What are the jurisdictional thresholds (turnover, assets, market share and/or local presence)?
Notification to MOFCOM for a business concentration is required as long as one of the turnover thresholds below is satisfied. As can be seen from the two turnover thresholds set out below, for the purpose of merger filings in China, in either case, there must be at least 2 business operators whose turnover in China exceeded RMB 400 million in their immediately preceding fiscal years.
- The total amount of global turnover of all business operators involved in such concentration exceeded RMB 10 billion and at least 2 of the business operators’ turnover in China exceeded RMB 400 million in their immediate previous fiscal year; or
- The total turnover in China of all business operators involved in the concentration exceeded RMB 2 billion and at least 2 business operators’ turnover in China exceeded RMB 400 million in their immediately preceding fiscal years.
A merger must be notified to the DCCA where:
- the combined aggregate turnover in Denmark of all the undertakings concerned is at least DKK 900 million and the aggregate turnover in Denmark of each of at least two undertakings concerned is at least DKK 100 million; or
- the aggregate turnover in Denmark of at least one of the undertakings concerned is at least DKK 3.8 billion and the aggregate world-wide turnover of at least one of the other undertakings concerned is at least DKK 3.8 billion.
No form of local presence is required in order for a transaction to be subject to Danish merger rules as long as the jurisdictional turnover thresholds in Denmark are met.
The aggregate turnover of an undertaking is assessed at group level, i.e. it consists of the turnover of the parent company, subsidiaries, and affiliated companies. Intra-group turnover, however, is excluded.
The turnover thresholds refer to revenue from all lines of business and not just revenue from the product markets directly influenced by the merger. However, if the transaction consists in acquiring control over part of one or more undertakings, the turnover threshold of the target company refers only to the parts which are the subject of the transaction.
As a main rule, the same jurisdictional thresholds apply to all sectors. However, mergers between providers of telecommunications (which are not, as such, subject to scrutiny under the Danish Competition Act) must be notified to the Danish Business Authority if the participating undertakings have a combined turnover in Denmark of at least DKK 900 million and the merger includes a public telecommunications network. The individual DKK 100 million turnover threshold does not have to be met in such cases.
A merger or acquisition as defined in the Competition Act will be notifiable if the following thresholds are met in the most recent financial year of each undertaking involved:
- The aggregate turnover in the State of the undertakings involved is not less than €50 million; and
- The turnover in the State of each of two or more of the undertakings involved is not less than €3 million.
For the purposes of the Competition Act thresholds, on the acquirer side, the turnover of the entire group to which the acquiring entity belongs is taken into account. On the target business side, only the turnover of the target business is taken into account, i.e. the turnover of the remainder of the vendor's group is not taken into account. For example, in an acquisition of sole control, the turnover to be taken into account is the turnover of the entire group to which the acquiring entity belongs and the turnover of the target business alone. In acquisitions of joint control, the undertakings involved are each of the parties (on a group basis) acquiring (and, where relevant, maintaining) joint control and, if the target is a pre-existing company, the target company.
The current thresholds were introduced as part of the 2014 reform of merger control, and now more clearly relate to transactions that have a direct connection to activities in the State. They replaced the previous thresholds which contained both a worldwide turnover test and a reference to undertakings carrying on business on the island of Ireland. The current thresholds can be triggered in respect of relatively small transactions, given the lower threshold is just €3 million. The 2014 Act also revised the concept of asset acquisitions that come within the scope of Irish merger control jurisdiction and the CCPC has interpreted the revised concept relatively broadly to include, for example, acquisitions of buildings with a rent roll.
With the exception of media mergers, which fall to be assessed under the Competition Act regardless of whether the turnover-based thresholds are met or not, the thresholds do not vary depending on industry sector. The thresholds are prescribed in the Competition Act and cannot be changed without an amendment to the Act (i.e. they are not subject to change by statutory instrument or administrative order).
Nexus to Israel
When non-Israeli entities are involved in a transaction, the "merger of companies" definition will only apply to the transaction if at least two of the parties involved in the transaction are each deemed as a "company" under the Israeli Antitrust Law; i.e. corporate entities with sufficient nexus to Israel (the "Nexus Test").
As explained in the Guidelines, the Nexus Test is met for a party if it is:
- An Israeli company;
- A non-Israeli company registered in Israel as a "foreign company";
- A non-Israeli company not registered in Israel, but with a "merger affiliation" with an Israeli company. A "merger affiliation" includes, inter alia, a situation where the non-Israeli company, an entity who controls it, an entity controlled by it or an entity controlled by any of them: (a) holds more than one quarter of an Israeli company’s issued capital stock; (b) holds more than one quarter of an Israeli company’s voting power; (c) has the right to appoint more than one quarter of the Israeli company’s directors; or (d) has the right to receive more than one quarter of the Israeli company’s profits; or
- A non-Israeli company neither registered in Israel nor affiliated with an Israeli company, but maintaining a place of business in Israel (by way of a distributor or otherwise), which is reflected by holding a significant influence over the conduct of a local representative (local representative prices, presentation, positioning, identity of customers etc.).
