Failure to file and Gun-jumping remain hot topics
Asia Pacific: in February, the Philippines authority imposed its first penalty for failure to notify. The deal in question became void as a result and a fine of approximately EUR 300,000 was imposed. Notably, from 8 December 2017, merger filings in the Philippines must be made within 30 days of signing the definitive agreements (more details on this in our client alert). In China, MOFCOM has already imposed three fines for failure to notify in 2018.
EU: recent developments in two important cases. Late last year, the General Court upheld a EUR 20 million penalty against Marine Harvest for failure to notify and gun-jumping. The main takeaways from this case are that (i) failing to notify a deal and gun-jumping in the EU can attract high fines and (ii) acquisitions of minority shareholdings or increases in existing shareholdings can trigger filings. This case is now on appeal to the CJEU. In January, a non-binding opinion of the Advocate General in relation to Ernst & Young/KPMG was released. The AG considered that that EY did not breach the standstill obligation during its 2013 takeover of KPMG Denmark principally because the termination of the affiliation between KPMG Denmark and its parent company preceded and was severable from the transaction with EY and that action did not give EY control over KPMG Denmark, nor prevent KPMG Denmark from acting as a competitor to EY. The final ruling of the ECJ is awaited.
Failure to provide information
In our May 2017 Merger Control Minute we highlighted the rise in EU probes regarding the provision of misleading or incomplete information. This trend continues with fines for failing to provide information during the merger process being imposed by the Polish authority on DOM Polska in January and the CMA in the UK on Hungryhouse in December. Late last year, a Danish court upheld as a fine imposed by the Danish Competition Authority on Metro Cash & Carry Denmark.
Upcoming changes in the law
Draft Argentine legislation is expected to be passed this year. It proposes changes such as the introduction of a mandatory and suspensory merger control regime, revised jurisdictional thresholds and the introduction of a simplified review process. A draft Israeli law was published in October and passed the first stage of the approval process in February. It proposes broad reform, including an increased turnover threshold, new powers to extend the merger review period from 30 days to 150 days and abolishing the local nexus requirement. There will no longer be any need for a company to be registered in Israel, to hold more than 25% of rights in an Israeli company or to maintain a 'place of business' in the country for it to be subject to merger control requirements. A mandatory regime is also being considered in Peru (where merger control currently only applies to the electricity sector).
From 22 November 2017, transactions involving failing banks, nationalised banks, regional rural banks and Central Public Sector Enterprises in the oil and gas sector in India are exempt from the notification requirement.
As of 1 January 2018, the Swedish Competition Authority (the "SCA") is authorised to approve or reject a transaction. This is the first time decisions in merger control cases will actually be made by the authority. Previously the SCA was required to file a summons to the Patent and Market Court to block a notified transaction.
As of 17 December 2017 the Ukrainian Authority can reject merger control filings, or close Phase II reviews without issuing a decision if the transaction in question involves any party listed under the Sanctions Law.
- Canada - the 'size of transaction' threshold has increased from CND 88 million to CND 92 million.
- Colombia - the minimum salary has increased to 781,242 Colombian pesos. The turnover/asset value threshold (based on the equivalent of 60,000 minimum salaries) has increased accordingly.
- Lithuania - the notification thresholds have increased as follows (i) combined turnover exceeds EUR 20 million (up from EUR 14.5 million) AND (ii) turnover of each of at least two parties exceeds EUR 2 million (up from EUR 1.45 million). The law also now clarifies the notion of related undertakings.
- Philippines - on 20 March 2018, the 'size of parties' threshold will increase from Php 1 Billion to Php 5 billion. The 'size of transaction' threshold will increase from Php 1 Billion to Php 2 billion. The threshold for JV agreements will also increase from Php1 billion to Php 2 billion. These thresholds will be subject to annual review.
- United States - the first notification threshold increased from USD 323 million to USD 337.6 million. The 'size of transaction' element of the second notification threshold increased from USD 80.8 million to USD 84.4 million, while the components of the 'size of person' element of the second notification threshold increased from USD 161.5 million to USD 168.8 million and from USD 16.2 million to USD 16.9 million.