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The Cartels and Leniency Review
Reproduced with permission from Law Business Research Ltd.
This article was first published in The Cartels and Leniency Review, 2nd edition(published in January 2014 – editor Christine A Varney).
For further information please [email protected]
The Merger Control
Review
Law Business Research
Seventh Edition
Editor
Ilene Knable Gotts
The Merger Control Review
Reproduced with permission from Law Business Research Ltd.
This article was first published in The Merger Control Review, 7th edition(published in August 2016 – editor Ilene Knable Gotts).
For further information please [email protected]
The Merger Control
Review
Seventh Edition
EditorIlene Knable Gotts
Law Business Research Ltd
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i
The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book:
ALI BUDIARDJO, NUGROHO, REKSODIPUTRO
ALLEN & GLEDHILL LLP
ALTIUS
ANDERSON MŌRI & TOMOTSUNE
ARAQUEREYNA
ASHURST
AZB & PARTNERS
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HOUTHOFF BURUMA
ACKNOWLEDGEMENTS
Acknowledgements
ii
JEFF LEONG, POON & WONG
KARANOVIĆ & NIKOLIĆ
KING & WOOD MALLESONS
LAW FIRM BEKINA, ŠKURLA, DURMIŠ AND SPAJIĆ LTD
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PELIFILIP
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PINHEIRO NETO ADVOGADOS
POLENAK LAW FIRM
PRAGMA LEGAL
SAYENKO KHARENKO
SLAUGHTER AND MAY
TORYS LLP
UGGC LAW FIRM
VALDÉS ABASCAL ABOGADOS, SC
WACHTELL, LIPTON, ROSEN & KATZ
WEERAWONG, CHINNAVAT & PEANGPANOR LTD
WILMER CUTLER PICKERING HALE AND DORR LLP
YULCHON LLC
iii
Editor’s Preface ..................................................................................................viiIlene Knable Gotts
PART I GENERAL PAPERS �������������������������������������������������� 1–76
Chapter 1 CHINA’S MERGER CONTROL IN THE PHARMACEUTICAL SECTOR..................................................................................... 3
Susan Ning, Hazel Yin and Ting Gong
Chapter 2 ECONOMICS TOOLS USED IN MERGER CONTROL ......... 10S Murthy Kambhampaty and James A Langenfeld
Chapter 3 EU MERGER CONTROL IN THE PHARMACEUTICAL SECTOR................................................................................... 30
Pablo Figueroa and Alejandro Guerrero
Chapter 4 INTERNATIONAL MERGER REMEDIES .............................. 46John Ratliff, Frédéric Louis and Cormac O’Daly
Chapter 5 US MERGER CONTROL IN THE HIGH-TECHNOLOGY SECTOR................................................................................... 61
C Scott Hataway and Michael S Wise
Chapter 6 US MERGER CONTROL IN THE MEDIA SECTOR .............. 68Gary W Kubek and Michael Schaper
CONTENTS
iv
Contents
PART II JURISDICTIONS ������������������������������������������������ 77–524
Chapter 1 AUSTRALIA ............................................................................. 79Peter Armitage and Ross Zaurrini
Chapter 2 AUSTRIA.................................................................................. 95Gerhard Fussenegger and Valentina Schaumburger
Chapter 3 BELGIUM .............................................................................. 105Carmen Verdonck and Steffie De Cock
Chapter 4 BOSNIA AND HERZEGOVINA ............................................ 122Rastko Petaković
Chapter 5 BRAZIL .................................................................................. 131Cristianne Saccab Zarzur
Chapter 6 CANADA ............................................................................... 141Dany H Assaf, Rebecca Moskowitz and Marina Chernenko
Chapter 7 CHINA ................................................................................... 152Susan Ning and Hazel Yin
Chapter 8 COSTA RICA ......................................................................... 160Edgar Odio
Chapter 9 CROATIA ............................................................................... 170Goran Durmiš, Tea Radmilo and Karla Ressler
Chapter 10 ECUADOR ............................................................................. 180Diego Pérez-Ordoñez, Luis Marín-Tobar and Natalia Almeida-Oleas
Chapter 11 FRANCE ................................................................................ 189Hugues Calvet and Olivier Billard
Chapter 12 GERMANY ............................................................................. 206Alexander Rinne and Andreas Boos
Chapter 13 HONG KONG ....................................................................... 215Marc Waha, Pearl Yeung and Sophie Chen
v
Contents
Chapter 14 INDIA .................................................................................... 225Samir R Gandhi, Fadi Metanios, Rahul Satyan and Shruti Aji Murali
Chapter 15 INDONESIA .......................................................................... 237Theodoor Bakker, Luky I Walalangi and Miriam Andreta
Chapter 16 ISRAEL ................................................................................... 248Ran Ben-Ari
Chapter 17 ITALY ..................................................................................... 258Rino Caiazzo and Francesca Costantini
Chapter 18 JAPAN .................................................................................... 267Yusuke Nakano, Vassili Moussis, Takeshi Suzuki and Kiyoko Yagami
Chapter 19 KOREA ................................................................................... 282Sai Ree Yun, Seuk Joon Lee, Cecil Saehoon Chung, Kyoung Yeon Kim and Kyu Hyun Kim
