What is the earliest time or stage in the transaction at which a notification can be made?
Merger Control (4th edition)
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 (Letter of Intent) will often be sufficient basis to notify a concentration.
The notification can be made immediately after the signing of the concentration agreement, such as the shares or assets purchase agreement or joint venture agreement, which requires that the preparation of the notification documents should be started earlier.
The notification can be made before the signing of the concentration agreement if the business operators can demonstrate with sufficient evidence that they are not able to provide the signed concentration agreement when making the notification due to the reasons that there are special business arrangements, compulsory requirements under other laws, regulations or policies, mandatory requirements of other jurisdictions or other reasonable reasons, or that they will not be able to abide by the relevant statutory review period if making the notification after the signing of the concentration agreement. In such a case, the notifying parties shall, when making the notification, provide relevant materials such as the memorandum or framework agreement of the transaction and the draft concentration agreement, with the main terms and conditions of the transaction. And the notifying parties shall provide to SAMR the concentration agreement after the signing of the same without delay.
While the Law provides that notifications take place following conclusion of the relevant agreement, publication of public offer or acquisition of control, as the case may be, the earliest 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.
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 submit-ting the notification (pre-notification). During the pre-notification phase, the DCCA may give its preliminary view on the merger and express poten-tial 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 car-ried out. Consequently, in some cases the pre-notification phase essentially corresponds to a Phase I and a Phase II review.
(a) In the case of a merger between companies or economic operators, since the general meeting of the shareholders or members of at least one of the venturers, or the competent body in accordance with the relevant statute, have agreed to put the merger into effect.
(b) In the case of the transfer of a trader's entire bill of exchange, from the moment the economic operators involved agree to carry out the transaction and determine the form, period and conditions under which it is to be carried out. When the venturers are companies, the agreement shall be deemed to exist when it has been adopted by the general meeting of shareholders or members, or the competent body, in accordance with the relevant statute.
(c) In case of the acquisition, directly or indirectly, of ownership or any right over shares or holdings in capital or debt securities giving any type of right to be converted into shares or holdings in capital or to have any type of influence over the decisions of the person issuing them, when such acquisition grants the acquirer control of, or substantial influence over the person issuing them, there is a concentration agreement from the moment the participants consent to carry out the operation giving rise to the concentration, and determine the form, term and conditions under which it is to be carried out, and determine the form, term and conditions under which it is to be carried out. When the venturers are companies, the agreement shall be deemed to exist when it has been adopted by the general meeting of shareholders or the competent body in accordance with the relevant statute.
(d) In case of joint administration, there is a concentration agreement as soon as the directors have been appointed by the general meeting of shareholders or partners, or the competent body in accordance with the relevant statute.
(e) In the case of any other agreement or act that effectively or legally transfers the assets of an economic operator to a person or economic group or grants it control or determining influence in the adoption of decisions of ordinary or extraordinary administration of an economic operator, there is a concentration agreement from the moment where the participants consent to carry out the operation that gives rise to the concentration, and determine the form, terms and conditions in which it is to be executed. When the participants are companies, the resolution shall be deemed to exist when it has been adopted by the general meeting of shareholders or associates, or the competent body, of conformity with the corresponding statute.
Concentrations should typically be notified to the Commission following the conclusion of the agreement, the announcement of the public bid, or the acquisition of a controlling interest.
However, notifications may also be made earlier where the companies demonstrate a good faith intention to conclude an agreement. Typically, the Commission would accept notifications on the basis of an agreed term sheet or similar document showing advanced negotiations. A public bid can be notified once an intention to make a bid has been publicly announced.
Pursuant to Article L.430-3 of the Code, the formal notification may be made at any time once the parties can evidence a sufficiently mature project.
The parties generally proceed to the formal filing after transactional agreements (e.g. share purchase agreement) are signed but they may file the notification even before, as long as they are able to evidence that the transaction is at a sufficiently advanced stage, for instance on the basis of an executed letter of intent, term sheet or put option.
There is no limitation by law to early filings as long as the parties are seriously interested in the transaction. 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.
A notification can be made to the CCI upon execution of binding transaction documents in case of any acquisition or board resolutions approving the merger, in case of a merger or amalgamation.
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 a preliminary document such as 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 EUMR.
Filing can be made, at earliest, when the transaction has taken a concrete form in a merger agreement. The Israeli Competition Authority is normally reluctant to review mergers based on a memorandum of understanding and will only do so in exceptional circumstances based on a specific request from the parties. In these cases, according to the Guidelines, the Israeli Competition 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 Competition Authority. For publicly-traded companies, the Israeli Competition Authority will be willing to review a takeover proposal without an agreement, if an agreement does not exist.
