What procedure applies in the event that remedies are required in order to secure clearance?
Merger Control (4th edition)
Remedies can be offered both in Phase I and Phase II. They may be given by notifying parties’ offer or upon official parties’ request. The notifying parties may offer remedies in order to convince the official parties not to refer a case to Phase II or to withdraw their Phase II request(s). Another possibility is that the notifying parties negotiate commitments with the official parties and present them to the Cartel Court, which will then issue a decision including the commitments.
In Phase II, the notifying parties may also offer remedies directly to the Cartel Court. However, in practice, remedy negotiations with the BWB and the FCP are much more common.
In the last years, the number of cases, in which parties have entered into commitments in order to get clearance, has increased substantially.
There is no specific procedural regime for remedies discussions, nor are there any strict deadlines. However, if the parties consider offering remedies in Phase I, these should be offered relatively early in the proceedings, given the short time available (maximum of six weeks). In Phase II, more time is available for remedy discussions.
The following procedures apply:
- The parties participating in the concentration may propose restrictive conditions as remedies after they are informed by SAMR that the concentration will lead or will likely lead to elimination or restriction of competition. The parties may propose remedies before they are so informed by SAMR if they consider necessary.
- SAMR will engage in consultation with the parties on the restrictive conditions proposals, evaluate the effectiveness, feasibility and timeliness of the proposals, and inform the parties of the evaluation results. For the purpose of evaluating the proposed restrictive conditions, SAMR may solicit the opinions of relevant government agencies, industry associations, business operators and consumers.
- Upon receipt of the evaluation results, the parties may submit revised proposals to SAMR. The parties are permitted to revise their proposals for more than once, but a final proposal shall be submitted to SAMR 20 calendar days prior to the deadline of the further review.
- SAMR will publish its review decision as well as the final proposal it accepted on its official website (http://www.samr.gov.cn/fldj/tzgg/ftjpz/).
Before reaching its final decision and subject to the time limits provided by the Law, the CPC may, if it considers it expedient to do so, carry out negotiations, hearings or discussions with any of the interested parties or other persons.
In declaring a concentration compatible with the operation of competition in the market, the CPC may impose conditions or remedies in relation to the implementation of the transaction, thus having the ability to interfere with the essence of the transaction.
The CPC is required to provide written notification to the undertakings concerned of any remedies as part of its decision. Should the merger be cross-border the CPC may liaise with the relevant foreign authority in relation to applicable remedies. Furthermore, any remedies have to be limited to those that are reasonably necessary for the protection of the competitive market.
Appendix IV of the Law prescribes the form that undertakings concerned should submit in relation to remedies. The CPC accepts both structural and behavioural remedies. If, following its review of the additional information provided to it, the CPC’s doubts as to compatibility have not been removed, the Service will commence negotiations with the undertakings concentrations in respect of any modifications which may result in the removal of such doubts..
If the DCCA finds that a merger gives rise to concerns, the parties may propose remedies in order to obtain an approval. Remedies should preferably be offered as early as possible. Remedies offered late in Phase II will extend the time frame of Phase II in order to grant the DCCA at least 20 business days to assess the remedies. The offered remedies will usually be market tested.
The conditions are clearly described in detail in the SCPM resolution, subjecting approval of an economic concentration to comply with such conditions. The resolution grants the notifying economic operator a term of 90 days to sign and submit a commitment that must specifically describe how each condition will be met and executed, to the SCPM. During that term, the notifying party must compose the commitment and send it to the SCPM for its review. Approval by the SCPM must be given within a maximum term of 90 days from the date of issuance of the resolution. There must be a time period for implementing and complying with each condition.
Remedies can be proposed during the Phase I investigation to avoid a Phase II, or during the Phase II investigation to avoid a prohibition of the transaction.
Parties must submit their proposed remedies within 20 working days from the notification date in a Phase I proceeding, and within 65 working days after the opening of Phase II. The timeline for the review gets extended if the Parties offer remedies (after the 54th day in Phase II).
