Notification and clearance timetableFiling formalities
What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?
Any project or transaction involving an economic concentration of undertakings caught by the Competition Act must be notified to the CNMC prior to completion (ie, prior to putting the transaction into effect). There are no specific deadlines for filing as long as the transaction has not been put into effect. However, as regards Spanish public takeover bids, filings must be made before, or up to five days after submitting the bid to the Spanish Securities Market Commission. Failure to notify within the five-day deadline may give rise to the imposition of fines of up to 1 per cent of the annual turnover of the undertakings concerned.
In addition, a 20-day deadline for filing is applicable only in cases where the CNMC requests parties for filing a transaction ex officio. Failure to notify within the said deadline may give rise to the imposition of fines of up to 1 per cent of the annual turnover of the undertakings concerned. In addition, such filings do not benefit from the legal deadlines to which the CNMC is bound.
Which parties are responsible for filing and are filing fees required?
The offeror or acquirer is responsible for filing in the case of an acquisition. For mergers, or in the case of the acquisition of joint control (ie, joint ventures), the filing must be made jointly by the merging parties.
The following filing fees for merger control proceedings are payable:
- €5,502.15 if the Spanish turnover of all the companies involved in the transaction does not exceed €240 million;
- €11,004.31 if the Spanish turnover of all the companies involved in the transaction exceeds €240 million but not €480 million;
- €22,008.62 if the Spanish turnover of all the companies involved in the transaction is higher than €480 million and does not exceed €3 billion; and
- a fixed amount of €43,944 if the Spanish turnover of all the companies involved in the transaction exceeds €3 billion, plus an additional €11,004.31 for each €3 billion exceeding the aforesaid turnover, up to a maximum of €109,860.
The filing fee for mergers notified under the abbreviated form (see question 16) procedure is €1,545.45. The fee must be paid in advance and the notification form must have evidence of payment attached.
What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?
As a general rule, the notified transaction may not be put into effect before clearance from the CNMC has been obtained. However, the Competition Act provides for the possibility for the parties to request a derogation from this duty from the CNMC, which may allow implementation of the transaction before clearance. In these cases, the transaction cannot benefit from the short-form notification and must be notified using the regular notification form. The CNMC will decide whether to grant the requested derogation in light of the specific circumstances of each case and the potential consequences of waiving the obligation to suspend. The derogation can be made subject to certain obligations and conditions to guarantee the effectiveness of the CNMC’s final decision. If the transaction is purely foreign-to-foreign, where one of the parties does not make sales in Spain, this could be regarded as a reason to allow the early implementation of the transaction before clearance. To date, such derogation has been granted in exceptional circumstances (see for instance, the COPE/Vocento/Punto Radio case (C/0493/13) where the CNMC conditionally allowed the parties, a week after a formal filing was carried out, to implement a temporary agreement on non-exclusive assignment of sports radio content - the transaction was subsequently cleared in Phase I with remedies). In November 2016, in the Daimler/Hailo/MYTAXI/Negocio Hailo case (C/0802/16), the CNMC allowed the parties to carve out Spain (by partially lifting the suspension obligation), that is, to close the deal on a global basis as long as the transaction was not implemented in Spain. This derogation was granted in exchange for a number of commitments submitted by Daimler and Hailo which, prior to clearance of the transaction by the CNMC, guaranteed the commercial autonomy of the Spanish subsidiary of the target company.
Similarly to the EUMR, the Competition Act states that public takeover bids are not subject to the general suspension obligation provided that certain conditions are met (see question 15).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?
The Competition Act provides for a fine of up to 5 per cent of the turnover of the notifying party or parties in the financial year in which the merger took place if the transaction is put into effect before clearance. The amount of the fines imposed by the CNMC can vary depending on the particular features of the transaction. The practice of the Spanish competition authorities is to take into consideration the Spanish turnover when determining the level of fines.
