Notification and clearance timetableFiling formalities
What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?
The Competition Authority (CA) shall be notified of a merger before it takes effect but after the conclusion of an agreement on the proposed merger, the public announcement of a takeover bid or the acquisition of a controlling interest in an undertaking. A merger falling within the regime shall not take effect while it is being examined by the CA. Any violation of these instructions and conditions can be subject to fines of up to 10 per cent of the total turnover of the preceding business year of any undertaking or association of undertakings involved in the violation. Fines for not notifying the CA of a merger are applied in practice. The CA is authorised, however, with the consent of the parties involved, to conclude the matter by a settlement.
In addition, the CA may, on request, grant an exemption from the obligation that a merger should not take effect while it is being examined by the CA, provided that it is established that delaying the implementation of the merger could harm the undertakings concerned or its business partners and threaten competition. Such a request shall be in writing and reasoned. An exemption may be made subject to conditions to ensure effective competition.
Which parties are responsible for filing and are filing fees required?
The parties to the merger, or the parties obtaining control, as applicable, shall jointly prepare the notification of the merger. If an undertaking acquires a controlling share in another undertaking, the undertaking initiating the takeover shall prepare the notification of the merger. In the event of a takeover bid for an undertaking, the bidder shall prepare the notification. The filing fee is 250,000 kronur, but the amount is currently under legislative review.
What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?
The CA shall, within 25 working days, notify a party that has submitted a notification of a merger if it sees reason for further investigation of the competitive impact of the merger. This time limit begins on the first working day following the receipt by the CA of a notification meeting the conditions set out in the Competition Act No. 44/2005 (the Act) and the Rules on the Notification of Mergers No. 684/2008. If the merger notification is not sufficient in that respect the relevant time limits do not commence. If no such communication is received from the CA within the established period, the CA cannot annul or otherwise intervene in the merger. A decision on the annulment of a merger shall be made no later than 70 working days from the time that a notification pursuant to the first sentence has been sent to the party or parties notifying the merger. If it is necessary to obtain further information to properly review the merger, the CA may extend this time limit by up to 20 working days.
If the CA fails to make a decision on whether to annul or establish conditions for a merger within the aforementioned time limits, the CA can neither annul the merger nor make it subject to conditions.
The aforementioned time limits stipulated by the Act are currently under legislative review.
The merger may not be implemented before the CA has reached a positive decision to that extent. The CA may, however, on request, grant an exemption from the obligation that a merger should not take effect while it is being examined, provided that it is established that delaying the implementation of the merger could harm the undertakings concerned or its business partners and threaten competition. Such a request shall be in writing and reasoned. An exemption may be made subject to conditions to ensure 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?
Closing before clearance is considered equivalent to an absence of filing and is accordingly subject to sanctions. The same applies to integration of activities of the merging entities before clearance.
Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?
Foreign-to-foreign mergers that meet the relevant thresholds for turnover in Iceland fall within the scope of the merger regime and must be notified. Sanctions are applicable in such cases.
What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?
No specific solutions permitting closing before clearance are provided for under the Act in foreign-to-foreign transactions, other than the CA’s granting of an exemption from the obligation that a merger should not take effect.Public takeovers
Are there any special merger control rules applicable to public takeover bids?
No, there are no special merger control rules applicable to public takeover bids. However, the notification of a merger in connection with a public takeover bid must be notified to the CA after the bid has been made public.Documentation
What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?
A merger notification shall include information on the merger, the undertakings concerned, the relevant markets and other details necessary for assessing the competitive effects of the merger. In brief, the standard notification shall, for example, contain:
- a short description of the merger;
- basic information of the parties to the merger, such as the names of the parties and the nature of their operations;
- detailed information on the background of the merger, its objectives and nature;
- information of ownership and control of all the parties to the merger;
- personal and financial relationship between the parties;
- all documents relating to the merger;
- detailed information on the market definition;
- a description of the effect on consumers and intermediaries; and
- a declaration certifying that the data provided by the parties is complete and accurate.
A short form may be used for the purpose of notifying a merger where one of the following conditions is met:
- the markets affected by the merger are not related;
- two or more of the parties to the merger are engaged in business activities in the same product and geographic market (horizontal merger), provided that their combined market share is less than 20 per cent;
- two or more of the parties to the merger are operating in product markets that are upstream or downstream of a product market in which either party to the merger is operating (vertical merger), provided that their individual or combined market share is less than 30 per cent;
- the merger in question is a joint venture that has a limited effect in Iceland; or
- a party acquires sole control of an undertaking over which it already had joint control.
The following information shall accompany a notification submitted in short form:
- an overview of the undertakings directly or indirectly controlled by the parties to the merger;
- a description of the product, service and geographic markets that are affected by the merger and a reasoned assessment of the market share of the undertakings in question in such markets;
- a reasoned assessment of the competitive impact of the merger;
- copies of all contracts and other instruments upon which the merger is based, together with copies of the annual financial reports of the undertakings that are parties to the merger; and
- a declaration certifying that the data provided by the parties is complete and accurate.
Submission of wrong, misleading or insufficient information to the CA is subject to fines or up to two years imprisonment. Fines can be imposed on both individual and legal persons.Investigation phases and timetable
What are the typical steps and different phases of the investigation?
During the first phase of investigation, the CA will first review the merger notification and see if it is complete or if any information is missing. The CA may request information not only from the parties, but also from other market players, including the parties’ suppliers, customers and competitors. When the CA has all the information required it will decide whether there are grounds to move on to the second phase of investigation. If the CA is of the opinion that the merger notification is not complete, it will call for additional information to be provided. The 25-working-day preliminary investigation will start when the notification is deemed complete.
The second phase of investigation is for mergers that the CA considers likely to be harmful to competition. During the second phase, the CA will perform a thorough definition of the relevant markets and evaluate the market power of the parties to the merger. To do so the CA may request further information not only from the parties, but also from other third parties. In cases raising competition concerns, the CA will issue a statement of objection and, if relevant, give the parties a chance to propose remedies. The parties then have the opportunity to respond to the CA’s statement of objection and present their arguments and views on the case, before the CA issues a final decision.
If the CA is of the opinion that a merger will obstruct effective competition by giving one or more undertakings a dominant position or by strengthening such a position, or will result in a significant distortion of competition in the market in other respects, the CA may annul the merger. The CA may also establish conditions for such a merger that must be met within a given time.
What is the statutory timetable for clearance? Can it be speeded up?
The current timetable for clearance is as follows:First phase (maximum 25 working days)
- This phase is common to all mergers. The CA shall within 25 working days notify a party that has submitted a notification of a merger if it sees reason for further investigation of the competitive impact of the merger.
- This time limit begins on the first working day following the receipt by the CA of a notification meeting the conditions of a sufficient merger notification.
Second phase (maximum 90 working days)
- A decision on the annulment of a merger shall in general be made no later than 70 working days from the time that a notification has been sent to the party notifying the merger.
- If it is necessary to obtain further information to properly review the merger, the CA may extend this time limit by up to 20 working days.
However, the time limits stipulated by the Act are currently under legislative review.
There is no special mechanism that can be used to speed up proceedings in merger cases in Iceland. However, if the merging parties feel it is necessary to execute the merger prior to the CA having reviewed it substantially, it is possible to seek a special exemption for that purpose. The time in which the CA typically reaches its decision, within the statutory timetable, varies and is dependent upon whether the merger demands further investigation by the CA, hence being moved to the second phase. The clearance process cannot exceed the time limits mentioned, and if it does, the CA cannot prevent, annul or impose conditions on a merger.
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2 July 2020