If the European Commission has concerns that a proposed transaction threatens to significantly impede effective competition, clearance will most likely be given only if the Parties divest a part of their business. The divested activities must consist of a viable business that can compete effectively with the merged entity on a lasting basis. Furthermore, the divested activities must be transferred to a suitable independent purchaser possessing the financial resources, proven relevant expertise, and the incentive and ability to maintain and develop the divested business.
The notifying party(ies) may submit remedies both during Phase I and Phase II of the merger control investigation (see question 19), which trigger specific extensions of the time limits governing the FCA's review allowing the latter to review and assess whether such remedies are appropriate and submit them to a market test as the case may be.
Pursuant to a Phase II investigation, if the notifying party(ies) does not propose remedies or such remedies are deemed insufficient, the FCA may impose in its clearance decision "injunctions" requiring the parties concerned to take all appropriate measures to maintain competition or guarantee adequate efficiencies (Article l.430-7 III of the Code). There are only a few cases where the FCA has ordered injunctions.
There is no strictly formalized procedure that must be followed in cases where remedies are necessary.
It should be noted that, in German merger control, the initiative for remedies lies with the parties, not the FCO. While there are no sharp lines in practice, commentators argue that the FCO should not suggest or demand a certain way in which undertakings might alter the structure of a transaction in order to receive clearance. It follows that the parties should suggest remedies as the FCO is under no obligation to do so but may just outright deny clearance. The FCO will, in practice, warn the filing party before a formal decision is made and point out its main concerns.
There is no specific “deadline” for proposals. In practice, the FCO may suggest in bilateral talks what kind of remedy might be sufficient for it to clear an envisioned transaction. If such indication is given, the parties should examine the reasons given carefully and may then propose a remedy. The FCO will then assess whether the remedy is sufficient to countervail or avoid the negative effects on competition. The assessment by the FCO is usually very thorough, as the FCO must clear a transaction without any additional leeway if the remedies are sufficient to resolve remaining competition concerns.
One important consequence of this procedure is that the FCO won’t give a conditional clearance where the parties did not seek one. Conditional clearance will only be given where the parties have suggested a remedy beforehand. Otherwise, the FCO will decide only between clearing a transaction and not clearing it.
As per the Combination Regulations, notifying parties could offer remedies up-front in Phase I before the CCI passes an order in Phase I. If the parties offer such remedies upfront, the CCI has an additional period of time, not exceeding 15 days, to evaluate the remedies and accept them. The 15-day period does not count toward the overall 210-day period.
If the parties choose not to offer remedies in Phase I, and the CCI decides to initiate a detailed Phase II investigation, the next opportunity to offer remedies will be at a later stage in Phase II itself. In this stage, the remedies are formally proposed “by” the CCI for acceptance by the parties (even if informally offered by the parties themselves). If the parties choose to accept the remedies, the merger is cleared at that stage. If not, the parties have another 30 working days to submit a counter-proposal. This 30-day period does not count toward the overall 210-day period. If the CCI accepts the revised proposal, then the decision is issued at that point, else the parties have another 30 working days (again, not counting toward the overall 210-day period) to accept the original remedies proposed by the CCI in the first instance.
The CCPC may enter into discussions with the undertakings involved in a transaction with a view to identifying measures which would ameliorate any effects of the merger or acquisition on competition. The CCPC is concerned with the competitive impact of the transaction in the State; to that extent, it will consider whether a remedy proposal made or agreed in another jurisdiction addresses the competition issues identified in Ireland.
Proposals can be submitted to the CCPC at any stage during Phase 1 or Phase 2, although the CCPC has made clear that early remedies discussions are desirable as the CCPC may have questions on the proposals and the proposal remedy may be market tested. Commitments at Phase 1 and Phase 2 must be proposed by the parties. If the remedy proposals are agreed between the parties and the CCPC, they will become binding on the parties as a commitment decision, which is published.
The Competition Act provides for the enforcement of obligations arising from commitments accepted by the CCPC. The High Court can grant an injunction to enforce compliance with the terms of commitments. Any person who contravenes such commitments is guilty of an offence and liable to fines and/or imprisonment.
