Are there any future developments or planned reforms of the merger control regime in your jurisdiction?
Merger Control Regulations in China are expected to offer greater clarity for business operators.
According to a speech by Mr. Han Chunlin, a deputy Director General of the Anti-monopoly Bureau of MOFCOM, given at the Antitrust and IP forum held in Shanghai on 9 July 2016, the Measures for Review of Concentrations Between Undertakings and the Measures for Notification of Concentrations Between Undertakings are under amendment, and it is possible that these two regulations will be integrated into a single draft with an aim to offer more clarity to companies.
MOFCOM may increase fines imposed on the non-filers in future amendments of the AML.
In a recent speech given by Mr. Shang Ming, the former Director General of the MOFCOM Anti-monopoly Bureau, at the 2015 China Competition Policy Forum held in Beijing on October 22, 2015, he commented that the current penalties prescribed in the AML for failure to notify are too lenient, and MOFCOM is endeavouring to increase such penalties in future amendments of the AML in order to make those non-filers subject to a monetary penalty that is much higher than the cost of making typical merger filings.
No reforms of the Danish merger control regime are expected in the near future.
An amendment to the Danish Competition Act entered into force in July 2015, which changed the composition of the Council and amended the Phase I time limit.
The Council now constitutes a professional board of the DCCA, consisting of seven members representing practical and theoretical expert knowledge on competition mat-ters, business management and consumer affairs. The new Council is expected to be less politically influenced and instead be more characterised by professional insight and expertise.
Furthermore, the DCCA may now extend the Phase I investigation period from 25 business days to 35 business days if the parties propose commitments during Phase I.
The Irish merger control system underwent a significant reform in 2014 as a result of the changes introduced by the 2014Act. While the CCPC continues to monitor the effectiveness of its merger control regime, we are not aware of any proposals for further reform of the Irish merger control system at this time.
The Israeli Antitrust Authority has announced its intention to advocate legislation to reform the merger control regime. Among other things, the following changes were suggested:
- Substantive prohibition on mergers which are likely to harm competition or the public, instead of the current per-se legality for mergers that do not meet the filing thresholds.
- Extension of the definition of ‘merger’.
- Increase in filing thresholds.
- The introduction of certain international turnover thresholds.
- The introduction of a "phase II" investigation period, to allow the Israeli Antitrust Authority to extend the 30-day review term without needing to rely on the Antitrust Tribunal decision or voluntary extensions from the merger parties.
The reform was delayed, in part, due to the personal changes which followed the resignation of the former Commissioner, Prof. David Gilo, in August 2015. The New Commissioner, Adv. Michal Halperin, prior to her appointment, expressed the opinion that the filing thresholds should be increased, but criticized other elements of the proposed reform, such as the removal of per-se legality for mergers below the filing thresholds, thereby creating uncertainty and imposing unnecessary costs on the merging parties. It therefore remains to be seen what will become of the Israeli Antitrust Authority's reform proposal in the area of merger control.
As of today, there are no planned reforms in the merger control regime.
No reforms to the regime are envisaged.
The major development expected in the Turkish competition law regime is the adoption of the draft law amending Law 4054 on the Protection of Competition. To that end, the draft law was officially submitted to the presidency of the Turkish Parliament on January 23, 2014 and was reviewed by a parliamentary sub-committee. However, the parliamentary sub-committee could not conclude its work on the necessary changes within the relevant parliamentary legislative year. Therefore, at present the draft law is statute barred. In order to re-initiate the parliamentary process, the draft law must again be proposed and submitted to the presidency of the Turkish Parliament. Although it is impossible to say when this will happen, it is likely that a draft reform law will remain on the competition law agenda.
The draft law aims to achieve further compliance with the EU competition regime, on which it is closely modelled. It adds several new dimensions and changes which should result in a procedure that is more efficient in terms of time and resource allocation. The draft law proposes several significant changes in terms of merger control:
- The substantive test for concentrations will be changed. The EU significant impediment of effective competition test will replace the existing dominance test.
- In accordance with EU competition law, the draft law will adopt the term ‘concentration’ as an umbrella term for mergers and acquisitions.
- The draft law will eliminate the exemption for acquisition by inheritance.
