proposals. However, it is up to the DG to decide whether or not to accede to such a request. If, following modifications, the DG finds that the concentration does not infringe the CCRs, the DG shall issue a decision declaring such concentration to be lawful. The decision is also considered to cover restrictions that are directly related and necessary for the concentration’s implementation. The DG may also choose to attach conditions and obligations to ensure that the undertakings comply with the commitments they entered into.

Where the DG finds that a concentration raises serious doubts as to its lawfulness in terms of the CCRs and decides to initiate proceedings, he or she shall, save in the case of modifications, issue a decision declaring that the concentration is unlawful within not more than four months from the date on which proceedings were initiated. However, when the undertakings concerned submit commitments with a view to rendering the concentration lawful in terms of the CCRs, following the DG’s initiation of the said proceedings and within three months of the initiation of the said proceedings, they may request that this four-month period be suspended for up to one month for proper consideration of such commitments, thereby extending it to a possible five months. In cases of concentrations deemed not to raise serious doubts as to their legality in terms of the CCRs and falling within the ambit of the simplified procedure, the DG shall issue a short form decision to that effect within four weeks of notification. The simplified procedure applies to the following categories of concentrations that are deemed not to raise serious doubts as to their legality in terms of the provisions of the CCRs, unless the DG, in exceptional cases and in view of the economic conditions pertaining to the market and the parties to the concentrations, deems otherwise:

  • two or more undertakings acquire joint control of a joint venture, provided that the joint venture has no, or negligible, actual or foreseen activities within the territory of Malta because the turnover of the joint venture or the turnover of the contributed activities, or both, is less than €698,812.02 in the territory of Malta and the total value of assets transferred to the joint venture is less than €698,812.02 in the territory of Malta;
  • two or more undertakings merge, or one or more undertakings acquire sole or joint control of another undertaking, provided that none of the parties to the concentration are engaged in business activities in the same product and geographical market, or in a market that is upstream or downstream of a product market in which any other party to the concentrations is engaged; or
  • two or more undertakings merge or one or more undertakings acquire sole or joint control of another undertaking and two or more of the parties to the concentrations are engaged in business activities either in the same product and geographical market and their combined market share is less than 15 per cent or in a product market that is upstream or downstream of a product market in which any other party to the concentration is engaged and their combined market share is less than 25 per cent.

The simplified procedure is available where there is not going to be a substantial lessening of competition.

Generally, implementation of the transaction must be suspended until clearance. However, the law specifically allows the implementation of a public bid that has been notified, provided that the acquirer does not exercise the voting rights attached to the security or does so only to maintain the full value of those investments and on the basis of a derogation granted by the DG. Furthermore, in all cases the DG may, upon a reasoned request and after having taken into account the effect of a suspension (eg, major financial risks) and the threat of competition, grant a derogation from the obligation to suspend transactions prior to clearance and this derogation may be subjected to conditions and obligations to safeguard effective competition. The Office for Competition has to date never received such a request.

The DG shall examine the notification and shall determine within a six-week period whether to proceed with one of the following methods:

  • conclude that the concentration notified does not fall within the scope of these regulations and record that finding by means of a decision;
  • conclude that the concentration notified, although falling within the scope of these regulations, does not raise serious doubts about its lawfulness in terms of the CCRs and decide not to oppose it; the DG shall declare it to be a lawful concentration and such a declaration shall also cover restrictions directly related and necessary to the implementation of the concentration; or
  • initiate proceedings after concluding that the concentration notified falls within the scope of these regulations and raises serious doubts as to its lawfulness in terms of the provisions of these regulations. All proceedings are deemed to be closed by means of a decision, which, subject to certain exceptions, must be taken within not more than four months of the date on which proceedings are initiated.

Where the DG finds that, following modification by the undertakings concerned, a notified concentration no longer raises serious doubts as to its lawfulness, the DG may decide to declare the concentration to be a lawful concentration.

The CCRs state that all the aforementioned time periods shall be suspended in a number of cases where, inter alia, the information given is not provided in full.

Where the DG has not taken a decision within the time limits set in the CCRs, the regulations state that the concentrations shall be deemed to be lawful.

The general rule states that a concentration shall not be put into effect either before its notification or until it has been declared lawful. However, the CCRs contain the following exceptions. The above rule does not apply in cases of a public bid that has been notified to the DG and on the basis of a special derogation granted by the DG, provided that the acquirer does not exercise the voting rights attached to the securities in question or does so only to maintain the full value of those investments.

The DG will grant, at his or her discretion, said derogation upon a reasoned request before notification or after the transaction, after taking into account, inter alia, the effects of the suspension on one or more undertakings concerned in a concentration or on a third party, and the threat to competition posed by the concentration. Furthermore, such derogation may be made subject to conditions and obligations to ensure conditions of effective competition.

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?

If a transaction is carried out before clearance, apart from any penalties that may be levied for this breach, its validity will depend on whether clearance is eventually granted. If the result is that the concentration is allowable under the CCRs, then it is likely that the transactions will be deemed valid.