There is no formal procedure or deadline for offering remedies. Under general principles of Israeli constitutional and administrative law, the Commissioner is required to choose the option that is least harmful to the parties' rights, in particular their property rights. If the Israeli Competition Authority believes that, at face value, a merger raises reasonable concern of significant harm to competition, it will approach the parties with proposed remedies or request the parties propose possible remedies. The Israeli Competition Authority may also impose remedies without the parties' consent. In its final decision, the Commissioner may consider remedies already agreed upon in other jurisdictions and apply them accordingly.
In cases where divestiture has been required, the Israeli Competition Authority has been known to require an up-front buyer in some instances, but settled for later sale in other cases. In some cases, when parties were allowed to carry out the divestiture after the merger, the parties were required to sign documents allowing the automatic transfer of the assets to a trustee who would perform the sale if divestiture of the assets was not carried out within the allocated timeframe. In past cases of divestiture, the Commissioner pre-approved the buyer.
In the case of a merger where the KFTC’s examiner determines remedies are necessary due to anticompetitive concerns, the KFTC’s examiner will submit an examiner’s report to the Commissioners and also send the report to the merging parties which contains the examiner’s findings of facts, determination of illegality, and comments regarding remedies. The merging parties may submit their responses to the examiner’s report. The KFTC will then hold a hearing to listen to the opinions of both sides (i.e., the KFTC examiner and the merging parties) and make a final decision. The KFTC will notify the merging parties of its final decision and the merging parties must implement the remedies as prescribed in the final decision.
If the agency considers the concentration has potential risks to competition in the relevant market, it will inform the involved parties before the resolution takes place, so they can provide additional documents or information to support the transaction and avoid it being rejected or conditioned. Also, during the process, the participants can voluntarily file as much information as they consider necessary to support the operation. The agency’s resolution can resolve to reject, impose remedies, or clear the transaction.
The Competition Act provides that the NCA does not have powers to suggest or impose remedial actions. Accordingly, the merger control procedure underlines that it is for the parties to propose remedies in the form of binding commitments as early as possible during the notification procedure. The NCA can either accept or refuse the commitments offered by the parties. They cannot issue a conditional clearance which includes commitments that go beyond what the parties have offered. Thus, insofar as the NCA does not find that the proposed commitments are sufficient, new commitments must be offered by the parties.
The underlying principle is that the NCA must clear a transaction as soon as possible on the commitments suggested by the parties, or present a formal notice of intervention. If none of the commitments offered are considered by the NCA to be sufficient to do away with the competitive concerns in question, the NCA is under an obligation to prohibit the transaction.
The general procedure for securing clearances is provided by the PCC’s Merger Review Guidelines. In cases, however, of full administrative investigations conducted by the PCC involving the implementation and enforcement of the PCA, the PCC promulgated through Commission Resolution No. 20-2017 the 2017 PCC Rules of Procedure.
The notifying party(ies) may, at any time in Phases I or II of the procedure, on either their own initiative, or upon informal invitation from the PCA, submit commitments with the aim of ensuring approval for the concentration. There is no legal timeframe for commitments to be offered, but the PCA recommends that during Phase I the parties submit commitments within 20 business days of the original notification and, in Phase II, within 40 business days of the decision being taken to open an in-depth investigation. The parties may also choose to submit commitments during pre-notification discussions before the review procedure is formally initiated.
Remedies are discussed with the PCA on an informal basis. The PCA does not formally have the prerogative to impose remedies that were not proposed by the notifying party(ies).
If the PCA considers the proposal adequate, it is formally submitted in the form of a “commitment”. The formal commitment shall be accompanied by a complete form describing the commitment, explaining its suitability to eliminate the competition concern, identifying any deviations from the PCA’s model texts and providing detailed information on the divestiture business/behavioral commitment offered. The usual practice involves the submission of a draft of the commitment and complete form to the PCA for the case team to review and comment on. After receiving the final formal commitment, the PCA “market tests” it with other market players, and publishes it on its website, before accepting it.
The clearance decision is subject to conditions and obligations intended to ensure compliance with the commitment.
As described above, there are two types of remedies available for FAS. In the first scenar-io, if FAS believes that the transaction could actually lead to restriction of competition in a certain market, FAS issues a decision on the delay of the review process and obliges the parties to perform certain actions or meet certain requirements. The duration of such de-lay may not exceed 9 months.
