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 must be notified after the conclusion of the corresponding agreement and before they are carried out or, whenever relevant, after the date of disclosure of the preliminary announcement of a public takeover bid or of an exchange offer or the date of disclosure of the announcement of the acquisition of a controlling shareholding in a listed company, or, in the case of a public procurement procedure, after the definitive award of the contract and before the closing of the transaction. In these latter cases, the awarding public entity shall, in the public procurement programme, set the rules regarding the interplay between the public procurement procedure and the merger control regime established in the Act.

Furthermore, when the undertakings taking part in the concentration show to the Competition Authority a serious intent of concluding an agreement or, in the case of a public takeover bid or of an exchange offer, the undertakings show the public intent to carry out such bid or offer, the concentration may be notified to the Competition Authority before the above deadlines.

Under the Act, projected concentrations may be the object of pre-notification evaluation by the Authority, which shall be carried out in accordance with the guidelines adopted by the Authority on 27 December 2012.

Implementation of a concentration that is subject to prior notification without fulfilling such requirement may give rise to a sanctioning procedure launched by the Authority, which shall be subject to the opportunity principle set out in the Act, pursuant to which the Authority may, on public interest grounds, grant different degrees of priority in respect of the matters it is called to assess.

The said implementation without prior notification is punishable with fines, which, for each of the concerned undertakings, cannot exceed 10 per cent of the corresponding turnover in the year immediately preceding that of the final decision adopted by the Competition Authority. In cases where under the Act individuals (eg, directors) are held responsible for the infringement, the applicable fine cannot exceed 10 per cent of the corresponding remuneration in the last full year in which the infringement took place.

In addition, the Competition Authority may decide to impose periodic penalty payments, not exceeding 5 per cent of the average daily turnover in the year immediately preceding that of the Competition Authority’s decision, per day of delay, counted from the date the decision is notified. Furthermore, an ex officio merger control procedure may be initiated by the Competition Authority. This ex officio procedure has been initiated by the Authority in the case of the acquisition of the Hospital of São Gonçalo de Lagos by the HPA Group, a transaction implemented by the end of 2017 that albeit subject to mandatory prior notification (see question 5) has not been notified to the Authority, which the acquirer did only after the ex officio procedure was initiated.

The above-mentioned sanctions are, in principle, applied in practice, as shown, notably, in two decisions, one of 26 June 2014 and the other of 27 December 2017.

In the first decision, the Authority imposed fines of approximately €6,900 and approximately €112,000 on the National Pharmacies Association (ANF) and on Farminveste, respectively, for failure to notify the acquisition of the control over Consiste and Glintt, a transaction where the statutory thresholds for mandatory notification (see question 5) were exceeded. No fine was imposed on a third concerned undertaking, Farminveste 3, as it had no revenues in 2013. The fines imposed resulted from a settlement proposal submitted by ANF and Farminveste, which the Authority accepted.

In the latter decision, the Authority imposed a fine of €38,500 to two companies of the Vallis group, for failure to notify the acquisition of the exclusive control over a network of dental clinics a transaction where the statutory thresholds for mandatory notification (see question 5) were also exceeded. Also in this case, the fines imposed resulted from a settlement proposal submitted by the two concerned companies, which the Authority accepted.

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

In the case of full mergers, creation of joint ventures or the establishment of common control over the whole or part of one or several undertakings, notification must be made by the group of undertakings jointly, through a common representative. In other cases, notification is filed by the undertaking (or persons) intending to acquire control of the whole or part of one or more undertakings.

Pursuant to the Act, a filing fee shall be due for the assessment of concentrations subject to prior notification. In addition, a notification shall only be effective if filed together with the document that confirms the payment of the due fee.

As regards filing fees, according to Regulation No. 1/E/2003 of 3 July 2003, of the Competition Authority (which having been adopted pursuant to the former Competition Act has not been repealed or replaced), the basic fee payable for the appraisal of concentrations has been established in the following amounts:

  • €7,500, when the previous financial year’s combined turnover in Portugal for the companies involved in the concentration, calculated according to the relevant provisions of the Act, is equal to or less than €150 million;
  • €15,000, when the previous financial year’s combined turnover in Portugal for the companies involved in the concentration, calculated according to the relevant provisions of the Act, exceeds €150 million and is equal to or less than €300 million; and
  • €25,000, when the previous financial year’s combined turnover in Portugal for the companies involved in the concentration, calculated according to the relevant provisions of the Act, exceeds €300 million.