The CNMC has taken action against a number of non-filed mergers and has imposed several fines in this regard over the past years. By way of example, on 24 October 2012 the CNMC imposed a €286,000 fine on Verifone - the highest fine to date - for gun jumping in the context of the acquisition of control over Hypercom. The Verifone/Hypercom merger was filed in October 2011 and it was authorised in December 2011 subject to remedies, but the transaction was put into effect in August 2011. On 16 October 2015, the CNMC imposed a €106,005 fine on Grifols for gun jumping in the context of the acquisition of certain assets of Novartis. The Grifols/Activos Novartis merger was filed in October 2014 and it was authorised in March 2015 in Phase I, but the transaction was put into effect in January 2014. In November 2015, the CNMC also fined Masmovil €39,578 for closing the acquisition of Xtra Telecom prior to clearance. The Masmovil/Xtra Telecom merger was notified in January 2015 and authorised in February 2015 in Phase I, but the transaction was put into effect prior to clearance. According to the activity report issued by the CNMC in February 2017, in 2016, the CNMC kept a good track record on enforcement in this field and investigated eight potential gun jumping cases. In 2017, the CNMC continued to actively pursue companies breaching the suspensory obligation applicable to merger control proceedings. Indeed, the CNMC levied a fine of €20,000 on Consenur for gun jumping in the context of the acquisition of the waste management services business of Cathisa. The Consenur/Activos Cathisa merger was filed in June 2016, following a request from the CNMC to do so on April 2016, and it was authorised in July 2016 in Phase I. The transaction had, however, been put into effect in July 2015. There were no gun jumping cases in 2018.
Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?
Yes. The former CNC initiated in 2011 for the first time an investigation for alleged gun jumping in the context of a foreign-to-foreign merger (ie, the parties did not have any relevant corporate presence in Spain). The acquisition by Dorf Ketal Chemicals (India) Private Limited of the titanates and zirconates business of EI Du Pont De Nemours & Company was allegedly put into effect before it was authorised by the former CNC. The CNC fined Dorf Ketal Chemicals (India) Private Limited €35,400 (3 per cent of the parties’ turnover in Spain). In the same vein, on 31 July 2014, the CNMC fined Essilor International SA €5,065 for gun jumping in the context of the foreign-to-foreign acquisition of Polycore Optical Ltd. In addition, on 31 July 2014, the CNMC fined Essilor International SA €5,065 for gun jumping in the context of the foreign-to-foreign acquisition of Polycore Optical Ltd. This amount represented 0.0001 per cent of Essilor’s worldwide turnover in 2013. The CNMC decided to impose a symbolic fine because there was an absence of bad faith; the company eventually notified the transaction and it was cleared in Phase I unconditionally as no possible harm to competition law was identified.
What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?
Though no such cases have been made public, in principle, there should be no reason for the Spanish authorities to object to a ‘hold-separate’ arrangement if it means that the implemented transaction has no impact on the Spanish market (see question 11).Public takeovers
Are there any special merger control rules applicable to public takeover bids?
For public takeover bids under Spanish law, filings must be made before, or up to five days after, submitting the bid to the Spanish Securities Market Commission (CNMV) and the bid will be conditional upon the outcome of the national merger control procedure. However, the Competition Act, in line with the EUMR, provides for the possibility to implement the public bid and acquire the shares before clearance has been obtained, provided that the transaction is filed with the CNMC within five days of submitting the bid to the CNMV and that the acquirer does not exercise the voting rights attached to the securities acquired or does so only to maintain the full value of those investments and on the basis of a derogation granted by the CNMC.Documentation
What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?
Notification is made to the CNMC using an official form (which is attached as Annex II to the Royal Decree). For straightforward cases raising no issues, which are specifically listed in article 57 of the Royal Decree (see below), a short form is available (Annex III to the Royal Decree). Notifications must be submitted in Spanish. The notifying party should indicate in its notification which data are business secrets in order for such data to be treated as strictly confidential, and provide a non-confidential version of the notification form.Notification form
The information required is similar to the information to be provided on Form CO under the EUMR (information on the parties, their turnover and business sectors, basic features of the transaction, details of ownership and control provisions, detailed market information, and the existence of cooperative and vertical aspects). Notification is a time-consuming and cumbersome exercise. It has to be complete and the Competition Act does not provide for the possibility of obtaining waivers of any of the information requirements. The CNMC can reject notifications for incompleteness, or require more detailed information to be provided during the investigation. It sometimes requires the clock to be stopped pending receipt of the information, which can significantly increase the length of the review period.Short-form notification
The Competition Act introduced the possibility of short-form notification for straightforward cases that are unlikely to raise competition issues (similar to the Short Form CO under the EUMR). The short-form notification applies to concentrations when, inter alia:
- there are no vertical or horizontal overlaps between the parties’ activities;
- the activities carried out by the parties in the markets affected by the transaction, because of their minor importance, are not capable of significantly affecting competition;
- there is a change from joint to sole control; or
- two or more undertakings acquire joint control over a joint venture, provided that the joint venture has no or minimal activity in Spain.
The 2012-2013 Annual Report of the former CNC stated that approximately 26 per cent of the merger control filings made in Spain during that period were short form. The proportion has since risen and, on average, it has been steady at around 50 per cent since 2014, accounting for 60 per cent of filings in 2017.