Chapter 20 MACEDONIA ........................................................................ 291Tatjana Popovski-Buloski
Chapter 21 MALAYSIA ............................................................................. 298Jeff Leong
Chapter 22 MEXICO ................................................................................ 309Rafael Valdés Abascal and José Ángel Santiago Ábrego
Chapter 23 MOROCCO ........................................................................... 317Corinne Khayat and Maïja Brossard
Chapter 24 NETHERLANDS ................................................................... 325Gerrit Oosterhuis and Weyer VerLoren van Themaat
Chapter 25 NEW ZEALAND .................................................................... 336Ross Patterson, Oliver Meech and Kristel McMeekin
Chapter 26 POLAND ................................................................................ 348Małgorzata Szwaj and Mariusz Łaszczyk
Chapter 27 PORTUGAL ........................................................................... 357Ricardo Bordalo Junqueiro and Marta Flores da Silva
Country
vi
Chapter 28 ROMANIA ............................................................................. 369Carmen Peli and Mihaela Ciolan
Chapter 29 RUSSIA ................................................................................... 383Maxim Boulba and Maria Ermolaeva
Chapter 30 SERBIA ................................................................................... 392Rastko Petaković
Chapter 31 SINGAPORE .......................................................................... 401Daren Shiau and Elsa Chen
Chapter 32 SOUTH AFRICA .................................................................... 418Candice Upfold
Chapter 33 SPAIN ..................................................................................... 436Joaquín Hervada and Emilio Carrandi
Chapter 34 SWITZERLAND .................................................................... 446Pascal G Favre and Patrick Sommer
Chapter 35 TAIWAN ................................................................................ 455Victor I Chang, Margaret Huang and Deven Lu
Chapter 36 THAILAND ........................................................................... 464Panuwat Chalongkuamdee and Parithat Chamnongsilp
Chapter 37 TURKEY ................................................................................ 469Gönenç Gürkaynak and K Korhan Yıldırım
Chapter 38 UKRAINE .............................................................................. 480Maksym Nazarenko and Valentyna Hvozd
Chapter 39 UNITED KINGDOM ............................................................ 489Jordan Ellison and Paul Walter
Chapter 40 UNITED STATES................................................................... 502Ilene Knable Gotts
Chapter 41 VENEZUELA ......................................................................... 511Pedro Ignacio Sosa, Rodrigo Moncho Stefani and Mauricio Ramírez Gordon
Appendix 1 ABOUT THE AUTHORS ...................................................... 523
Appendix 2 CONTRIBUTING LAW FIRMS’ CONTACT DETAILS ....... 555
vii
EDITOR’S PREFACE
Pre-merger competition review has advanced significantly since its creation in 1976 in the United States. As this book evidences, today almost all competition authorities have a notification process in place – with most requiring pre-merger notification for transactions that meet certain prescribed minimum thresholds. Additional jurisdictions, particularly in Asia, are poised to add pre-merger notification regimes within the next year or so. In our endeavour to keep our readers well informed, we have expanded the jurisdictions covered by this book to include the newer regimes as well.
Given the ability of most competition agencies with pre-merger notification laws to delay, and even block, a transaction, it is imperative to take each jurisdiction – small or large, new or mature – seriously. For instance, in 2009, China blocked the Coca-Cola Company’s proposed acquisition of China Huiyuan Juice Group Limited and imposed conditions on four mergers involving non-China-domiciled firms. In Phonak/ReSound (a merger between a Swiss undertaking and a Danish undertaking, each with a German subsidiary), the German Federal Cartel Office blocked the entire merger, even though less than 10 per cent of each of the undertakings was attributable to Germany. It is, therefore, imperative that counsel for such a transaction develops a comprehensive plan prior to, or immediately upon, execution of an agreement concerning where and when to file notification with competition authorities regarding such a transaction. To this end, this book provides an overview of the process in 41 jurisdictions, as well as a discussion of recent decisions, strategic considerations and likely upcoming developments. Given the number of recent significant M&A transactions involving media, pharma and high-technology companies, we have included chapters that focus on the enforcement trends in these important sectors. In addition, as merger review increasingly includes economic analysis in most, if not all, jurisdictions, we have added a chapter that discusses the various economic tools used to analyse transactions. The intended readership of this book comprises both in-house and outside counsel who may be involved in the competition review of cross-border transactions.