The aforementioned fees shall be doubled when the Competition Authority decides to initiate proceedings in the following cases:

  • concentrations of which the Competition Authority becomes aware and that, though subject to mandatory notification, have not been notified;
  • concentrations for which the express or tacit decision of non-opposition was grounded on information provided by the participants in the concentration that was false or inaccurate with regard to essential elements for the decision; and
  • concentrations in which there has been total or partial disregard of the obligations or conditions imposed at the time of the decision of non-opposition.

Also, if the Competition Authority, during the first phase of the merger control procedure, considers that the transaction is likely to affect competition and decides to proceed with an in-depth investigation (see questions 16 and 18), a further fee of 50 per cent of the basic fee shall be payable.

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

The waiting period for a Phase I decision is 30 working days from the date on which the notification is effective. This deadline may be suspended if requests for additional information are made by the Authority. It may also be suspended for 20 working days if the notifying party offers commitments. Prior hearing of the notifying party and of interested third parties that have submitted observations also suspends the deadline (see question 17).

When a Phase II in-depth investigation takes place, it must be completed within a maximum of 90 working days from the effective date of the notification. This deadline may be suspended if requests for additional information are made by the Competition Authority. It may also be suspended for up to 20 working days upon request of the notifying party or with this latter’s agreement. Prior hearing of the notifying party and of the interested third parties that have submitted observations, which must take place no later than 75 working days from the effective date of the notification, also suspends the deadline (see question 17).

The Act prohibits the implementation of concentrations subject to prior notification before this latter is filed. Furthermore, until tacit or express clearance is granted, a concentration subject to prior notification shall not be put into effect. However, this does not prevent the implementation of a public takeover bid to purchase or an exchange offer that has been duly notified to the Competition Authority, provided that the acquirer does not exercise the voting rights attached to the securities in question. Upon reasoned request from the participant, undertakings submitted before or after the notification of the obligations of not putting into effect a concentration or of not exercising voting rights may, in exceptional cases, be subject to a derogation granted by the Competition Authority, which may attach conditions or obligations to such derogation to ensure effective competition. Legal transactions carried out in breach of the prior notification or suspension obligations are ineffective.

In addition, and without prejudice to the applicable sanctions, after the notification of a concentration implemented in breach of the above obligations and before a decision is adopted by the Competition Authority, the individuals or legal entities that acquired the control must immediately suspend the corresponding voting rights and the management body shall not perform any act outside the normal course of business, the transfer of shareholdings or assets of the acquired undertaking being prohibited. Upon reasoned request from the concerned individuals or legal entities, these obligations may, in exceptional cases, be subject to a derogation granted by the Competition Authority, which may attach conditions or obligations to such derogation to ensure effective competition.

Furthermore, the Competition Authority may adopt measures it considers necessary or adequate to restore the situation existing prior to the breach, notably divestment.

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?

As stated above, until tacit or express clearance is granted, a concentration subject to prior notification shall not be (partially or totally) put into effect and legal transactions carried out in breach of such suspension obligation are ineffective. Furthermore, the violation of such suspension obligation is punishable with fines, which, for each of the concerned undertakings, cannot exceed 10 per cent of the corresponding turnover in the year immediately preceding that of the final decision adopted by the Competition Authority. So far, the Authority’s decision record does not include any case concerning the specific violation of the suspension obligation (all cases refer to implementation of concentrations that were not notified albeit subject to mandatory prior notification; see question 9). However, this should not allow for the conclusion that the Authority shall not investigate and punish any such violation.

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

As stated in question 12, so far the Authority’s public record of decisions does not include any case concerning the violation of the suspension obligation. As also stated, this should not allow for the conclusion that the Authority shall not investigate and punish any such violation, including in cases of foreign-to-foreign mergers.

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

The law does not specifically address this situation; solutions must therefore be found on a case-by-case basis, and would not differ from those applicable to local mergers.

Public takeovers

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

See questions 9 and 11.

There is no other reference in the merger control rules to public bids specifically. Such bids are, in any event, subject to other rules, notably those provided for in the Securities Code and the Commercial Companies Code.

Documentation

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

Notifications must, in principle, be filed according to a ‘Regular Notification Form’ that has been adopted by the Competition Authority as an attachment to its Regulation No. 60/2013 of 14 February 2013.