The CCRs contain special rules regarding securities. The provisions discussed in question 11 shall have no effect on the validity of transactions in securities, including those convertible into other securities admitted to trading on a market, which is regulated and supervised by the competent authorities appointed under the law and that operates regularly and is accessible directly or indirectly to the public, unless the buyer and seller knew or ought to have known that the transaction was carried out in contravention of the provisions of the CCRs.

A concentration shall not be put into effect either before its notification or until it has been declared lawful pursuant to a decision under Regulation 6(1)(ii) or Regulation 8(2) or on the basis of a presumption according to Regulation 9(7).

Nevertheless, severe penalties apply for breaches of the provisions of the CCRs. The CA stipulates that a person found guilty of a breach is liable in solidum with the undertaking in whose interests he or she was acting to a fine up to 10 per cent of the turnover of the said undertaking.

The CCRs also provide for penalties in situations where clearance or derogations from suspension are granted subject to certain conditions or obligations, which are then breached by the undertakings. In these cases, as in the case where the DG orders the cessation or dissolution of the concentration, the applicable punishment under the CA shall be a fine ranging between €1,000 and €10,000.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

No specific reference is made to foreign-to-foreign mergers in the relevant laws and the normal provisions are applicable.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

Local authorities are empowered to take the necessary remedial action in the case of a foreign-to-foreign merger that is in breach of the CCRs. Naturally such a merger would be acceptable if it has a minimal effect on the Maltese market. ‘Hold-separate’ arrangements may be used, but, nevertheless, the merger is likely to be caught under the CCRs if, notwithstanding the arrangement, it results in a lessening of competition in the Maltese market.

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

A public bid that has been properly notified is not suspended before clearance, provided that the acquirer does not exercise the voting rights attached to the security or does so only to maintain the full value of those investments and on the basis of a derogation granted by the DG in terms of the CCRs.

The CCRs stipulate that the bidder acquiring an undertaking or part thereof must submit the notification. Furthermore, in such cases, Form CN specifically requires:

  • a declaration of whether any public offer for the securities of one party by another party has the support of the former’s board of directors or other bodies legally representing that party; and
  • a copy of the offer document, which, if unavailable at the time of notification, should be submitted as soon as possible and no later than when it is posted to shareholders.
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 notification of concentrations is to be made in accordance with the provisions of the Form CN contained in a schedule attached to the CCRs. This form requires the applicants to supply details about, inter alia:

  • the notifying party and all parties to the concentration;
  • the nature of the concentration;
  • the extent to which the parties are involved in the concentration;
  • the economic and financial structure of the concentration;
  • the proposed structure of ownership and control;
  • the worldwide and Maltese turnover;
  • details on product and market descriptions (including structure of supply and demand, market entry and pre-existing agreements in the market) together with all supporting documentation; and
  • all ancillary restraints entered into by the parties to the concentration and other involved parties (including the seller and minority shareholders).

Until all the required information is supplied, the notification will be deemed to be incomplete and no time frames shall commence until all the necessary information and details are supplied.

The CCRs list four types of documents to be submitted:

  • copies of the final or most recent versions of all documents bringing about the concentration, whether by agreement between the parties of a public bid;
  • in a public bid, a copy of the offer document; if it is unavailable at the time of notification, it should be submitted as soon as possible and not later than when it is made available to the shareholders;
  • copies of the most recent annual reports and accounts of all the parties to the concentration; and
  • where at least one affected market is identified: copies of analyses, reports, studies and surveys submitted to or prepared for any members of the board of directors, the supervisory board, or the shareholders’ meeting, for the purpose of assessing or analysing the concentration with respect to competitive conditions, competitors (actual and potential) and market conditions.

Where a party supplies incorrect or misleading information relating to a deal, intentionally or negligently, they may be liable to an administrative fine of not less than €1,000 and not more than €10,000, as imposed by the DG. In addition, the DG may also revoke his or her decision on the compatibility of a notified concentration where it is based on incorrect information for which one of the undertakings is responsible.

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

The investigative process can be broadly divided into two separate phases. The first phase commences from notification and lasts until the initial decision is issued, whereby the DG determines whether to start proceedings. The second phase comes into effect when, upon finding that a concentration raises serious doubts as to its lawfulness in terms of the CCRs, the DG initiates proceedings to further investigate and, if need be, induce modification by the applicants of the said concentration to bring it within the parameters of the CCRs.

Within this second phase, undertakings may submit commitments with a view to rendering the concentration lawful and the DG may in turn request the supply of certain additional information as well as order certain investigations to be carried out. At the end of this phase, the DG either declares the concentration to be in breach of the CCRs and therefore prohibits it, or else finds it to be allowable subject to the imposition of certain conditions, restrictions or modifications and issues a decision to that effect.

In the case of concentrations deemed not to raise serious doubts as to their legality in terms of the CCRs and falling within the ambit of the simplified procedure, the DG shall issue a short-form decision to that effect within four weeks from notification.

What is the statutory timetable for clearance? Can it be speeded up?

See question 11.