- Turnover threshold: the combined turnovers in Israel of the parties to the merger in the financial year prior to the transaction were over NIS 150 Million, and at least two of the parties each had a turnover in Israel of at least NIS 10 Million in that year;
- Combined market share threshold: the parties' combined market shares will exceed 50% of a product/service market following the merger; or
- Individual market share threshold: one of the parties in the transaction has a "monopoly" (defined by the Israeli Antitrust Law as having over 50% market share) in any market in Israel. It is enough if this threshold is met by one of the parties.
As mentioned, the Nexus Test must be met for at least two parties in order for the transaction to be considered a "merger of companies".
If the transaction is a "merger of companies", and has met the Nexus Test, the transaction must be reported to the Antitrust Commissioner and receive the Commissioner's approval prior to consummation if one or more of the following applies:
Note that, the Israeli Antitrust Law and the Restrictive Trade Practices Regulations (Registry, Publication and Transaction Reporting), 2004 (the "Regulations") do not set an asset threshold to filing in Israel, and whether a company has or does not have assets in Israel is irrelevant to the thresholds. For example, a high-tech company may have a development centre in Israel employing several engineers, and not meet the filing thresholds due to the fact that it has no sales in Israel.
At the moment, all thresholds refer to activity in Israel only (see "Future developments" below).
The thresholds refer to the parties of the transaction, as well as to every company that is controlled by the same ultimate controlling owner. "Control" is defined under the Israeli Antitrust Law as the possession of more than half of either (i) the right to vote at a company's general meeting or the parallel body of another corporation or (ii) the right to appoint the directors of a corporation. Turnover thresholds refer to all activities of these companies, not just the activities in the market relevant to the transaction.
In this regard, sellers' market shares and turnovers will not be taken into account if all their connections to the acquired company or assets are severed. If some connections remain – the sellers' turnover or market shares will be taken into account when assessing the turnovers.
Japanese rules provide the jurisdictional thresholds for each category of the qualifying transactions as follows:
(a) Share acquisitions
• Turnover in Japan of the acquirer and its group companies exceeds JPY 20 billion; AND
• Turnover in Japan of the target and its subsidiaries exceeds JPY 5 billion.
• Turnover in Japan of one party and its group companies exceeds JPY 20 billion; AND
• Turnover in Japan of the other party and its group companies exceeds JPY 5 billion.
(c) Business/asset transfers
• Turnover in Japan of the acquirer and its group companies exceeds JPY 20 billion; AND
• Turnover in Japan of the target business/asset exceeds JPY 3 billion.
(d) Company splits
Type 1: cases where two undertakings (X and Y) de-merge their businesses and jointly transfer those businesses to a new company
• If both X and Y de-merge the whole of their businesses:
o Turnover in Japan of one party and its group companies exceeds JPY 20 billion; AND
o Turnover in Japan of the other party and its group companies exceeds JPY 5 billion.
• If X de-merges its whole business and Y de-merges not the whole but an important portion of its business:
o Turnover in Japan of X and its group companies exceeds JPY 20 billion; AND
o Turnover in Japan of the de-merged business of Y exceeds JPY 3 billion.
o Turnover in Japan of X and its group companies exceeds JPY 5 billion; AND
o Turnover in Japan of the de-merged business of Y exceeds JPY 10 billion.
• If both X and Y de-merge not the whole but an important portion of their businesses:
o Turnover in Japan of one party and its group companies exceeds JPY 10 billion; AND
o Turnover in Japan of the other party and its group companies exceeds JPY 3 billion.
Type 2: cases where one undertaking (X) de-merges its business and transfer it to another undertaking (Y)
• If X de-merges the whole of its business:
o Turnover in Japan of one party and its group companies exceeds JPY 20 billion; AND
o Turnover in Japan of the other party and its group companies exceeds JPY 5 billion.
• If X de-merges not the whole but an important portion of its business:
o Turnover in Japan of the de-merged business of X exceeds JPY 10 billion; AND
o Turnover in Japan of Y and its group companies exceeds JPY 5 billion.
o Turnover in Japan of the de-merged business of X exceeds JPY 3 billion; AND
o Turnover in Japan of Y and its group companies exceeds JPY 20 billion.