There is no shorter timetable for clearance for notifications made under short form (see question 18); however, in practice, in straightforward cases, the CNMC tends to issue a decision prior to the expiry of the one-month deadline for Phase I.
Finally, submitting incomplete, incorrect, misleading or false information is subject to fines of up to 1 per cent of the total turnover of the infringing undertaking.Investigation phases and timetable
What are the typical steps and different phases of the investigation?Phase I investigations
One month after filing, the CNMC must reach a Phase I decision, extendible by 10 working days if the parties submit commitments. Within this one-month period, the CNMC will carry out Phase I investigations, which will end with a non-binding report produced by the Competition Directorate. On the basis of the report, the Council will decide whether to clear the transaction, to clear the transaction subject to the commitments presented by the parties, to shelve the file, or to open a Phase II investigation if the transaction could impede effective competition.
During Phase I investigations, if the CNMC considers the notification incomplete and requires additional information, the one-month period may be interrupted and will start running again when the additional information is submitted. Experience shows that it is very useful (and customary in practice) to enter into pre-notification discussions and agree a draft notification form with the CNMC prior to formal submission to avoid unnecessary delays and tackle any technical discussions from day one.
There is a possibility of clearing the transaction during Phase I through commitments or undertakings presented by the parties. The positive impact upon timing of choosing to offer Phase I remedies where potentially required. In 2018, the Servired/Sistema4B/EURO 6000, BP/Petrocorner and Talleres Alegría/Duro Felguera Rail transactions, where Phase I remedies were offered, were cleared in approximately two months from formal filing. However, some of these deals entailed lengthy pre-notification contacts.Phase II investigations
The basic period for Phase II investigations is two months, extendible by 15 working days where the parties submit commitments. In Phase II, the CNMC normally requests comments from ‘interested third parties’. The merging parties may also request a hearing with the CNMC.
If the CNMC decides to clear the transaction unconditionally, such decision puts an end to the Phase II investigation, and thus the government cannot further intervene in the merger review process regarding such transaction.
Despite the statutory periods mentioned above, in practice Phase II cases have taken much longer for clearance because of the possibility to stop the clock in case additional information is required. For instance, and as recent examples of Phase II case duration, the Schibsted/Milanuncios case was cleared in seven months, the Telefónica/DTS case was cleared in six months and the JCDecaux/Cemusa case was cleared in five months (time periods calculated from filing). In 2019, the Quirón/Clínica Santa Cristina case was cleared in approximately nine months from filing.Phase III investigations
However, in those cases where the CNMC decides either to prohibit the transaction or to clear it subject to commitments or conditions, the Ministry of the Economy may ask the government to decide whether to confirm the CNMC’s decision or clear it, subject or not to commitments or conditions. In the second case, the government’s decision must be based on certain specified public interest criteria other than competition. In such cases, the Ministry of the Economy has 15 days to decide whether to ask the government to intervene. If it does, the government has one month to decide on the transaction. The intervention of the government in merger control proceedings is informally known as ‘Phase III’.
In practice, the government tends not to intervene in merger control proceedings. The Antena 3/La Sexta case (2012) is the only ‘Phase III case’ in Spain to date. The transaction was notified after the Telecinco/Cuatro merger, which had already reduced the number of private free-to-air television broadcaster from four to three; the Antena 3/La Sexta merger would leave only two such operators. The former CNC imposed conditions that were more severe than the remedies the former CNC had accepted in Telecinco/Cuatro. The Ministry of the Economy decided to refer the case to the government, arguing that the decision concerned ‘reasons of general interest related to the guarantee of an adequate maintenance of sector-based regulation and the promotion of research and technological development’. The government softened the conditions originally imposed by the former CNC and declared that the conditions should be in ‘line with those [conditions applied to other operators] in the sector’. The merger was finally approved eight months after the first notification to the former CNC.
What is the statutory timetable for clearance? Can it be speeded up?
During Phase I, the CNMC must reach a decision within one month of formal filing, extendible by 10 working days if commitments are submitted. However, during this phase of the investigation there is scope for contact with the authorities, particularly if they require additional information, either formally (which ‘stops the clock’) or informally. The Competition Directorate can also request information from third parties. For straightforward cases raising no issues, the CNMC tends to issue a decision prior to the expiry of the one-month deadline for Phase I. In fact, the average timeline for a decision to be delivered by the CNMC is 20 days, providing that there are no commitments submitted by notifying parties that need to be assessed.
Phase II investigations can last between two (basic period) and four months (due to the possibility to ‘stop the clock’ in case additional information is required). During the Phase II investigation, the law provides for requests for information to ‘interested third parties’ and the possibility for the merging parties to request a hearing before the CNMC.