What is the earliest time or stage in the transaction at which a notification can be made?
In principle, a notification can be made no earlier than the signing of a binding transaction agreement, and a formally signed transaction agreement shall be submitted to MOFCOM together with the notification form. The reason is that MOFCOM does not want to spend administrative resources unless there is certainty for the transaction that it reviews.
However, under some special circumstances, such as for public takeovers, a merger filing can be made prior to the execution of a binding transaction agreement. To make an early filing, the notifying party shall provide strong evidence to prove that an executed binding agreement is not available due to special transactional arrangements, mandatory requirements or any other legitimate reasons. In this situation, alternative materials such as relevant memorandums, draft agreements or tender offers shall be submitted together with the key terms of the transaction instead, and an executed binding agreement shall be submitted to MOFCOM when it becomes available.
In principle, the earliest time for notification is at the time when the parties have signed the merger agreement.
However, the parties are encouraged to contact the DCCA prior to submitting the notification (pre-notification). During the pre-notification phase, the DCCA may give its preliminary view on the merger and express potential concerns, thereby enabling the parties to address such concerns in advance. Pre-notification discussions may also reduce the number of questions asked by the DCCA after filing, thus increasing the likelihood of approval in Phase I.
In practice, the pre-notification phase will last at least two to three weeks in simple cases, and four weeks or more in more complex cases. Recently, we have seen cases where the pre-notification phase has lasted up to six months and where Phase I thus did not commence until the DCCA had no more questions and most of the case analysis had already been carried out. Consequently, in some cases the pre-notification phase essentially corresponds to a Phase I and a Phase II review.
A notification to the CCPC may be made after any of the following events occurs:
- One of the undertakings involved has publicly announced an intention to make a public bid or a public bid has been made but not yet accepted.
- In relation to a scheme of arrangement, the scheme document is posted to shareholders.
- The undertakings involved demonstrate to the CCPC a good faith intention to conclude an agreement, or a merger or acquisition is agreed. It is not necessary for a binding transaction agreement to be signed to demonstrate this, but typically the CCPC will look for at least a heads of terms or term sheet that is in agreed form as between the parties. This early notification trigger was introduced as part of the 2014 reforms of the merger control regime, and follows closely the approach taken by the European Commission under the EU Merger Regulation.
Filing can be made, at earliest, when the transaction has taken a concrete form in a merger agreement. The Israeli Antitrust Authority is normally reluctant to review mergers based on a memorandum of understanding and will only do so under rare circumstances based on a specific request from the parties. In such case, according to the Guidelines, the Israeli Antitrust Authority will start the review itself, but the 30 days allotted to the Commissioner to complete the review will not start until the full merger agreement, including annexes, is presented to the Israeli Antitrust Authority. For publically traded companies, the Israeli Antitrust Authority will be willing to review a takeover proposal without an agreement, if an agreement does not exist.
No statutory time limitation as to an early filing exists. However, a notification must be filed with a document that can prove that the parties’ actual intention to complete the transaction. Such document does not need to be a copy of the signed binding agreement, but the parties have to prove their sincere intention to complete the transaction by a document such as a statement signed by the representatives of the parties.
The notification can be made immediately upon the occurrence of any of the events outlined in above. Moreover, the OFC encourages pre-notification meetings to ensure a smooth transaction process.
The Turkish merger control rules do not provide a pre-notification mechanism (i.e. submission of a draft notification form). Also in practice, a filing is seen as a one-sided review by the Authority, once a formal one-shot notification is made. The Authority may of course issue various information requests, but it will only do so after the notification is made.
It is possible to notify a transaction on the basis of a close-to-final draft version of the transaction agreement instead of a signed agreement. It is also possible to submit the notification form under the MoU, letter of intent, term sheet, etc.
A merger control notification may be filed with the AMC at the stage when the parties agree key commercial terms of the transaction (structure of the transaction, purchase price and the number of shares to be purchased reflecting on votes, etc.), which must be reflected in the draft of the binding transaction document.
The US antitrust enforcement agencies will not review hypothetical transactions. The parties must have signed some form of an agreement prior to submitting their HSR filings. The signed agreement need not be the definitive agreement; a signed letter of intent will suffice. Each party must also include a sworn affidavit (or declaration under penalty of perjury) affirming that the party has the good-faith intent to complete the transaction that is the subject of the notification.
The parties may submit the filing once they agree on the material terms of the deal.
If the transaction documents are not signed at the time of filing, the parties could provide the authority with the current drafts of the relevant documents containing the material terms of the deal (draft of the SPA or master agreement will suffice for filing purposes).