(e) Joint share transfers
• Turnover in Japan of one party and its group companies exceeds JPY 20 billion; AND
• Turnover in Japan of the other party and its group companies exceeds JPY 5 billion.
The undertakings considered for the purposes of calculating aggregate thresholds are those participating directly in the transaction, i.e. the acquiring entity and target, or each of the merging companies or those involved in the joint venture. The Regulations also require the turnover of the following undertakings to be taken into account:
- Undertakings in which the participating undertaking concerned, directly or indirectly:
- owns more than half the capital or business assets, or
- has the power to exercise more than half the voting rights, or
- has the power to appoint more than half the members of the board of directors or other body or bodies legally representing the undertakings; or
- has the right to manage the undertakings’ affairs;
- Parent undertakings of the participating undertaking which exercise any of the rights or powers mentioned above;
- Subsidiary undertakings which share a parent undertaking with the participating undertaking (i.e. ‘sister companies’), and which parent undertaking exercises over said subsidiary any of the rights or powers mentioned above;
- Undertakings in which any two or more of the abovementioned undertakings exercise any of the rights or powers mentioned above;
The thresholds affect all parties concerned, as evidenced by the fact that each of the undertakings concerned must have a turnover in Malta of at least 10% of the combined aggregate turnover. If such turnover threshold is not reached, the transaction would fall outside the scope of the Regulations.
These threshold requirements apply irrespective of the product/service markets which they relate to. It can thus be assumed that all turnover is taken into account for notification purposes, although the DG will then consider the relevant product/service market when determining if the concentration substantially lessens competition in Malta. If the companies, although meeting the thresholds, are deemed to operate in different markets and thus do not substantially lessen competition in Malta, then the concentration will be accepted.
Aggregate turnover comprises the amount derived by each of the undertakings concerned in the financial year preceding the transaction, taking into account the sale of products and the provision of services to any other undertaking not being a group entity. The turnover of each undertaking is then added to establish the combined aggregate turnover.
The Regulations do not provide for periodical updating of the thresholds. Nor do they stipulate different thresholds according to industry or sector.
Under Article 7 of the Communiqué No.2010/4, the transaction would be notifiable in case one of the below turnover thresholds are triggered:
- the aggregate Turkish turnover of the transaction parties exceeding TL 100 million (approximately €33 million or $37 million) and the Turkish turnover of at least two of the transaction parties each exceeding TL 30 million (approximately €10 million or $11 million); or
- (i) the Turkish turnover of the transferred assets or businesses in acquisitions exceeding TL 30 million (approximately €10 million or $11 million) and the worldwide turnover of at least one of the other parties to the transaction exceeds TL 500 million (approximately €166 million or $184 million), or (ii) the Turkish turnover of any of the parties in mergers exceeding TL 30 million (approximately €10 million or $11 million) and the worldwide turnover of at least one of the other parties to the transaction exceeds TL 500 million (approximately €166 million or $184 million).
The thresholds do not differ according to the sector. There is however certain other special merger control rules to be considered in respect of a number of specific sectors. Besides, the thresholds above are reviewed by the Competition Board every two years. The next deadline for the Board to confirm or revise the thresholds is the beginning of the year 2017.
There is no market share threshold in Turkey. If the parties meet the turnover thresholds, the transaction would be notifiable, regardless of the parties’ market shares. In addition, sellers’ turnover is not relevant while determining the filing obligations however it is only relevant in joint venture transactions i.e. where the buyer and the seller form a joint venture, both the seller and the buyer would be considered as buyers pursuant to Article 5 of Communiqué No. 2010/4.
Regardless of the parties’ physical presence in Turkey, sales in Turkey may trigger the notification requirement to the extent that the turnover thresholds are met. Article 2 of Law 4054 sets out the effects criterion – that is, whether the undertakings concerned affect the goods and services markets in Turkey. Even if the undertakings concerned have no local subsidiaries, branches or sales outlets in Turkey, the transaction could still be subject to Turkish competition legislation if the goods or services of the participating undertakings are sold in Turkey and the transaction would thus affect the relevant Turkish market.
Ukrainian competition law provides for a “double-decker” thresholds system – two alternative thresholds. The merger control clearance is required, if:
- the aggregate worldwide value of assets or turnover of the parties to concentration exceeds EUR30 mln, and the value of Ukrainian assets or turnover of at least two parties to the concentration exceeds EUR4 mln each; or
- the aggregate value of Ukrainian assets or turnover of the target or at least one of the founders of a joint venture exceeds EUR8 mln, and the worldwide turnover of at least one other party to the concentration exceeds EUR150 mln.
There is no market share threshold.
All thresholds are calculated on a group-level basis (taking into account the relations of control). All entities, which are directly or indirectly controlled by the parent company, form a group of entities and constitute a single undertaking from a merger control standpoint. The thresholds test is applied for the acquirer group and the target group including the seller group.