Pursuant to said Regulation, the following information must, notably, be provided in a notification:

  • a summary of the transaction, which shall be used in the publication referred to in question 30;
  • the identity of the parties including the indication of their activities (and, in the case of the notifying party, of the activities of the entities with which it has interdependence links), the indication of their turnovers for the last three years and the submission of their individual and consolidated accounts and reports;
  • the indication of other competition authorities to which the transaction is being notified;
  • the indication of the activities subject to sectoral regulation;
  • the nature (merger, acquisition of exclusive or joint control or joint venture) and the type (horizontal, vertical or conglomerate) of the concentration;
  • a description of the concentration, which shall include the submission of the relevant contractual, public bid or public tender documents (as applicable), its economic and financial structure, the estimated timing and required acts, the existing financial support, if any, and the submission of reports, studies or other documents prepared for the purposes of assessment of the notified transaction;
  • the control structure of the participant undertakings, including:
    • a list of the undertakings that control, or are controlled by, the participants or are part of the participants’ group of undertakings;
    • the turnover in Portugal of such undertakings;
    • the identity of the members of their boards of directors;
    • copies of the articles of association;
    • copies of shareholders’ agreements, when relevant for the concentration; and
    • if the transaction will create a joint venture, a detailed description of the decision-making rules and of the demonstration that it shall perform on a lasting basis the functions of an autonomous economic entity;
  • the personal and financial connections of the participant undertakings (list of undertakings active in the relevant markets in which the directors of the participants hold similar positions or in which the participants hold a minority shareholding);
  • a reasoned identification of the relevant product and geographical markets;
  • identification of the relevant product and geographically related markets with indication of the estimated market shares of the participant undertakings and of the five major competitors in the past three years in each of such related markets;
  • information on the relevant markets; notably, their size in value and in quantity in the last three years and the description of facts that influence the entry in and the exit from the relevant markets;
  • the offer structure in the relevant markets (including an indication of the participants’ turnovers and market shares in the past three years and of the five major competitors and estimated market shares in the same period);
  • the demand structure in the relevant markets by indicating, notably, the consumers’ or end users’ preferences as to certain products or brands, after-sales services, network effects and consumption habits;
  • information on the participants, which must include the indication of the 10 major suppliers and the 10 major clients; and
  • other information that the participants may deem relevant, including the reasons why they consider that the notified transaction should be cleared.

The aforementioned Regulation No. 60/2013 covers in a very detailed manner not only the above information but also other information that may be deemed relevant for the review procedure.

To preserve confidentiality, notifying parties may identify in a reasoned manner the information to be considered confidential and file non-confidential versions of the notification.

Regulation No. 60/2013 also includes a Simplified Notification Form that requires a lower level of information to be provided within each of the above categories of data, as listed in detail in the regulation. The Simplified Notification Form is to be used in concentrations that, on a preliminary assessment, do not create significant impediments to competition, in accordance with the following criteria established in Regulation No. 60/2013:

  • none of the parties to the concentration performs economic activities in either the same relevant geographic or product markets (no horizontal overlap) or in markets that are located upstream or downstream in the production or commercialisation process (no vertical effects), or in neighbouring markets (no conglomerate relationships), in which operate any other parties to the concentration. This criterion also applies to situations of change from joint to exclusive control, in which prior to concentration the party acquiring exclusive control is not active outside the joint venture in markets where this latter is present or in upstream or downstream vertically related markets, or in neighbouring markets. It further applies to situations of change from exclusive to joint control, in which prior to concentration the undertakings acquiring the joint control (other than the undertaking that had exclusive control) are not active outside the joint venture in markets where this latter is present or in upstream or downstream vertically related markets, or in neighbouring markets;
  • when the parties to the concentration are engaged in activities in the same relevant geographic or product markets (horizontal overlap) provided that within the geographical scope of the market, as defined by the notifying parties, and in the national territory their combined market share does not exceed 15 per cent; or their combined market share exceeds 15 per cent, but is lower than or equal to 25 per cent, and the corresponding increase of market share does not exceed 2 per cent;
  • when the parties are engaged in activities in markets vertically related, provided that the individual or combined market shares at any level of the production or commercialisation process (upstream or downstream) within the geographical scope of the markets, as defined by the notifying parties and in the national territory do not exceed 25 per cent; and
  • when the parties to the concentration are engaged in activities in neighbouring markets, provided that the individual or combined market shares in any of these markets, within the geographical scope of the markets, as defined by the notifying parties, and in the national territory does not exceed 25 per cent.