Please note, however, that since a clearance decision is valid for one year from issue, we do not recommend filing earlier than 3 months prior to completion. So the optimum period for filing is 3 month prior to completion.
Transactions may be notified even if the parties have not yet signed a sale and purchase agreement. The CMA will generally expect the parties to be able to demonstrate a good faith intention to proceed with the transaction, by reference to, for example, adequate financing, heads of agreement or similar, or evidence of board-level consideration.
In addition, it is advisable to engage in a pre-notification dialogue with the CMA, because:
- The CMA's filing form (the 'merger notice') requires very extensive information (considerably more than the equivalent filing form of the European Commission, for example). For most transactions, at least some of this information will be irrelevant or unnecessary for the CMA's review. Notifying parties can therefore use pre-notification discussions with the CMA to confirm which information can be safely omitted.
- In complex cases, such pre-notification contacts can serve to inform the CMA case team about the relevant markets and to establish the appropriate frame of reference for the CMA's review. In some cases, lengthy pre-notification discussions may reduce the likelihood of a detailed second-phase investigation.
The CMA's guidance states that, in general, pre-notification contacts should commence at least two weeks before the parties' intended date of notification. In many cases, a significantly longer period will be appropriate.
As notification results in a public announcement by the CMA (see paragraph 6.5), it is not, in practice, possible to notify a confidential transaction that has not been announced. For transactions that are not yet in the public domain, the parties can consider approaching the CMA for 'informal', non-binding advice on the likelihood that a second-phase investigation would be opened. Such advice is only available if certain criteria are met.
Parties may notify a concentration after signing the relevant purchase agreement or after publication of the take-over bid or public offer of exchange. A notification may be filed on the basis of a draft agreement, provided that the parties state explicitly that they intend to conclude a final agreement that will not substantially differ from the draft on issues pertaining to competition law.
The Belgian Competition Authority encourages parties to engage in pre-notification contacts in order to discuss an intended concentration informally and in confidence before formal notification. Such contacts may take place on the basis of a draft agreement.
As mentioned, there is no explicit provision which governs the point(s) in time for an application for clearance. As regards the earliest date practicable, Austrian jurisprudence confirmed the established practice that a concentration can be notified as soon as the (serious) intention to merge within a foreseeable period of the actors involved is recognizable. An LoI will often be sufficient basis to notify a concentration.
Parties are entitled to file based on an intention to merge. Parties do not need to wait for signature of a binding transaction agreement. If any documents evidencing such an intention exist (such as offer letters) they must be submitted as part of the merger filing obligations.
Under Article L.430-3 of the FCC, parties may notify at any time as long as their project is sufficiently well advanced, notably after the publication of the public bid or once they have signed a letter of intent.
As mentioned, filing must be made prior to closing or prior to acquiring control (including de facto control). Regarding mergers, according to the FLEC, the filing must be made prior to executing the merger agreement. In practice, the enforcer has raised no concerns on filings made after the merger agreement is executed, provided closing is subject to clearance as statutory provisions contemplate such possibility. In addition when there is a succession of acts, the filing must be made prior to perfecting the last act triggering the threshold.
Filings do not require execution of a binding transaction agreement and can be made once the transaction has become sufficiently concrete and is no longer merely hypothetical (typically at MOU or LOI stage). In principle, no transaction documents have to be provided in conjunction with the notification of a transaction to the FCO. It is also not required under German merger control practice to have pre-filing consultations with the FCO staff. Only in truly complex matters is it worth considering whether to approach the FCO prior to submission of a formal notification.
Companies can submit the filing to the ICA once they agreed on the main terms and conditions of the transaction. As an established practice, parties may submit the notification to the ICA before the signing of an agreement only if they are able to provide sufficient elements in order to show to the ICA that the main terms and conditions of the transaction will not be subject to further changes (e.g., a signed letter of intent).
Filing or seeking a pre-assessment can be made at any time. The ACCC may be notified before a transaction has been signed, provided there is a real prospect of a transaction occurring. It will not review ‘speculative’ transactions.
Filings can be submitted as early as desired, so long as the transaction negotiations are advanced enough that the required information can be provided to allow the Bureau to review the transaction. It is not uncommon for parties to notify the Bureau on the basis of a signed letter of intent (LOI) or a term sheet, particularly in transactions that clearly do not raise material competition issues (e.g., where there is no horizontal overlap between the purchaser and the target) where the parties are looking to close as soon as possible after signing the transaction agreement.
Parties should be aware that notification may trigger market outreach by the Bureau, which may have the effect of disclosing to industry stakeholders a transaction that has not yet been announced publicly. As noted below, in such circumstances parties can ask the Bureau to delay making its market contacts until after the transaction has been announced or disclosed.