The thresholds refer to the whole turnover and assets of the parties (not only those related to the relevant product/service market). The thresholds are the same for all industries and sectors involved.
The HSR Act applies two principal jurisdictional thresholds: the size-of-person test and the size-of-transaction test. Transactions valued at up to US$312.6 million are reportable only if both thresholds are met. For transactions valued at greater than US$312.6 million, the size-of-person test does not apply. Transactions valued above that amount are reportable without regard to the size-of-person test.
For transactions valued at up to US$312.6 million, both parties must meet the size-of-person test for the transaction to be reportable. The size-of-person test is determined based on the total assets and annual net sales of the “acquiring person” and “acquired person” to the transaction. Each “person” includes the “ultimate parent entity” (UPE) of the party to the transaction, and all entities “controlled” by the UPE. “Control” means, in the case of a corporation, holding 50% or more of the outstanding voting securities or having the contractual power presently to designate 50% or more of the members of the board of directors. In the case of a partnership or LLC, “control” means having the right to 50% or more of the profits or 50% or more of the assets upon dissolution.
For the size-of-person test to be met, either the acquiring or acquired person must have total assets or annual net sales of US$15.6 million or more, and the other person must have total assets or annual net sales of US$156.3 million or more. There is a variation to this general rule, however. If the acquiring person meets the US$156.3 million threshold, and if the acquired person is not engaged in manufacturing, then the threshold for the acquired person is US$15.6 million in total assets or US$156.3 million in annual net sales. In all cases, the total assets of a person are as stated on the UPE’s last regularly prepared, fully consolidated balance sheet. The annual net sales of a person are as stated on the UPE’s last regularly prepared, fully consolidated, annual income statement. As with other HSR thresholds, the size-of-person thresholds are adjusted annually, typically in February, to reflect changes in the US gross national product.
For a transaction to be reportable under the HSR Act, the value of the voting securities, assets, or controlling interest in an unincorporated entity to be held by the acquiring person as a result of the acquisition must exceed US$78.2 million. Voting securities and interests in unincorporated entities held “as a result of” an acquisition include any securities or interests already held by the acquiring person, as well as the additional securities or interests to be acquired. Thus, for example, if an acquiring person already held voting securities of a target corporation valued at US$50 million, and proposed to acquire additional voting securities of the target valued at US$30 million, the acquisition of the additional voting securities would trigger an HSR filing obligation, because the total value of the voting securities of the target held “as a result of” the acquisition would be US$80 million, above the US$78.2 million threshold. The HSR Act employs aggregation rules for assets acquisitions as well, generally requiring aggregation of the value of assets acquired or agreed to be acquired from the same acquired person within 180 days. As with other HSR thresholds, the size-of-transaction threshold is adjusted annually, typically in February, to reflect changes in the US gross national product.
The Russian merger control regime is based on both turnover and asset value thresholds, while market shares or the fact of overlapping businesses are not considered. For the purpose of this overview, below are stated the thresholds for acquisition deals, which constitute the majority of deals actually cleared by the FAS.
The thresholds for acquisition deals are considered to be met if:
- the global turnover of the acquirer and its group and the seller and its group for the calendar year preceding the transaction calculated together or separately exceeds RUB 10 bn; or
- the total value of the assets of the acquirer and its group and the seller and its group taken together or separately for the calendar year preceding the transaction exceed RUB 7 bn; and
- the total assets of the target and its group exceed RUB 0.4 bn.
Please note that, if the seller loses its control over the target as a result of the transaction (e.g., sells a 100% share), its own assets/turnover and those of its group are not considered when checking if the RUB 0.4 bn. threshold has been met.
There is only one case when the thresholds can be satisfied by one party only. As clear from the above, the Seller’s group turnover/assets and the target’s assets may alone satisfy the thresholds mentioned.
The turnover/asset thresholds in Russia are rarely updated and refer to all revenues worldwide, not to the relevant product market. Consequently, neither the physical location of the assets nor the place of their registration is relevant for calculating the abovementioned thresholds.
Even so, this should be taken into account when analysing whether the transaction itself is covered by the merger control regime. In particular acquisition of a foreign company could fall within merger control regime if such company supplied to Russia in the last year goods and services worth more than RUB 1 bn. Therefore such criteria could be viewed as an additional threshold applied to concrete transaction.
Please note that the jurisdictional thresholds are somewhat different with regard to financial organisations (banks, stockbrokers, insurance companies, micro financial institutions, etc.). In this case, only the target’s assets are considered, while the threshold for the target’s assets varies depending on the type of business it runs.