Some common threads in institutional design underlie most of the merger review mandates, although there are some outliers as well as nuances that necessitate careful consideration when advising a client on a particular transaction. Almost all jurisdictions vest exclusive authority to review transactions in one agency. The United States and China may
Editor’s Preface
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end up being the exceptions in this regard. Most jurisdictions provide for objective monetary size thresholds (e.g., the turnover of the parties, the size of the transaction) to determine whether a filing is required. Germany, for instance, provides for a de minimis exception for transactions occurring in markets with sales of less than €15 million. There are some jurisdictions, however, that still use ‘market share’ indicia (e.g., Bosnia and Herzegovina, Colombia, Lithuania, Portugal, Spain, Ukraine and the United Kingdom). Most jurisdictions require that both parties have some turnover or nexus to their jurisdiction. However, there are some jurisdictions that take a more expansive view. For instance, in Poland, a notification may be required even though only one of the parties is present and, therefore, there may not be an impact on competition in Poland. Turkey recently issued a decision finding that a joint venture (JV) that produced no effect on Turkish markets was reportable because the JV’s products ‘could be’ imported into Turkey. Germany also takes an expansive view by adopting as one of its thresholds a transaction of ‘competitively significant influence’. Although a few merger notification jurisdictions remain ‘voluntary’ (e.g., Australia, Singapore, the United Kingdom and Venezuela), the vast majority impose mandatory notification requirements. Moreover, in Singapore, the transaction parties are to undertake a ‘self-assessment’ of whether the transaction will meet certain levels, and, if so, should notify the agency to avoid potential challenge by the agency.
Although in most jurisdictions the focus of the competition agency is on competition issues, some jurisdictions have a broader mandate. For instance, the ‘public interest’ approach in South Africa expressly provides for consideration of employment matters, local enterprises and procurement, and for economic empowerment of the black population and their participation in the company. Many of the remedies imposed in South Africa this year have been in connection with these considerations. Although a number of jurisdictions have separate regulations and processes for addressing foreign entity acquisitions when national security or specific industrial sectors are involved, in Romania, for example, the competition law provides that the government can prohibit a merger if it determines that such merger could have a potential impact on national security.
The potential consequences for failing to file in jurisdictions with mandatory requirements vary. Almost all jurisdictions require that the notification process be concluded prior to completion (e.g., pre-merger, suspensory regimes), rather than permitting the transaction to close as long as notification is made prior to closing. Many of these jurisdictions can impose a significant fine for failure to notify before closing, even where the transaction raises no competition concerns (e.g., Austria, Cyprus, India, the Netherlands, Romania, Spain and Turkey). In France, for instance, the competition authority imposed a €4 million fine on Castel Frères for failure to notify its acquisition of part of the Patriache group. In Ukraine, the competition authority focused its efforts on discovering consummated transactions that had not been notified, and imposed fines in 32 such cases in 2015 alone.
Some jurisdictions impose strict time frames within which the parties must file their notification. For instance, Cyprus requires filing within one week of signing of the relevant documents and agreements; Serbia and India provide for 15 days after signing of the agreement; and Hungary, Ireland and Romania have a 30-calendar-day time limit for filing the notification that commences with entering into the agreement. Some jurisdictions that mandate filings within specified periods after execution of the agreement also have the authority to impose fines for ‘late’ notifications (e.g., Bosnia and Herzegovina, Indonesia, India and Serbia). Most jurisdictions also have the ability to impose significant fines for failure to notify or for closing before the end of the waiting period, or both (e.g., Austria, Canada,
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China, Greece, Portugal, Ukraine and the United States). In Macedonia, the failure to file can result in a misdemeanour and a monetary fine of up to 10 per cent of the worldwide turnover. In Belgium, the competition authority fined a party for late submission of information.
In addition, other jurisdictions have joined the EC and the United States in focusing on interim conduct of the transaction parties. Brazil, for instance, issued its first ‘gun-jumping’ fine in 2014 and recently issued guidelines on gun-jumping violations. In most jurisdictions, a transaction that does not meet the pre-merger notification thresholds is not subject to review or challenge by the competition authority. In Canada – like the United States – however, the Canadian Competition Bureau can challenge mergers that were not required to be notified under the pre-merger statute. In Korea, Microsoft initially filed a notification with the Korea Fair Trade Commission (KFTC), but when it faced difficulties and delays in Korea the parties restructured the acquisition to render the transaction nonreportable in Korea and consummated the transaction. The KFTC, however, continued its investigation as a post-consummation merger investigation and eventually obtained a consent order.
