What procedure applies in the event that remedies are required in order to secure clearance?
Merger Control (3rd 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.
Only the parties can propose remedies, which can be done at any stage of the investigation before the expiration of phase II. However, the remedies offered in phase I may only be accepted if the risks are easily identifiable and the remedies are sufficiently comprehensive and adequately address all the possible competition issues the operation may raise.
The offer must be made in writing, detailing the remedies offered, the way in which they are intended to be implemented and the deadlines for doing so. If necessary, it shall also identify and describe the functions of the compliance supervisor and/or trustee.
Once the offer is submitted to the FNE, the terms of phase I and phase II will be automatically suspended up to 10 and 15 working days, respectively.
The FNE may request from third parties their opinion on the suitability of the remedies offered to revert the risks to competition caused by the concentration, and on the potential problems that the implementation of remedies could imply.
The FNE will evaluate the remedies offered during the term of the investigation. Once such evaluation is made, the FNE will approve or prohibit the notified transaction, depending on whether it considers that the remedies offered are sufficient to mitigate the risks observed.
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).
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.
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 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.
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. Furthermore, the CPC has wide investigative powers when assessing a concentration, including access to any premises, property, means of transport, books or records in the possession of the undertakings concerned or third parties.
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, which it is bound to issue within four months as of the date of receiving the notification of the concentration and payment of the filing fees. 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.
Where the CPC ascertains that the notified concentration falls within the scope of the Law and raises doubts as to its compatibility with the competitive market, it will inform the Service of the need to conduct a full investigation. In such an event, the Service will request further information from the participants as well as other entities involved in the specific sector for the purpose of completing its investigation. Moreover, the Service will notify the participants that it proposes remedies that will remove the doubts of the CPC regarding the compatibility of the transaction within the time-limit defined by the Service.
Appendix IV of the Law provides the form that the undertakings concerned will be asked to submit when they are willing to undertake any remedies. The CPC accepts both divestiture and behaviour 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 if it finds any differentiations or modifications in the circumstances under which the concentration has been established which may result in the removal of the doubts, will commence negotiations with the participating undertakings.
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.
There is no standard procedure. Remedies can in principle be offered either during Phase I or Phase II. However, the ICA has the legal power to impose remedies in Phase II only. 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.
In light of the above, the ICA is generally more inclined to open a Phase II investigation, when it deems that remedies are necessary to clear the concentration.
Executing a concentration without complying with the remedies imposed by the ICA may result in a sanction between 1% and 10% of the turnover of the business activities that form the scope of the concentration.
The Competition Act provides that the NCA does not powers to suggest or impose remedial actions. Accordingly, the merger control procedure underlines the parties’ ability 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.
As described above, there are two types of remedies available for FAS. In the first scenario, 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 delay may not exceed 9 months.
In the second scenario, FAS issues such conditions simultaneously with the clearance decision. 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 negotiation 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 imposed conditions or receive unconditional clearance.
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.
Remedies may be raised (by either the authorities or the merging parties) at any stage of the Commission’s investigation or during proceedings before the Tribunal. Merging parties who are of the view that a transaction is likely to raise competition or public interest concerns may elect to offer remedies up front or early on in the merger review process.
Typically the Commission will inform the merging parties of concerns arising in the course of its investigation and will indicate that remedies are required to address these concerns. In practice, the Commission affords the merging parties an opportunity to engage with it on the need for remedies, and the parameters of the remedies. In most cases, the parties may be able to negotiate an acceptable remedy which addresses the Commission’s concerns. However, if consensus cannot be reached, the Commission will impose conditions (in the context of small or intermediate mergers) and in such circumstances the merging parties may request the Tribunal to consider the Commission’s decision. In the case of a large merger, the Commission will similarly engage with the merging parties in respect of remedies but may only recommend that these be imposed. In both a request for consideration and large merger reviews, the Tribunal will consider the remedies and may accept, amend or remove them.
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 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.
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.
Commitments can be proposed only after the Chairman of the HCC has issued a resolution that has been served on the parties to the concentration, holding that the notified concentration gives rise to significant doubts as to its compatibility with competition in the particular markets to which it relates. According to the Competition Act, this resolution may be issued within one month following the date of submission of the notification by the parties to the concentration, a deadline that may in practice be extended if the parties are requested by the HCC case handler to submit additional evidence on their operations and the concentration itself. A report is then drafted on the merits of the concentration within forty five days from the issuance of the Chairman’s resolution, on the basis of which the case is referred to the HCC for further assessment.
The parties have the right to submit commitments any time from the date they have been served with the Chairman’s resolution initiating Phase B, and, in any event, no later than twenty days following the referral of the case to the HCC. Exceptionally, the HCC may accept the submission of commitments even after the expiration of said deadline, but it would be expected that the parties advance sufficient reasons for which submission of commitments within the said statutory deadline was not possible. The acceptance of the substance of the commitments as a condition to clearance of concentrations lies within the HCC’s ample discretion. If the HCC has accepted the substance of the commitments, it may impose a fine of up to 10% of the turnover of the parties to the concentration in case the commitments have not been complied with post consummation.
Law No. 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 adopt it within the term, the authorization is denied.
The notifying party(ies) may, at any time in Phases I or II of the procedure, either their own initiative, or upon informal invitation from the PCA, submit commitments with the aim of ensuring approval for the concentration. There is not a 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 contacts 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 which 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 to the PCA of a draft of the commitment and complete form 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.
The parties can begin to negotiate about remedies with the JFTC at any time during the review. The negotiation is typically triggered by the JFTC’s explanation to the parties of its competitive concerns on the notified transaction. The parties need to take initiative in proposing them. When the parties propose remedies, the JFTC will comment as to whether the proposed remedies are sufficient to resolve the concerns or not.
The JFTC’s merger guidelines provide that remedies in principle should take place before the implementation of the transaction. Even if this is not possible, they should be implemented before the proper deadline which is to be clearly provided in the remedy proposal. In addition, if the remedies include the divestiture of any or all of the overlapping business, for example, the buyer of such business should be identified before the implementation of the transaction, otherwise the parties may have to obtain the JFTC’s approval of the buyer before divesting the business.
It is critical to note that the merger control “clock” stops for the time taken by the CCI to evaluate modifications proposed by the parties to the combination. In the first stage, the CCI may clear the transaction with modifications (i.e., remedies) proposed by the parties. If the parties offer a modification in Phase I, additional time of up to 15 calendar days can be taken by the CCI for evaluation of the modification.
In case of a modification proposed by the CCI, the parties may agree with the CCI, disagree and negotiate with the CCI or file an appeal before the NCLAT within 60 calendar days of the CCI’s order. Whenever the CCI proposes modifications to a combination, it can appoint an independent monitoring agency (i.e., accounting firms, management consultants, or any other professional firm) to oversee the implementation of the CCI’s decision or the parties’ commitment.
The clearance of the combination depends on the implementation of the remedies and approval may be revoked if the remedies are not implemented.
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.
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).