For calculating the thresholds, the parties should always use the most recent annual financial statements.
A merger that satisfies the control test described in paragraph 3.1 above can be reviewed by the CMA (and thus may be notified) if it: (i) is not notifiable under the EU Merger Regulation; and (ii) meets either of the following jurisdictional thresholds:
- The target's UK turnover exceeds GBP 70 million (approximately EUR 93.6 million). This is known as the 'turnover test'. In principle, this test can be met even if the purchaser has no sales or presence in the UK (although it is highly unlikely that the CMA would seek to investigate a transaction in those circumstances).
- The businesses which cease to be distinct will together supply or acquire at least 25% of a particular category or type of goods or services of any kind in the UK, or in a substantial part of the UK. This test is known as the 'share of supply' test. To qualify, the merger must result in an increment to the share of supply or consumption and the resulting share must be at least 25%. In practice, therefore, the share of supply test can only be met where the enterprises concerned both supply or acquire goods or services of a similar kind in the UK (i.e. a horizontal merger). The CMA has a broad discretion as to the category of goods or services that it uses as the frame of reference for assessing whether the share of supply test is met, and that category may be wider than the relevant economic product market to which the goods or services belong.
A party's turnover and/or share of supply should be taken as including the turnover or share of supply of entire group of companies to which it belongs. However, the turnover or share of supply of the seller (and any of the seller's group companies) is not taken into account when determining the turnover or share of supply of the target. In addition, the group of entities that is to be taken into account for the purposes of calculating turnover under the EA is slightly wider in scope than that which is taken into account for the purposes of the EU Merger Regulation. In particular, the following entities may be included in the turnover calculation:
- Entities or persons that are 'associated' with the target, for example because they are family relations, or because they carry on business 'in partnership' with the target.
- Where the target has material influence or control over the policy of an enterprise, but does not have a legally controlling interest (as defined in paragraph 3.1 above), the CMA can include its turnover with that of the target for the purpose of assessing whether it has jurisdiction, although it is not required to. The same applies with respect to enterprises that have a material influence or control of the target's policy, but do not have a legal controlling interest.
The CMA's jurisdiction to review a completed merger also has a temporal element. The CMA can open a second-phase investigation at any time up to four months from the date of completion of the transaction, or from the date on which facts about the transaction became public (e.g. when it is announced, or when it receives significant press coverage in the national or trade press), whichever is the later.
Different jurisdictional thresholds apply to qualifying transactions involving:
- government defence contractors; and
- newspaper publishers or broadcasters, where one of the parties to the transaction supplies or provides at least 25% of the newspapers of a particular type, or 25% of the broadcasting of any description (as the case may be), in the UK or a substantial part of the UK.
These transactions can be subject to an investigation by the CMA at the request of a government minister – the Secretary of State for Business, Energy and Industrial Strategy – even if they fall below the turnover and market share thresholds that apply to all other transactions. The investigation will be into public interest consideration specified by the Secretary of State (see paragraph 4.3 below), with whom the final decision on those considerations rests. If the 'normal' jurisdictional thresholds are met, the CMA may also investigate and decide upon the competitive effects of the transaction.
A concentration must be notified if two thresholds are both satisfied: (a) the aggregate turnover in Belgium of all parties exceeds €100 million; and (b) at least two of the parties each have a turnover in Belgium above €40 million. The thresholds cannot be satisfied by one party alone, and only Belgian turnover (see below) is relevant.
The thresholds are based on the consolidated turnover of a party’s entire group, i.e., the turnover of all undertakings that control the party concerned, all undertakings under common control with that party, and all undertakings that are controlled by that party. If the acquisition involves only parts of an undertaking, or its assets, only the turnover that is derived from the parts of the undertaking that are the subject of the transaction are taken into account. The turnover of the seller is not taken into account when applying the thresholds.
Turnover is defined as the revenue generated from the sale of goods and supply of services in Belgium as part of normal business activities, after deducting discounts and VAT or any other turnover-related taxes, in the last completed financial year. Intra-group (non-third party) sales are not included.
There are specific rules for calculating the turnover of credit and financial institutions, and insurers. The relevant turnover of a credit or financial institution is the total income of the Belgian branch (or branches), after VAT and other directly related taxes. The total income comprises interest and similar income; income from securities; commissions received; net profit on financial operations; and other operating income.
The turnover of insurance companies is based on the value of gross premiums paid by Belgian residents. This includes all amounts received and receivable in respect of insurance contracts issued by or on behalf of the insurer, including premiums assigned to re-insurance companies, after all taxes on the value of individual premiums or on the total value of premiums.
The Belgian Competition Authority is entitled to review the jurisdictional thresholds every three years. The current thresholds were last reviewed on 3 April 2013.
