Following an amendment to Italian antitrust law, to be effective in 2013, Italy's antitrust authority now has clarified that, for transactions that are signed in 2012 but will not be closed until 2013, it is the new 2013 rule that determines whether a premerger notification must be filed.
In May 2012 Italian law was amended to redefine what mergers must be notified to the Italian Antitrust Authority (Autoritá Garante della Concorrenza e del Mercato or "AGCM"). For transactions signed in 2013 or later, if the deal does not meet the EU thresholds set forth by the Council Regulation 139 of 2004, it still may have to be filed with AGCM. The Italian Merger Control Legislation (Law No. 287/90) requires a 2013 transaction be filed with AGCM if both of the following "thresholds" are met:
- the parties' combined aggregate turnover in Italy exceeds Euro 474 million and
- the target's aggregate turnover in Italy exceeds Euro 47 million.This amendment was designed to change the prior rule in that, beginning in 2013 transactions must be filed only if both thresholds are met, whereas transactions before 2013 had to be filed if either was met.
This change seems pretty simple. However, the Italian legislators did not specify which rule applies to transactions being signed in 2012 but not closed until 2013. For such transactions, and where one but not both thresholds are met, it has been unclear whether or not parties must file with AGCM.
This ambiguity has led to different approaches. Parties to some transactions have determined they must give notice of the transaction in 2012 because that was when the relevant agreement was signed (e.g., a memorandum of understanding, term sheet, gentlemen's agreement or a share purchase agreement subject to condition precedents, etc.). Parties to other transactions have determined they may give notice in 2013, when the closing will occur (e.g., the actual transfer of the shares upon the closing date, effectiveness of the deed of merger, happening of all pending conditions, etc. ).
The Italian Antitrust Association, an organization of competition law firms in Italy, asked AGCM to clarify the rule. On November 14, AGCM released guidance for business and counsel. AGCM has made clear that the rule that applies is the one to be in effect at the closing of the transaction, not the date of signing of a binding agreement or the like. AGCM indicated that closing is the time at which there is a "change in control" of the target business.
Premerger notification is mandatory under Italian law. Parties that fail to file before closing are subject to a fine of one per cent (1%) of their Italian turnover in the preceding year. However, unlike many jurisdictions including the European Union, in Italy the requirement to file and the filing do not impose any "bar to closing." Even if a filing is required, the parties may close their transaction before AGCM has completed its review. If AGCM determines that the transaction will lessen competition, it may – through its autonomous decision – seek to reverse the deal or impose conditions. AGCM decisions may be appealed before the administrative courts, TAR of Regione Lazio and Consiglio di Stato.
Given the circumstances, the best advice for parties in proximity of a transaction would be – unless there is urgency in closing the concentration before the end of 2012 – to wait the end of the year and verify whether both the Italian thresholds are actually met. This would minimize the risk of any wrong assessment and – if the transaction does not exceed the thresholds – will also exempt the parties from the costs related to the filing. Of course, if the matter is particularly complex, and may require substantial pre-closing activities before year end, then it should be considered not taking a risk and make a submission as early as possible.
AGCM's November 14 guidance (Nuova disciplina relativa all'obbligo di comunicazione preventiva delle operazioni di concentrazione) can be found here (link to the Italian text).