In almost all jurisdictions, very few transactions undergo a full investigation, although some require that the notification provide detailed information regarding the markets, competitors, competition, suppliers, customers and entry conditions. Most jurisdictions that have filing fees specify a flat fee or state in advance a schedule of fees based upon the size of the transaction; some jurisdictions, however, determine the fee after filing or provide different fees based on the complexity of the transaction. For instance, Cyprus is now considering charging a higher fee for acquisitions that are subjected to a full Phase II investigation.
Most jurisdictions more closely resemble the EC model than the United States model. In these jurisdictions, pre-filing consultations are more common (and even encouraged); parties can offer undertakings during the initial stage to resolve competitive concerns; and there is a set period during the second phase for providing additional information and for the agency to reach a decision. In Japan, however, the Japan Federal Trade Commission (JFTC) announced in June 2011 that it would abolish the prior consultation procedure option. When combined with the inability to ‘stop the clock’ on the review periods, counsel may find it more challenging in transactions involving multiple filings to avoid the potential for the entry of conflicting remedies or even a prohibition decision at the end of a JFTC review. Some jurisdictions, such as Croatia, are still aligning their threshold criteria and processes with the EC model. Some jurisdictions even within the EC remain that differ procedurally from the EC model. For instance, in Austria, the obligation to file can be triggered if only one of the involved undertakings has sales in Austria, as long as both parties satisfy a minimum global turnover and have a sizeable combined turnover in Austria.
The role of third parties also varies across jurisdictions. In some jurisdictions (e.g., Japan), there is no explicit right of intervention by third parties, but the authorities can choose to allow it on a case-by-case basis. In contrast, in South Africa, registered trade unions or representatives of employees must be provided with a redacted copy of the merger notification from the outset and have the right to participate in merger hearings before the Competition Tribunal: the Tribunal will typically also permit other third parties to participate. Bulgaria has announced a process by which transaction parties even consent to disclosure of their confidential information to third parties. In some jurisdictions (e.g., Australia, the EC and Germany), third parties may file an objection to a clearance decision. In some jurisdictions (including Canada, the EC and the United States), third parties (e.g., competitors) are required to provide information and data if requested by the antitrust authority. In Israel, a third party that did not comply with such a request was recently fined by the authority.
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In almost all jurisdictions, once the authority approves the transaction, it cannot later challenge the transaction’s legality. The United States is one significant outlier with no bar for subsequent challenge, even decades following the closing, if the transaction is later believed to have substantially lessened competition. Canada, in contrast, provides a more limited time period of one year for challenging a notified transaction (see the recent CSC/Complete transaction). Norway is a bit unusual, where the authority has the ability to mandate notification of a transaction for a period of up to three months following the transaction’s consummation. In ‘voluntary’ jurisdictions, such as Australia and Singapore, the competition agency can investigate and challenge unnotified transactions.
It is becoming the norm in large cross-border transactions raising competition concerns for the United States, Canadian, Mexican and EC authorities to work closely together during the investigative stages, and even in determining remedies, minimising the potential of arriving at diverging outcomes. The KFTC has stated that it will engage in even greater cooperation with foreign competition authorities, particularly those of China and Japan, which are similar to Korea in their industrial structure. Regional cooperation among some of the newer agencies has also become more common; for example, the Argentinian authority has worked with Brazil’s CADE, which in turn has worked with the Chilean authority. Competition authorities in Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Montenegro, Serbia, Slovenia and Turkey similarly maintain close ties and cooperate on transactions. Taiwan is part of the Asia-Pacific Economic Cooperation Forum, which shares a database. In transactions not requiring filings in multiple European jurisdictions, Member States often keep each other informed during the course of an investigation. In addition, transactions not meeting the EC threshold can nevertheless be referred to the European Commission in appropriate circumstances. The United States has signed cooperation agreements with a number of jurisdictions, including most recently Peru and India. China has ‘consulted’ with the United States and the EC on some mergers and entered into a cooperation agreement with the United States authorities in 2011.