Formal Notification. In the case of a post-merger notification, the earliest time at which a notification can be made is the closing date. In the case of a pre-merger notification, the notification can be filed after the execution of the transaction agreement.
Voluntary Preliminary Notification. A voluntary preliminary notification can be filed even before the aforementioned earliest time in which a formal notification can be made if the parties can demonstrate to the KFTC their intention to enter into an agreement—e.g., based on a MOU, a letter of intent or a draft of the transaction agreement. A voluntary preliminary notification is a request to the KFTC to conduct a preliminary review of the proposed transaction in advance.
After submission of the filing to the KFTC, the KFTC must issue its decision on whether to grant clearance within 30 days. However, the 30-day period may be shortened or extended by up to 90 days at the discretion of the KFTC.
The notifying party still needs to file a formal notification with the KFTC upon the arrival of the mandatory reporting period, even if it undergoes a preliminary review. In other words, even if a voluntary preliminary notification was submitted to the KFTC and the KFTC issued a preliminary clearance upon execution of the MOU before execution of the transaction agreement, a formal filing must still be submitted after the parties enter into a definitive transaction agreement. In this case, if there are no substantial changes in the transaction after the preliminary clearance, quick clearance may be obtained with regards to the formal notification.
It is possible to file a concentration notice having an executed agreement (subject to conditions precedent) or a definitive draft of agreement. Also, letters of Intent, and memorandums of understanding are acceptable documents for filing the merger control notice. Nevertheless, the significant parts of the transaction cannot change once the clearance is granted.
The NCA has accepted filings on the basis of letter of intents in previous cases. The NCA will assess the likelihood of whether an agreement is binding. As the main rule, for the NCA to accept filing before the transaction agreement has been signed by the parties, all material aspects of the transaction must to a large extent be "final" (e.g. the scope of the acquisition). In practice, most transactions are filed between signing and closing.
Notification can be made at any time prior to the execution of a definitive agreement.
Notifications can be filed (voluntarily) 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 this requirement.
A notification must be made in time to ensure that the clearance decision is obtained be-fore the first notifiable stage of a transaction. There is no statutory limitation of the earliest time, although the clearance decision is valid for one year following the date of issue of the clearance decision. If the parties have not completed the transaction within one year, it is necessary to obtain another (new) approval.
Practically the possibility to notify early is also limited by the requirement to submit the relevant transaction agreement, e.g. share purchase agreement, underlying the filing requirement. The document can, however, be submitted in the form of a draft that has not been finalized yet, although the draft should contain the key structural elements of the transaction.
Notifications of concentrations may be made to SCA as soon as a party to the concentration can demonstrate the intention of implementing a concentration.
Notifications can thus be made as early as when there is a letter of intent. However, the details regarding the intended concentration must be concrete enough so that it can be used as a basis for review by the SCA. Pre-notification contact with the SCA is advantageous.
In general, the notification is made after the conclusion of the purchase agreement. However, it is also possible to notify the proposed concentration at an earlier stage, e.g. at the conclusion of a letter of intent or a memorandum of understanding. In this case, the notifying parties have to credibly demon-strate that the participating undertakings are willing to conclude the purchase agreement. Either way the notification has to contain all information and documents required by the MCO.
In the case of a public takeover offer, the notification must be submitted immediately after publication of the takeover offer.
Law N° 26876 and the Bill stablished that the notification must be made before it is executed, without indicating an earliest time or stage in the transaction. However, the transaction will not take effect if it has not been notified and approved.
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.
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.
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.
The notification can be made as soon as the parties have signed a concentration agreement.
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.
A notification can be filed once the parties have reached an agreement on the essential terms of the transaction. A letter of intent is typically sufficient to this effect, if the structure of the transaction is clearly defined.
In case of public takeover bids, merger control filing must occur simultaneously with the regulatory filing with the securities and exchange authority (CONSOB).
Pursuant to the Notification Form Guidelines, a notification may be submitted to the HCC prior to the conclusion of a binding agreement as long as the notifying parties can prove to the HCC their intention to enter into a definitive agreement or, in the event of a public offer, as long as such offer has been announced. The HCC assesses whether a preliminary agreement may be considered to trigger the notification obligation on a case-by-case basis.
With regard to mergers, the HCC accepts submission after the board resolution approving the draft merger deed, but does not provide clearance before the final decision on the merger by the General Shareholders’ Meeting (Eurobank Ergasias- Grivalia Properties HCC 685/2019).