There is no market share threshold in Austria.
The relevant turnover thresholds are both global and national in scope and they apply uniformly. There is no distinction between different sectors or industries save for a special rule when it comes to media concentrations.
A concentration has, in principle, to be filed for clearance with the BWB, if the undertakings involved achieved all of the following in the last business year:
- a combined aggregate worldwide turnover of more than EUR 300 million; and
- a combined aggregate turnover in Austrian of more than EUR 30 million; and
- at least two of the undertakings involved had a worldwide turnover of more than EUR 5 million each.
A concentration is exempted from the notification obligation if the two following conditions are met:
- only one of the undertakings involved achieved a turnover of more than EUR 5 million in Austria;
- the combined aggregate worldwide turnover of the other undertakings involved was not more than EUR 30 million.
A special rule applies with regard to media concentrations. In case of a media concentration, the turnover of the media companies and media services (Mediendienste) is multiplied by 200 and the turnover of companies providing auxiliary services for media companies (Medienhilfsunternehmen) is to be multiplied by 20. However, these multiplyers are not applied with regard to the two EUR 5 million thresholds mentioned above.
The thresholds refer to net turnover. All undertakings which are linked to each other in a way that would constitute a concentration if newly established are deemed as one single undertaking and, therefore, the turnover of the entire group(s) has to be taken into account. There is a limit in case of indirect shareholdings (participation via stages) according to jurisprudence: The turnover is only to be considered if on each stage subsequent to an indirect participation a controlling influence exists.
Turnover within the meaning of Austrian merger control is, as under the EUMR, generally understood as turnover resulting from the ordinary activities of all undertakings involved during the last completed business year. In the banking sector, turnover refers to interest and similar income, income from shares and other equity interests, income from non-fixed income securities, commission revenues, net earnings from financial transactions and other operating revenues. In the case of insurance companies, the premium incomes have to be used.
The seller group is, in general, not regarded as an undertaking involved. The turnover of the seller must only be included if the seller also post transaction will be connected (typically) to the target company in a way as described above.
The Competition Act establishes three categories of mergers which are determined with reference to the total South African turnover or assets (whichever is the higher) of the acquiring firm and target firms. The financial position of the seller is not relevant.
The thresholds are determined with reference to:
- the combined asset value or annual turnover of the target and acquiring firms, and, separately;
- the asset value or annual turnover (whichever is higher) of the target firm.
Accordingly, it is possible for the thresholds to be met with reference only to the turnover or assets of the target firm (if high enough to meet the combined threshold) but a merger that does not meet the required target firm threshold is not subject to compulsory notification, even if the combined threshold is met.
A small merger occurs where the combined assets or annual turnover of the acquiring firm and the target firm are below R560 million or the target firm's assets or annual turnover are below R80 million.
An intermediate merger occurs where the combined assets or annual turnover of the acquiring firm and the target firm equal or exceed R560 million and the target firm's assets or annual turnover equal or exceed R80 million.
A large merger occurs where the combined assets or annual turnover of the acquiring firm and the target firm equal or exceed R6,600 million and the target firm's assets or annual turnover equal or exceed R190 million.
For purposes of calculating the thresholds, the entire acquiring group is taken into account. In relation to the target the firm over which control is transferred, that firm, together with all firms controlled by such transferred firm (i.e., the target group), is taken into account.
Worth noting is that turnover is with reference to turnover in, into or from South Africa. Accordingly, a physical presence (such as local subsidiary or sales office) is not required.
Three alternative turnover-based thresholds exist in France:
- There is a general threshold under which notification is required if (a) the parties’ combined worldwide pre-tax revenues exceeded €150 million in the previous financial year; (b) at least two of the parties each achieved pre-tax revenues of €50 million in France; and (c) the concentration does not have an EU dimension (Article L.430-2 I of the FCC);
- There is a specific threshold as regards the retail trade industry under which notification is required if (a) the parties’ combined worldwide pre-tax revenues exceeded €75 million in the previous financial year; (b) at least two of the parties each achieved pre-tax revenues of €15 million in France in the retail trade industry; and (c) the concentration does not have an EU dimension (Article L.430-2 II of the FCC);
- Finally, there is a specific threshold concerning the French overseas territories under which notification is required if at least one party to the transaction has activities in one or more French overseas departments (Guadeloupe and La Réunion), the Mayotte department or in the French overseas communities of Saint-Pierre-et-Miquelon, Saint-Martin and Saint-Barthélemy and (a) the parties’ combined worldwide pre-tax revenues exceeded €75 million; (b) at least two of the parties each achieved pre-tax revenue of €15 million (or €5 million if in the retail trade industry) in at least one French overseas department or overseas community (Saint-Pierre-et-Miquelon, Wallis and Futuna islands, French Polynesia, Saint-Barthélémy, and Saint-Martin); and (c) the concentration does not have an EU dimension (Article L.430-2 III of the FCC).