If the notification is incomplete or includes inaccurate data, the Authority shall, within seven working days of the filing, invite the notifying party to complete the notification. In such a case, the notification becomes effective only on the date the missing elements are filed (see question 17).

In addition, in the cases where the concentration was cleared on the basis of false information provided by the concerned undertakings that was essential to the decision, the Authority shall revoke such clearance decision and may also adopt measures necessary or adequate to re-establish, to the extent possible, the situation existing prior to the concentration, notably divestment (see question 24).

Furthermore, the provision of false or inaccurate information in response to an Authority’s request for information in merger control proceedings is punishable with fines, which, for each of the concerned undertakings, cannot exceed 1 per cent of the corresponding turnover in the year immediately preceding that of the decision adopted by the Competition Authority. In cases where, under the Act, individuals (eg, directors) are held responsible for the infringement, the applicable fine ranges between 10 and 50 ‘account units’ (currently an ‘account unit’ corresponds to €102).

Investigation phases and timetable

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

The timetable for the merger clearance procedure is as follows:

  • if the notification is complete, it becomes effective on the date it is filed together with the document that confirms the payment of the due filing fee. If the notification is incomplete or includes inaccurate data, the Authority, within seven working days, invites the notifying party to complete the notification and the notification becomes effective on the date the missing elements are filed. The notifying party may at any time withdraw the notification or waive its rights or legitimate interests;
  • within five working days of the date on which it is effective, the Competition Authority shall publish the essential elements of the notification in two national newspapers, at the expense of the notifying party, so that any interested third parties may submit their observations within the prescribed time, which may not be less than 10 working days; and
  • within 30 working days of the date on which the notification is effective, the Competition Authority shall complete the investigation and shall accordingly decide either:
    • the concentration is not subject to prior notification;
    • not to oppose the concentration, with or without conditions or obligations attached thereto; or
    • to initiate an in-depth investigation when it considers that the concentration in question is likely to create significant impediments to competition in the Portuguese market or in a substantial part of it.

The above 30-working-days deadline may be suspended if requests for additional information are made by the Competition Authority. It may also be suspended for 20 working days if the notifying party offers commitments. Prior hearing of the notifying party and of interested third parties that have submitted observations also suspends the deadline.

The lack of a decision within the period of 30 working days referred to above (plus suspensions) shall be considered as a decision of non-opposition to the concentration.

This initial 30-day period may be shortened under the simplified decision procedure, introduced on 24 July 2007. This procedure, which currently is merely an internal guideline, is applied on a case-by-case basis depending on the specifics of each transaction. It may apply, in particular, to transactions that do not result in a significant change in the competitive structure of the market (for example, because they only consist of a transfer of a market share, as opposed to an increase).

If the Competition Authority decides to initiate an in-depth investigation, this must be completed within a maximum of 90 working days of the effective date of the notification. This deadline may be suspended if requests for additional information are made by the Competition Authority. It may also be suspended for up to 20 working days upon request of the notifying party or with this latter’s agreement. Prior hearing of the notifying party and of the interested third parties that have submitted observations, which must take place no later than 75 working days from the effective date of the notification, also suspends the deadline.

Until the end of this period, the Competition Authority must either authorise the concentration, with or without conditions or obligations attached thereto, or prohibit the concentration if it considers that the concentration, as initially notified or following the amendments made by the notifying party, is likely to create significant impediments to competition in the Portuguese market or in a substantial part of it. In this latter case, the Competition Authority shall prescribe appropriate measures should the concentration have already been implemented. The lack of a decision within the 90-working-day period referred to above (plus suspensions) shall also be considered as a decision of non-opposition to the concentration.

In the case of concentrations that occurred in less than five years of which the Competition Authority becomes aware and that, though subject to mandatory notification, have not been notified, the procedures initiated ex officio by the Competition Authority shall be subject to the above time limits.

The above delays may, to a certain extent, be accelerated if, during a pre-notification assessment (see question 9), all the required data and all relevant competition issues are discussed and clarified with the Authority, thereby avoiding future suspensions and allowing for a more swift response by the Authority. Typically, non-complex merger control proceedings may take approximately one month.

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

See question 17.