Merger Control 2016

The Merger Control guide provides expert legal commentary on the key issues for businesses operating in the Merger Control sector. The guide covers the important developments in the most significant jurisdictions.

Last Updated October 21, 2016

Contributing Editor

Jean-François Bellis is the managing partner of Van Bael & Bellis. In 1975, he started his practice in Brussels, specialising in EU competition and EU trade law. From 1979-1980, he served as legal secretary to Lord Mackenzie Stuart at the Court of Justice of the European Communities (now Court of Justice of the European Union) in Luxembourg. In 1986, he co-founded Van Bael & Bellis with Ivo Van Bael. Bellis has extensive litigation experience in EU competition and trade cases, representing clients before the European Commission, the EU Courts and in national proceedings. In the field of competition law, he assists international clients in cases at both the EU and national level. He regularly advises on all aspects of competition law with particular expertise in a broad range of antitrust issues, including cartels, dominant market positions, mergers, distribution and licensing. Bellis has written numerous books and articles in the fields of competition and trade law and has spoken on both of these subjects at several international conferences and seminars. He is also a professor of EU competition law at the Institute of European Studies of the University of Brussels.

In April 2014, Jean-François was honoured by Chambers & Partners for his “Outstanding Contribution to the Legal Profession.” 

Van Bael & Bellis is widely acknowledged as having one of the leading practices in EU competition law. Since the early 1970s, members of the firm have been involved in many of the seminal cases in the field. With one of the largest competition practices in Brussels, Van Bael & Bellis has extensive expertise in all aspects of EU competition law, including merger control, joint ventures, cartel investigations, the establishment and operation of distribution systems, the licensing and use of intellectual property rights, abuses of dominant market positions and state aid. As a result of this depth of experience, the firm combines a full range of skills in complex transactions, major litigation, filings and advisory work. Van Bael & Bellis has assisted clients in cases at both the EU and national level, notably appearing before the European Commission and the EU courts, where the firm has acted as defence counsel in many landmark cases.

Within the field of merger control specifically, Van Bael & Bellis has a dedicated team of merger control specialists and regularly represents merging parties in cases involving key issues of jurisdiction, procedure and substantive law. The firm has succeeded in obtaining clearance of numerous complex transactions before the European Commission. With its large number of lawyers qualified to practice in a number of Member States, the Van Bael & Bellis team also routinely helps clients to obtain merger clearance from Member State authorities for transactions which do not meet EU thresholds. The firm is also frequently called on to co-ordinate merger control filing efforts across the world.

Introduction – the increasingly complex world of global merger control

Any competition lawyer worth their salt will be able to tell you that co-ordinating global merger control filings has become an evermore complex task over the past decades.  Not too long ago, the major merger control jurisdictions of the world could arguably be counted on one hand – two at most. Indeed, many jurisdictions did not have any merger control legislation, and many of the countries that did have a merger control regime in place had no enforcement record to speak of. Even if a merger notification was technically required in such a country, there were often little or no consequences in practice to failing to file. 

Proliferation of merger control regimes

All this has changed significantly over the last few decades. A number of major jurisdictions have adopted new merger control legislation – think of, for instance, China and India. In addition, many jurisdictions that already had merger control rules have significantly stepped up their enforcement activities; for instance by actively monitoring the press for deals that are not notified and going after companies (including foreign ones) that  do not meet their merger control filing obligations. Indeed, the list of jurisdictions that have imposed fines for failure to file in merger cases grows every year and is certainly no longer limited to the likes of the EU and US. For instance, in December of 2014, China’s MOFCOM published its first decision punishing parties for failure to notify, fining Tsinghua Unigroup CNY300,000 (about EUR40,000) for failing to notify its acquisition of RDA Microelectronics, even though MOFCOM considered the transaction not to raise serious competition concerns.

Unfortunately, this proliferation of merger control regimes and enforcement has not gone hand in hand with an increase in standardisation. Each merger control regime has its own test that determines what transactions amount to a notifiable event (with some catching only changes in control, while others also catch certain acquisitions of non-controlling minority stakes), its own filing thresholds (some based on turnover, some on market share, some on value of assets and some on combinations thereof), its own formalities for making notifications (filing fees, translations, etc), its own timelines (with quick trigger filings in some cases, review periods of varying lengths and different possibilities to stop the clock on such a review), its own substantive test for review (with some jurisdictions carrying out only a competition law assessment, while others also take into account public interest issues), etc. With many of these rules, the devil is often in the details. 

Lack of standardisation

For instance, a country like Canada has filing thresholds based, in part, on turnover (which is the case for most merger control jurisdictions across the globe), but unlike most countries with turnover-based thresholds who typically only count sales to domestic customers, Canada counts all imports, exports and domestic sales. For companies with significant export operations from Canada, this rule may well lead to filing requirements even if most of their sales are made outside of this jurisdiction. 

Another good example is Brazil. In applying Brazil’s group-wide turnover thresholds, CADE considers the turnovers of the entire economic groups involved, meaning not only that of the target business but also of the seller. Moreover, the turnover of these groups includes not only the combined turnover of all companies under common control, but also that of all other companies in which those companies directly or indirectly have a 20% or greater shareholding. Even a small acquisition can trigger a merger filing in Brazil based simply on the buyer’s and seller’s minority investments.

South Africa is another example of a jurisdiction where extra caution is well-advised. In addition to competition issues, the Competition Commission must, by law, consider public interest factors such as employment and South African industries’ international competitiveness, and it has a track record of requiring remedies for public interest reasons in transactions raising no real competition concerns.

Global merger review

This cocktail of a proliferation of merger control regimes, increased enforcement action and a lack of standardisation has made navigating a global merger review process a complex task. This book aims to cut through some of that complexity and provides the reader with a practical guide that covers 32 jurisdictions in a question and answer format.

The questions cover all the key rules relevant for a merger control filing assessment including: what kind of transactions have to be notified, what are the filing thresholds, what is the procedure and timeline for notification and approval, what are the substantive considerations of the authorities and what kind of enforcement record do the authorities have? Moreover, the questions go beyond the letter of the law and probe for useful answers on how these rules are applied in practice. 

For instance, the questions on applicable fines for failure to fine do not only ask whether such penalties exist and what their legal maximum is but, more importantly, they ask whether these penalties are applied in practice and what penalties have been imposed recently. To give but one specific example, the Ukrainian competition authority can – in theory – impose a fine of up to 5% of worldwide turnover if a company fails to make a merger notification. However, the letter of the law is really only half the story here given that the fines for failing to notify imposed by the Ukrainian authority are, in practice, generally in the range of EUR500 to EUR60,000.

As another example, many jurisdictions allow for informal pre-notification contacts with the authorities to narrow the focus of the filing and facilitate a smoother review. However, it is important to know that the actual practice on pre-notification in these jurisdictions can differ, for instance at the EU level and in Germany: while the European Commission in practice requires pre-notifications in even the simplest transactions, engaging in pre-notification in Germany is far less common and is generally reserved for cases that raise clear issues of jurisdiction or substance.

Although by no means a substitute to seeking advice from experienced merger control counsel, this book provides clear and practical answers to these kinds of questions and thus provides a very useful tool for companies and counsel navigating the increasingly complex labyrinth of global merger control.

As with any work of this nature, compiling this book has been a team effort. With this in mind, I would like to thank all the authors for their contributions, as well as the Chambers team for their diligence in compiling this book.