For the purpose of the above-mentioned thresholds, the turnover of an undertaking is assessed at the group level and the seller is not taken into account.
For the purpose of the specific thresholds in the retail trade sector, retail trade is defined as the sale of goods to consumers for domestic use. This includes the sale of second-hand objects and certain small-scale services (e.g., shoe repair, photography). However, services of an immaterial or intellectual nature (e.g., banks, insurance) as well as companies that carry out the entirety of their sales online are excluded (para. 75 of the Merger Control Guidelines).
Applicable statutory thresholds are provided in the FECL, which contemplates three specific scenarios as follows:
- Those transactions involving an act or a series of acts, regardless of the place of execution, amounting in Mexico the equivalent of 18 million times the Units of Measure or more (equivalent to approx. MEX $1.3 billion pesos / US $60 million dollars);
- Transactions involving an act or a series of acts with an accumulation of at least 35 per cent of the assets or capital stock of an economic agent, whose assets in Mexico or annual sales originated in Mexico involve more than the equivalent to 18 million times the Units of Measure (equivalent to approx. MEX $1.3 billion pesos / US $60 million dollars); or
- Transactions involving an act or series of acts with an accumulation in Mexico of assets or capital stock higher than 8.4 million times the Units of Measure (equivalent to approx. MEX $600 million pesos / US $29 million dollars), and the transaction involves the participation of two or more economic agents with assets in Mexico or annual sales originated in Mexico, jointly or separately, of 48 million times the Units of Measure (equivalent to approx. MEX $3.6 billion pesos / US $168 million dollars).
The first two thresholds are referred to the target’s assets located in Mexico, where target’s companies with direct operation in Mexico (mainly Mexican subsidiaries or branches) or target’s sales originated in Mexico. The third threshold considers a combination of sales or assets of the parties in Mexico, and an additional accumulation of assets or capital stock in Mexico of the target company only.
In addition, there are no filing obligations if the target or seller company has no presence (assets or sales or both) in (or into) Mexico. However, there is no de minimis doctrine, so in case that any of the thresholds are met, then the transaction must be filed, even if one of the parties has insignificant presence or sales in (or into) the country. Likewise, one or both parties will be taken into account and thresholds can be satisfied by one or both parties.
Finally, considering the wide range of volatility that the Mexican peso has affronted over the last couple of months, statutory thresholds for transactions agreed on foreign currencies have vary daily.
The German merger control provisions apply only to the extent that the parties to the concentration exceed certain turnover thresholds, namely:
- the combined aggregate worldwide turnover of all the companies involved is more than EUR 500 million;
- the German turnover of at least one company involved is more than EUR 25 million; and
- the German turnover of a least one other company involved exceeds EUR 5 million.
However, the merger will not be subject to the ARC, even if the above-mentioned turnover figures are met in the following situation:
- a company that had a worldwide turnover of less than EUR 10 million in the past business year and which is not controlled by a third company (or where the whole group had a worldwide turnover of less than EUR 10 million in the past business year) merges with another company.
Previously, transactions involving minor markets which existed for at least the last five years and the total German market volume of which did not exceed EUR 15 million in the preceding calendar year were also exempted from the notification requirement. The 8th amendment of the ARC has made such transactions involving de minimis markets still subject to the notification requirement, but they cannot be prohibited if only minor markets are at issue.
For purposes of the turnover thresholds, ‘companies involved’ are the buyer and the target, excluding selling entities.
The relevant turnover has to be calculated on the basis of the companies’ turnover during their preceding financial year, while also taking into account the revenues of affiliated upstream or downstream companies. Revenues from the supply of goods and services between affiliated companies (intra-group revenues) as well as excise taxes are not taken into consideration. Special turnover calculation rules are set up for companies trading in goods, companies in the print media sector, some financial institutions and building companies.
In calculating the turnover, turnover of activities that were acquired or divested after the last fiscal year must be added or subtracted.
Transactions shall be notified to the ICA when both the following thresholds (as of 14 March 2016) are met (provided that the transaction does not have a Community dimension under the EU merger control rules set out in Regulation (EC) No. 139/2004 on the control of concentrations between undertakings):
- the combined turnover of the parties in Italy exceeds €495 million; and
- the target’s turnover in Italy exceeds €50 million.
The above turnover thresholds are adjusted annually to take into account increases in the GDP deflator index.
From 1 January 2013, the turnover thresholds have become cumulative and no longer alternative (Law Decree no. 1 of 24 January 2012, converted with amendments with Law no. 27 of March 2012).