- The draft law will abandon the Phase II procedure (which was similar to the investigation procedure) and provide a four-month extension for cases requiring in-depth assessments. During in-depth assessments, parties can deliver written opinions to the Competition Board, which will be akin to written defences.
- The draft law will extend the appraisal period for concentrations from the existing period of 30 calendar days to 30 business days, which equates to approximately 40 days in total. As a result, the period in which to obtain a decision on a preliminary review is expected to be extended.
Further, the draft law proposes to abandon the fixed turnover rates for certain procedural violations, including failing to notify a concentration and hindering onsite inspections; and to cap the monetary fines imposed for these violations. This new arrangement gives the board discretion to set fines by conducting case-by-case assessments.
Another significant anticipated development is the Draft Regulation on Administrative Monetary Fines for the Infringement of Law on the Protection of Competition, which will replace the Regulation on Monetary Fines for Restrictive Agreements, Concerted Practices, Decisions and Abuse of Dominance. The draft regulation is heavily inspired by the European Commission’s guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation 1/2003. Thus, the introduction of the draft regulation clearly demonstrates the authority’s intention to bring the secondary legislation into line with EU competition law during the harmonisation process. The draft regulation was sent to the Turkish Parliament on January 17 2014, but as yet no enactment date has been announced.
We expect the merger control regime to be further made more business-friendly. In particular, the primary milestones in the future are (1) to develop the guidelines on the calculation of fines for violations of competition law, which will have a legal binding nature; (2) to adopt the ‘effects doctrine’; and (3) to adopt the mechanism under which the merger control clearance will cover non-competition agreements within the framework of the notified transaction.
There are no announced reforms to either the HSR Act or substantive merger review standards on the horizon. The future direction of merger enforcement may turn to some degree on the outcome of the upcoming presidential election. A victory by Secretary Clinton would likely mean a continuation of the agencies’ current relatively aggressive approach to merger enforcement. A win by Mr. Trump might signal a slightly less aggressive posture. Regardless, any changes are likely to be at the margins, impacting relatively few enforcement decisions. The vast majority of transactions would be unaffected by the results of the election.
The FAS has recently adopted rules allowing an application to be filed in electronic format which should speed up communication process between the companies and the authority. No other changes are anticipated at the moment.
The UK government has consulted on a number of proposed refinements to the UK merger control regime, and is currently considering which of those proposals to pursue. The possible reforms include:
- imposing obligations on the CMA to ensure proportionality of merger information requests; and
- introduction of powers to impose civil fines for breaches of undertakings entered into by parties (e.g. to avoid a second-phase investigation) and higher maximum fines for procedural infringements.
In addition, the CMA has indicated that it intends to streamline its merger review procedures by (i) clarifying its merger notice information requirements; (ii) holding pre-notification meetings to obtain information and better understand markets earlier in the process; and (iii) publishing additional guidance on derogations from initial enforcement orders.
A further reform that has been signalled by the current Prime Minister, Theresa May, is the possible introduction of new powers to allow the Secretary of State to intervene in acquisitions of 'critical infrastructure' in the UK, to ensure the protection of the national interest. A consultation on these proposals is expected in early 2017.
In the longer term, the exit of the UK from the European Union (Brexit), in accordance with the results of a referendum in June 2016, will have a significant impact on the UK merger control regime. While it remains unclear what form of Brexit will be negotiated, many of the likely models involve the EU Merger Regulation ceasing to apply under UK law. This would mean that:
- Large mergers involving UK businesses that raise competition concerns would face having two, parallel, reviews by each of the EU and UK authorities, instead of the present 'one-stop-shop' review by the European Commission.
- The exclusion of UK turnover when calculating whether the thresholds for an EUMR filing are met would push some transactions below those thresholds, and would likely mean fewer filings are required for joint ventures – including acquisitions of joint control over businesses – with activities in the UK, but not the EEA region.
- Finally, the UK government would have greater freedom to block or impose conditions on mergers on grounds that are unrelated to competition, such as the impact on employment, or a desire to limit foreign ownership of UK businesses. At present, the UK government is prevented by the EU Merger Regulation from prohibiting, or imposing remedies on, mergers that are notifiable to the European Commission, except in certain limited circumstances. Given the recent announcement of proposals for greater political scrutiny of acquisitions of 'critical infrastructure', it seems likely that the present government would seek to make use of this greater freedom.
