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Process and timing
Is the notification process voluntary or mandatory?
For concentrations with an EU dimension, the notification process is mandatory.
What timing requirements apply when filing a notification?
There is no deadline for notifying, but a transaction cannot be implemented without approval.
Filing before signing is also possible. Notification may be made if the participating companies demonstrate to the European Commission that they have a good-faith intention to conclude an agreement (eg, on the basis of an agreement in principle, a letter of intent or a memorandum of understanding). The plans must be sufficiently concrete.
What form should the notification take? What content is required?
The 2013 Implementing Regulation (which implemented EU Merger Regulation (139/2004)) states that notifications must be submitted in the manner prescribed by the Form CO notification template, which requires the submission of information regarding:
- the parties’ activities;
- their views on how the relevant markets should be defined;
- horizontal overlaps; and
- any vertical relationships between the parties.
Copies of the transaction agreements and other supporting documents are also required, as well as detailed market data and contact details for customers, competitors and trade associations. Market dynamics, including the structure of supply and demand in affected markets, must also be discussed.
Transactions qualifying for the so-called 'simplified procedure' can be notified using the Short Form CO notification template. Transactions qualifying for the so-called 'super simplified procedure' can also be notified using the Short Form CO notification template and may be filed without the need to go through a pre-notification procedure.
The benefits of using a Short Form CO rather than a Form CO are that:
- the Short Form CO’s disclosure obligations are less burdensome on the parties (ie, less market data and fewer internal documents are required);
- there is an absence of market testing (and the burdensome requirement to provide contact details to facilitate the commission's market outreach); and
- it is easier to obtain prompt clearance from the commission.
The vast majority of cases notified to the commission use a simplified procedure (statistics released by the commission put the volume of such cases between 60% to 70% of all notifications under the EU Merger Regulation). However, the commission can revert to a full Form CO in certain circumstances and this inevitably impacts has a negative impact on overall timing.
Form CO and Short Form CO templates are found in the annexes to the 2013 Implementing Regulation.
Notification can be made in any official EU language.
Is there a pre-notification process before formal notification, and if so, what does this involve?
Pre-notification contacts are triggered with the submission of a case allocation request form to the merger registry of the European Commission’s Directorate General for Competition. The request form should provide:
- a brief background of the transaction;
- a brief description of the relevant sectors and markets involved;
- details of the transaction’s likely impact on competition in general terms; and
- an indication of the case language.
On the basis of the case allocation request form, the commission will allocate a case team to the transaction.
The commission strongly recommends pre-notification contacts in which draft versions of the formal notification are reviewed and possible questions answered. Notifications for simple 'no issues' transactions generally take between one to three weeks from the submission of a preliminary draft to the case team to be accepted by the commission. In complex cases, it may take up to four to six months or longer. In ‘super-simplified’ cases (ie, the establishment of a joint venture outside the European Economic Area or where there are no horizontal or vertical overlaps), the commission has indicated that it will accept notifications without a pre-notification period. However, a case allocation form must still be submitted. In practice, even in super-simplified cases, the parties typically go through pre-notification to ensure that the case team is comfortable that the transaction qualifies for the super- simplified procedure before formal notification.
During pre-notification, notifying parties are advised to disclose fully and frankly information relating to potentially affected markets and possible competition concerns, even if they may ultimately consider that they are not affected and, notwithstanding that, may take a particular view in relation to, for example, the issue of market definition. This will allow for early market testing of alternative market definitions and the notifying parties’ position on the markets in question.
Further, the European Commission’s Directorate General for Competition recommends that notifying parties should, as early as possible in pre-notification, submit internal documents such as board presentations, surveys, analyses, reports and studies discussing:
- the proposed concentration;
- the economic rationale for the concentration; and
- the competitive significance or market context in which it takes place.
Can a merger be implemented before clearance is obtained?
Pursuant to Article 7(1) of the EU Merger Regulation (139/2004), a concentration with an EU dimension cannot be implemented before it has been notified to the commission and been declared compatible with the regulation (the so-called 'standstill obligation').
The commission will grant exceptions to the standstill obligation only in exceptional cases, where it is satisfied that the harm to the notifying parties or a third party from complying with the standstill obligation is greater than the possible negative effects on competition as a result of the proposed transaction.
Guidance from authorities
What guidance is available from the authorities?
In addition to informal guidance available from the commission, it has also published on its website numerous best practice guidelines and notices and guidelines providing important guidance for mergers.
Regarding substance, the guidance covers:
- horizontal and non-horizontal mergers;
- relevant market definition;
- remedies; and
- ancillary restraints.
Regarding procedure, the guidance covers:
- jurisdiction (consolidated jurisdictional notice);
- simplified procedures; and
- case referrals.
Further, the best practice guidelines cover:
- the conduct of EU merger control proceedings;
- the submission of economic evidence;
- divestiture commitments; and
- the disclosure of information in data rooms.
What fees are payable to the authority for filing a notification?
No fees are payable for filing a notification.
Publicity and confidentiality
What provisions apply regarding publicity and confidentiality?
Throughout its investigation, the commission will protect confidential information and business secrets contained in submissions provided by all parties involved in merger proceedings. Given the short deadlines of the merger review process under the EU Merger Regulation, parties are encouraged to clarify as soon as possible any queries relating to confidentiality claims with members of the case team. Where a transaction has not been publicly announced, the commission can engage only in pre-notification discussions. A formal notification can be submitted only once a transaction has been announced. A formal filing becomes public knowledge.
Only a brief summary of the transaction will be published on the commission's official website, not the notification itself. A notice will subsequently be published in the EU Official Journal summarising the transaction in question and inviting interested third parties to submit to the commission their possible observations on the proposed concentration.
Are there any penalties for failing to notify a merger?
Yes. The commission can impose a fine of up to 10% of the aggregate worldwide turnover of the parties on which the filing obligation rests for failure to notify a notifiable transaction.
The commission can also require a transaction to be unwound or take any other measure to ensure that effective competition conditions are restored.
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