The merger control prohibition outlined above applies to any acquisition where the acquirer is incorporated, carries on business or is ordinarily resident, in Australia.
Merger notification turns on a substantive assessment of whether the proposed transaction gives rise to potential competition concerns.
To assist merger parties, the ACCC uses the Notification Threshold as an indicator of transactions that the ACCC might wish to examine (see section 1).
In all cases, the “size of parties” threshold must be exceeded to trigger a mandatory notification. The “size of parties” test is met if the parties, together with their respective affiliates, have aggregate assets in Canada, or aggregate annual gross revenues from sales in, from, or into Canada, in excess of CAD $400 million. This means that the seller’s turnover and assets, as well as both parties’ exports, are included for the purpose of calculating whether the parties exceed this threshold.
If the “size of parties” threshold is exceeded, the transaction will be subject to the pre-merger notification provisions if the following thresholds are exceeded, which vary depending on the type of transaction as follows (financial thresholds subject to annual adjustment for inflation):
Acquisition of Assets.
- “Size of transaction” threshold is satisfied if the aggregate value of the assets in Canada to be acquired, or the aggregate annual gross revenue from sales in or from Canada generated from those assets, is greater than CAD $87 million (for 2016).
Acquisition of Shares.
- “Size of transaction” threshold is satisfied if the aggregate value of the assets in Canada, or the aggregate annual gross revenue from sales in or from Canada generated from Canadian assets, of the target operating business and its subsidiaries, is greater than CAD $87 million (for 2016); AND
- “Size of equity” threshold described above is met.
- “Size of transaction” threshold is satisfied if the aggregate value of the assets in Canada that will be owned by the continuing corporation and any corporations that it controls, or the aggregate annual gross revenue from sales in or from Canada generated from those assets, is greater than CAD $87 million (for 2016); AND
- Each of at least two of the corporations that are parties to the transaction, along with their affiliates, must have assets in Canada that exceed an aggregate value of, or aggregate annual gross revenues from sales in, from, or into Canada that exceed CAD $87 million (for 2016).
A Combination or Acquisition of an Interest in a Combination.
- “Size of transaction” threshold is satisfied if the aggregate value of the assets in Canada that are the subject matter of the combination, or the aggregate annual gross revenue from sales in or from Canada generated from those assets, is greater than CAD $87 million (for 2016).
All of the notification thresholds are national in scope. They refer to all revenues / assets as opposed to only those related to the relevant product market and are assessed at the group level to include the parties and their affiliates.
While the “size of parties” threshold takes into account both the purchaser and the target, in every case apart from amalgamations, the applicable thresholds can be satisfied by the target party only. As mentioned above, the ‘size of transaction’ threshold is updated annually to account for inflation and the changes are posted in the Canada Gazette. The thresholds do not vary based on industry or sector and are the same across the country.
To be captured by Canada’s merger control regime a transaction must have some form of local presence or connection to Canada. Hence, the merger control regime only applies to “operating businesses” which are defined in the Act as “a business undertaking in Canada to which employees employed in connection with the undertaking ordinarily report for work”.
A concentration of undertakings is deemed to be of major importance and therefore meet the jurisdictional thresholds where:
- the aggregate turnover achieved by at least two of the undertakings concerned exceeds, in relation to each one of them, €3.5 million;
at least two of the undertakings concerned achieve a turnover in Cyprus; and
at least €3.5 million of the aggregate turnover of all undertakings concerned is achieved in Cyprus.
In cases of acquisition of sole control, the turnovers of the acquiring undertaking and the target are respectively taken into account in determining whether the jurisdictional thresholds are met. The turnover of undertakings acquiring joint control over a target undertaking (together with the target) are taken into account in respective cases.
One party could satisfy the thresholds by itself, provided that at least two of the undertakings concerned achieve a turnover in Cyprus.
Turnovers comprise the amounts derived from the sale of products and the provision of services by the undertakings concerned during the preceding financial year and corresponding to the ordinary activities of the undertakings, after deduction of sales rebates, of value added tax and other taxes directly related to turnover.
Turnovers are calculated for groups of undertakings and are derived from the last audited financial statements of each of the undertakings concerned (or consolidated financial statements at a group level).
In calculating turnover in relation to banks and insurance companies, the following calculation methodology shall respectively apply:
- for a bank or other credit institution, the one tenth of the balance sheet of the last financial year
for an insurance company the value of the gross premiums during the last financial year which shall comprise all amounts received or receivable in respect of insurance contracts concluded by it or on its behalf, including outgoing reinsurance premiums and after deduction of taxes and parafiscal contributions or levies charged by reference to the amounts of individual premiums or the total volume of premiums.