Legislation, triggers and thresholds
Legislation and authority
What legislation applies to the control of mergers?
Mergers and acquisitions are governed by the Regulations on Control of Concentrations 2002, issued under the Competition Act 1994 (Cap 379 of the Laws of Malta).
What is the relevant authority?
The Office for Competition, headed by the director general (competition) within the Malta Competition and Consumer Affairs Authority, is competent to examine and control concentrations between undertakings in terms of their effect on the market. The director general’s decisions are subject to appeal before the Competition and Consumer Appeals Tribunal.
Transactions caught and thresholds
Under what circumstances is a transaction caught by the legislation?
According to the regulations, the term ‘concentration’ encompasses the following transactions:
- mergers between two or more previously independent undertakings;
- the acquisition by one or more undertakings of direct or indirect control of the whole or part of one or more other undertakings; and
- full-function joint ventures.
Such concentrations must lead to:
- a lasting change of control, with reference to the possibility of exercising a decisive influence on an undertaking through the ownership of or the right to use all or part of the assets of that undertaking; or
- rights or contracts that confer decisive influence on the composition, voting or decisions of the organs of an undertaking.
Do thresholds apply to determine when a transaction is caught by the legislation?
Yes – in addition to the control criterion, the application of the regulations is determined based on the turnover of the parties concerned. A concentration is deemed to arise where, in the preceding financial year:
- the aggregate turnover in Malta of the undertakings concerned exceeded €2,329,373.40; and
- each of the undertakings concerned had a turnover in Malta equivalent to at least 10% of the combined aggregate turnover.
Is it possible to seek informal guidance from the authority on a possible merger from either a jurisdictional or a substantive perspective?
Yes – according to the Office for Competition Guidance on Mergers and Acquisitions, the office encourages pre-notification meetings, as they are extremely valuable to both the notifying parties and the office. Pre-notification meetings are considered useful because they facilitate open discussion of both jurisdictional and substantive issues.
Are foreign-to-foreign mergers caught by the regime? Is a ‘local impact’ test applicable under the legislation?
Yes – foreign-to-foreign mergers are caught by the regime, provided that each party has a turnover in Malta which satisfies the thresholds set out in the legislation.
What types of joint venture are caught by the legislation?
Joint ventures which perform on a lasting basis all functions of an autonomous economic entity – referred to under the legislation as ‘full-function joint ventures’ – constitute concentrations for the purposes of the legislation.