What is the earliest time or stage in the transaction at which a notification can be made?
Merger Control (2nd Edition)
Notifications can be (voluntarily) filed from the time the notifying party(ies) is/are able to demonstrate a serious intention to conclude an agreement or, in the case of a public offer of acquisition or exchange, where the intention to make such an offer has been publicly announced, and if this agreement or the public offer at issue results in a concentration. This serious intention needs to be assessed in light of the particular circumstances of each case, but normally a letter of intent or a memorandum of understanding will be sufficient to satisfy such a requirement.
It must be noted that in some cases the HCC has resolved that execution of a binding MoU (Memorandum of Understanding) setting out all the “essentialia negotii” or of a LoI (Letter of Intent) may constitute the triggering event for the notification deadline. These precedents indicate that irrespective of a title of a document the HCC examines whether such document creates binding obligations to the signatory parties thus constituting a triggering event for the countdown of the statutory deadline to file a merger notification.
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 section 26), 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.
A notification can be filed once an agreement has been reached on the transaction’s essential terms and conditions. A letter of intent is typically sufficient to this effect, if the structure of the transaction is clearly defined.
Notably, in case of public takeover bids, merger control filing must occur simultaneously with the regulatory filing with the securities and exchange authority (CONSOB).
Parties may also start discussing the proposed concentration with the ICA before formal filing (so-called “pre-notification”). In particular, parties can send to the ICA a briefing memorandum or a draft notification and discuss, on a strictly confidential basis, the main terms of the concentration and its possible competitive impact.
The pre-notification aims at (i) speeding up the formal review process; and (ii) reducing the risk that further information be requested at a later stage of the proceeding (see question 18). The duration of the pre-notification varies between 15 calendar days and a few months, depending on the complexity of the case.
Parties may make their HSR filings at any time as long as they have an agreement in principle that is in writing, such as a signed term sheet or letter of intent, or if the buyer intends to make open market purchases. In a negotiated transaction each party’s notification must also include a sworn affidavit (or declaration under penalty of perjury) affirming, if applicable, that an agreement has been executed and the filing person has the good-faith intent to complete the transaction that is the subject of the notification.
There is no limitation by law to early filings as long as the parties are seriously interested in the transaction to be notified. However, it is necessary that the notification contains all the necessary data. Therefore, filing is possible prior to the signing of a transaction as long as the parties can provide sufficient comfort that they have interest in the transaction and the data required for the notification is available.
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.
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.
A "LoI" (Letter of Intent) will often be sufficient basis to notify a concentration.
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.
The FNE’s Guidelines on Jurisdiction states that the real and serious intention of the parties to materialize the operation is sufficient in order to file a notification. Such intention may be manifested in any form and may be reflected in various documents, such as a letter of intent, memorandum of understanding, draft of the document containing the transaction, or public announcements of the intention to carry out a public offer.
The earliest point in time at which a notification can take place is when the undertakings concerned are able to evidence to the CPC their bona fide intention to conclude an agreement (such as for example on the basis of a term sheet), or, in the case of a takeover offer, following a public announcement of an intention or final decision to make such offer.
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 practically all 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 can be made as soon as the undertakings concerned are able to demonstrate a good faith intention to conclude an agreement, for example on the basis of a letter of intent which is sufficiently concrete and binding or an advanced draft of the agreement. In case of a public bid, the parties can file the notification once they have publicly announced an intention to launch the bid.
Parties may formally file the transaction when their deal is sufficiently advanced. In practice, the notifying party generally formally files at signing.
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 applicable rules set no fixed earliest time or stage for submitting a notification. The parties may submit a notification before signing a binding agreement; however, the parties must be able to describe the contemplated concentration in requisite detail in the notification. Furthermore, a filing cannot be made so far in advance of the actual concentration that the relevant future market factors which will provide the basis for the competitive assessment are not clearly identifiable.
Please note that the NCA will issue a short brief announcement of all received notifications on its website shortly after reception. Accordingly, the parties must be prepared to go public with the transaction when notifying to the NCA.
The rule is that an economic concentration must be notified after the execution of the relevant agreement and prior to the implementation of the transaction resulting thereof.
However, the Competition Law no. 21/1996 stipulates that the notification may be filed even prior to the execution of a relevant agreement, provided that the concerned parties prove to the Competition Council their intention to execute a binding agreement which gives rise to a notifiable concentration. In this respect, the concerned parties must submit a pre-contract or any other preliminary arrangement which undoubtedly proves their intention to carry out the economic concentration.
KN: The filing is possible prior to signing of the binding transaction agreement, on the basis of a simple, non-binding document such as a letter of intent or a similar document such as memorandum of understanding which expresses serious intent of the parties to enter into a transaction.
The only formality of such a non-binding document is that the document has to be signed by both parties. In the subsequently signed binding agreement, however, the parties should not materially deviate from the transaction structure as submitted in the merger notification based on the non-binding document that was approved by the Commission.
The Competition Commission has thus far accepted such documents as valid acts of concentration. Also, if a filing is made based on such a document there is no 15-calendar day filing deadline, but the concentration is still subject to a stand-still obligation.
The usual practice is to notify the transaction once the relevant agreement has been signed. It is, however, possible to file on the basis of a draft transaction document, provided that the transaction structure and principal terms are reasonably clear and do not change significantly.
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.
There is no specific mention of an early stage for filing. If the transaction falls under the criteria posed in question 2, it is mandatory to file a notification before the merger takes place. However, it is important to note that CADE has already accepted and analyzed a transaction in which the parties decided to file a preventive notification, given that, in spite of the criteria in article 88 of the Brazilian Antitrust Law having not being met, still the market share of the merger company would justify such preventive measure.
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.