In the second scenario, FAS issues such conditions simultaneously with the clearance deci-sion. Such conditions can be limited to a specific period or unlimited in time.
There are no voluntary remedies that can be used by the parties in advance to secure clearance. However, despite the fact that there is no legally provided mechanism for ne-gotiation of such conditions with FAS, it is always advisable to actively negotiate with FAS in case the transaction could actually restrict competition in order to minimize the im-posed conditions or receive unconditional clearance.
Remedies may be proposed at any stage during Phase I or Phase II.
If the SCA accepts an offer by the parties regarding remedies, the SCA will issue a clearance-decision including the accepted remedies, and couple the relevant remedies with a penalty clause.
Remedies are ordered unilaterally by the ComCo either during phase 1 - if this can ensure effective competition and avoid an investigation procedure - or during phase 2. Thus, no formal consensus is required between the ComCo and the parties involved. However, the parties may try at any time during the merger control proceeding to negotiate the remedies with the ComCo, with particular regard to the way in which those should be implemented.
Law N° 26876 does not provide for a specific procedure if remedies are required. In practice, INDECOPI grants a deadline for the parties to adopt the proposed remedies if they agree. If they do not agree or they not adopted it within the term, the authorization is denied.
The regulation under the Bill is essentially the same. However, the Bill also states that if the authorization is subject to conditions, they must be reviewed within a certain period of time in order to determine whether it is necessary to maintain, eliminate or modify them. This review may also occur due to a variation in the conditions of competition or at the request of the parties.
The parties may submit to the Board proposals for possible remedies either together with the notification form, during the preliminary review or the investigation period. If the parties decide to submit the commitment during the preliminary review period, the notification is deemed filed only on the date of the submission of the commitment. In any case, a signed version of the commitment text that contains detailed information on the context of the commitment and a separate summary should be submitted to the Authority.
As per the Remedy Guideline, it is at the parties’ own discretion whether to submit a remedy. The Board will neither impose any remedies nor ex parte change the submitted remedy. In the event the Board considers the submitted remedies insufficient, the Board may enable the parties to make further changes to the remedies. If the remedy is still insufficient to resolve the competition problems, the Board may not grant clearance.
There have been several cases where the Competition Board has accepted the remedies or commitments (such as divestments) proposed to, or imposed by, the European Commission as long as these remedies or commitments ease competition law concerns in Turkey (see, for example, Cookson/Foseco, 08-25/254-83, 20.03.2008). In this regard, the Board also reviewed the acquisition of sole control over Monsanto by Bayer (May 8, 2018, 18-14/261-126) in 2018. The Board considered that the transaction may result in the creation or strengthening of Bayer’s dominant position and thus, may significantly impede effective competition in the relevant market. It therefore decided to take the transaction into a Phase II review through its decision of May 15, 2017. Bayer’s commitment to divest its global cotton and vegetable seeds businesses was then submitted to the EU Commission. The Board conditionally approved the transaction based on the commitments submitted to the Commission due to the fact that the new transaction would not result in the creation or strengthening of a dominant position not significantly impede competition, since the commitments submitted by Bayer with regards to the vegetable seeds, cotton seeds and corn seeds and seeds businesses and insecticide seed dressings for corn subject to the investigation would eliminate horizontal and vertical overlaps occurring in the relevant markets in Turkey.
The Board conditions its clearance decision on the application of the remedies. Whether or not the parties may complete the merger before the remedies have been complied with depends on the nature of the remedies. Remedies may either be a condition precedent for the closing or may be designed as an obligation post-closing of the merger. The parties may complete the merger if the remedies are not designed as a condition precedent for the closing.
During the first-phase investigation, remedies can be offered at any time up to five working days after the CMA has informed the parties of a decision that the merger risks giving rise to a substantial lessening of competition, and will therefore be subject to a second-phase investigation unless suitable remedies are agreed and implemented. This means that the parties are not required to offer remedies without having been informed of the substance of the CMA's concerns and the markets to which they relate. In practice, it is possible to commence a dialogue on remedies at any stage in the process, or even before the CMA begins its investigation.