There are no current plans to reform the merger control regime in Belgium.
Currently, an amendment of the Austrian competition law mainly focusing on transposing the provisions of the EU Damages Directive into national law is under way. There are two proposals that may, however, also noted in the context of merger control. On the one hand, there is a proposal to extend the Cartel Court’s decision competence with regard to cooperative effects of joint ventures. On the other hand, it is discussed to introduce a value of transaction threshold (in addition to the mentioned turnover thresholds).
The Minister of Economic Development has signaled an intention to amend the Competition Act. Proposed amendments have not yet been published but it is anticipated that these may include provisions relevant to merger control – possibly to strengthen the Minister's power to appeal decisions in the public interest.
No reform of the merger control regime is currently planned in France.
Currently, there aren’t planned future reforms of the merger control regime.
A proposal for an amendment of the ARC is currently before the German parliament. If adopted, the proposal would introduce an important change by adding an additional threshold: under the new rules, transactions falling below the second domestic sales threshold of EUR 5 million in Germany (see question 3.2 above) would be reportable if the value of the transaction exceeds EUR 350 million and the business whose sales do not exceed EUR 5 million is likely to be active in Germany. This would significantly widen the scope of potential merger control filings to transactions with only very indirect or minor links to Germany, specifically targeting R&D pipeline transactions in the pharmaceutical sector which have so far escaped merger control in Germany (and the EU) as they did not generate sufficient revenue in the prior year, yet the transaction value and projected sales may be substantial.
In May 2014, the ICA closed a consultation (launched in February 2014) on the following proposed amendments to the Italian merger control thresholds:
- the reduction of the current second merger control threshold;
- the amendment to the second threshold, whereby it would refer to the turnover of each of at least two of the parties to the transaction (rather than the target’s turnover).
The results of the public consultation were not clearly in favour of a reduction of the current second merger control threshold. Therefore, the ICA decided to continue to monitor the functioning of the current system and defer any decision on its proposed amendment.
The ICA is also considering the opportunity of amending, in the near future, the notification procedure for transactions that clearly do not raise competition concerns, by means of a simplified notification procedure.
Exposure draft legislation proposing to amend the merger regime (amongst other things) was released by the Australian government for public comment on 5 September 2016. It is part of the government's response to the Final Report of the Competition Policy Review, released in March 2015 (the most recent comprehensive review of Australia's competition laws and policy).
The exposure draft legislation proposes to repeal the existing formal clearance and authorisation processes and introduce a new authorisation process. Under the proposal, assessment of merger authorisation will be undertaken by the ACCC, with review by the Tribunal of the ACCC's determination available on a limited basis. It is proposed that the ACCC must not grant merger authorisation unless it is satisfied in all the circumstances that the merger either would not have the effect or likely effect of substantially lessening competition, or the conduct would result or be likely to result in public benefit which would outweigh the public detriment that would result or be likely to result from the conduct.
At the time of writing, no Bill amending the CCA to reform the merger regime as proposed in the exposure draft legislation has yet been introduced into Parliament.
The Canadian merger review and notification process was substantially reformed in 2009. Further proposed amendments to the Act were introduced on September 28, 2016, but have not yet become law. These proposed amendments are technical in nature and less significant than the 2009 changes. They would broaden the scope of the “affiliates” definition in the Act in an effort to close some legislative gaps that currently result in the inconsistent treatment of corporate and non-corporate entities. Specifically, the proposed amendments (i) introduce a new definition for “entity” which, in addition to a corporation, also includes non-corporate entities such as a partnership, sole proprietorship, trust or other unincorporated organization capable of conducting a business; and (ii) expand the concept of “control” for non-corporate entities in a way that is consistent with the current approach to corporations. These broadened affiliation rules may result in more transactions being subject to the notification provisions (because the assets and revenues of additional entities may be captured by the new rules), while at the same time allowing certain business groups more freedom in relation to inter-affiliate dealings that will no longer be subject to certain provisions of the Act.