After the CMA has issued its SLC decision, the parties have five working days within which to offer remedies, and the CMA will have up to 10 working days from the SLC decision within which to decide whether the offered remedies merit further negotiation (if it considers that they do not, it will open the second-phase investigation).
The CMA will then have up to 50 working days from the date of the SLC decision within which to negotiate, consult on, and finalise the remedies. This period can be extended to 90 working days if there are 'special reasons' (e.g. if an up-front buyer is required – see section 31 above).
During the second-phase investigation, the question of remedies will not normally be raised until the CMA has issued its provisional findings. The basic outline of any remedies will be finalised before the CMA takes its final second-phase decision on the merger. The detailed terms and conditions of the undertakings are negotiated after the final decision has been announced, and must be finalised within 12 weeks (which can be extended by six weeks, if there are special reasons). Where parties do not cooperate in the negotiation of second-phase remedies, the CMA can impose the required remedy in the form of an order on the parties.
There is no legally regulated procedure for remedies submission. In case of establishment of the grounds for the merger prohibition the AMCU informs the concentration participants on such grounds substance and provides a 30-day period for submission by the participants of their proposals as to obligations that they are ready to take in order to eliminate or mitigate the negative impact of the merger on competition acceptable for the AMCU.
The obligations assumed by the participants of the concentration should be proportional to the reasonable threat of the negative impact on competition. Those remedies may be negotiated by the AMCU and participants. The AMCU decisions on the issue of merger clearance may be conditional to the implementation of the above obligations, which eliminate or mitigate the negative impact of the merger on competition. Such conditions and obligations may concern, in particular, restrictions on the management, use or disposal of property, as well as the obligation of the entity to dispose of the property. However, the remedies can be submitted at any time of the review process until the AMCU decision is adopted.
Typically, throughout the reviewing agency’s investigation, the parties to the transaction and agency staff discuss any competitive issues raised by the transaction and potential remedies to address such concerns. Any proposed divestiture is scrutinised and evaluated by the agency to ensure it effectively remedies anticompetitive concerns identified during the investigation. Typically, parties offer a remedy after the reviewing agency has conducted its investigation, to ensure that any fix addresses the agency’s concerns.
The agencies usually require a buyer up front in the vast majority of divestitures. In contrast to a buyer up front remedy, post-order consents typically allow the parties to divest the required assets or business approximately three to six months after the merger is consummated. In either case, the agencies require approval of the divestiture buyer for the package of assets to ensure that the buyer is (1) financially stable, (2) will be able to compete going forward, and (3) that the divestiture will restore any competition lost due to the transaction. The FTC’s merger remedies retrospective study, which includes best practices during the remedy process, confirmed that the framework utilized by the FTC has been generally effective at replacing lost competition.
If the reviewing agency has evidence that a transaction may be anticompetitive and the parties are unwilling or unable to offer a divestiture, the agency may file an injunction proceeding in federal court to block the transaction.
Remedies are typically proposed by the parties, negotiated with the ICA, and formally imposed by the latter. If the ICA believes that the remedies offered by the parties do not eliminate all the competitive concerns, it can also impose further measures.
Remedies can be offered during Phase I or after an in-depth investigation is started. However, the ICA can enforce the adoption of remedies in case of in-depth investigation only (and impose fines in a range of 1-10% of the parties’ turnover for failure to comply with such remedies in the implementation of the transaction). Accordingly, if the concentration is cleared in Phase I also based on remedies offered by the parties, such remedies are not enforceable by the ICA. This means that the ICA cannot impose any fines in case the parties violate the remedies, but can only argue that the clearance decision was adopted based on a different factual scenario and open new proceedings.
The HCC may attach to its clearance decision conditions and obligations intended to ensure that the undertakings concerned shall comply with the commitments they have entered into vis-à-vis the HCC with a view to ensuring effective competition in the relevant markets. The undertakings concerned must offer remedies within twenty (20) days from the date the concentration is brought before the HCC, in the context of the Phase II Process. The HCC may, however, in exceptional cases, accept commitments by the undertakings even after the lapse of the twenty (20) day period. In this case the HCC may decide and notify to the undertakings concerned the extension of the ninety (90) day period to one-hundred and five (105) days.