The impact of such multijurisdictional cooperation was very evident this year. For instance, the transaction parties in Applied Materials/Tokyo Electron ultimately abandoned the transaction due to the combined objections of several jurisdictions, including the United States, Europe, and Korea. In Office Depot/Staples, the FTC and the Canadian Competition Bureau cooperated and both jurisdictions brought suits to block the transaction (although the EC had also cooperated on this transaction, it ultimately accepted the undertakings offered by the parties). In the GE/Alstom transaction, the United States and the EC coordinated throughout, including at the remedies stage. Additionally, in the Halliburton/Baker Hughes transaction, the United States and the EC coordinated their investigations, with the United States suing to block the transaction while the EC’s investigation continued. Also, in Holcim/Lafarge, the cooperation between the United States and Canada continued at the remedies stage, where both consents included assets in the other jurisdiction’s territory. The United States, Canada and Mexico coordinated closely in the review of the Continental/Veyance transaction. In fact, it is becoming the norm for coordination among the jurisdictions in multinational transactions that raise competition issues.
Although some jurisdictions have recently raised the size threshold at which filings are mandated, others have broadened the scope of their legislation to include, for instance, partial ownership interests. Some jurisdictions continue to have as their threshold test for pre-merger notification whether there is an ‘acquisition of control’. Many of these jurisdictions, however, will include, as a reportable situation, the creation of ‘joint control’, ‘negative (e.g., veto) control’ rights to the extent that they may give rise to de jure or de facto control (e.g., Turkey),
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or a change from ‘joint control’ to ‘sole control’ (e.g., the EC and Lithuania). Minority holdings and concerns over ‘creeping acquisitions’, in which an industry may consolidate before the agencies become fully aware, have become the focus of many jurisdictions. Some jurisdictions will consider as reviewable acquisitions in which only a 10 per cent or less interest is being acquired (e.g., Serbia for certain financial and insurance mergers), although most jurisdictions have somewhat higher thresholds (e.g., Korea sets the threshold at 15 per cent of a public company and otherwise at 20 per cent of a target; and Japan and Russia at any amount exceeding 20 per cent of the target). Others use, as the benchmark, the impact that the partial shareholding has on competition; Norway, for instance, can challenge a minority shareholding that creates or strengthens a significant restriction on competition. The UK also focuses on whether the minority shareholder has ‘material influence’ (i.e., the ability to make or influence commercial policy) over the entity. Several agencies during the past few years have analysed partial ownership acquisitions on a stand-alone basis as well as in connection with JVs (e.g., Canada, China, Cyprus, Finland and Switzerland). Vertical mergers were also a subject of review (and even resulted in some enforcement actions) in a number of jurisdictions (e.g., Belgium, Canada, China, Sweden and Taiwan). Portugal even viewed as an ‘acquisition’ subject to notification the non-binding transfer of a customer base.
For transactions that raise competition issues, the need to plan and to coordinate among counsel has become particularly acute. Multi-jurisdictional cooperation facilitates the development of cross-border remedies packages that effectively address competitive concerns while permitting the transaction to proceed. The consents adopted by the United States and Canada in the Holcim/Lafarge merger exemplify such a cross-border package. As discussed in the International Merger Remedies chapter, it is no longer prudent to focus merely on the larger mature authorities, with the expectation that other jurisdictions will follow their lead or defer to their review. In the current enforcement environment, obtaining the approval of jurisdictions such as Brazil and China can be as important as the approval of the EC or the United States. Moreover, the need to coordinate is particularly acute to the extent that multiple agencies decide to impose conditions on the transaction. Although most jurisdictions indicate that ‘structural’ remedies are preferable to ‘behavioural’ conditions, a number of jurisdictions in the past few years have imposed a variety of such behavioural remedies (e.g., China, the EC, France, the Netherlands, Norway, South Africa, Ukraine and the United States). For instance, some recent decisions have included as behavioural remedies pricing, sales tariffs and terms of sale conditions (e.g., Korea, Ukraine and Serbia), employee retrenchment (South Africa) and restrictions on bringing antidumping suits (e.g., Mexico). Many recent decisions have imposed behavioural remedies to strengthen the effectiveness of divestitures (e.g., Canada’s decision in the Loblaw/Shoppers transaction, China’s MOFCOM remedy in Glencore/Xstrata, and France’s decision in the Numericable/SFR transaction). This book should provide a useful starting point in navigating cross-border transactions in the current enforcement environment.
Ilene Knable GottsWachtell, Lipton, Rosen & KatzNew YorkJuly 2016
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Chapter 3
BELGIUM
Carmen Verdonck and Steffie De Cock1
I INTRODUCTION
The entry into force of Book IV of the Code of Economic Law2 on 6 September 2013 introduced some fundamental changes to Belgian competition law.
One of the main innovations was the simplification of the Belgian Competition Authority’s structure. The Competition Authority’s former tripartite structure was changed into a single administrative body that investigates and decides upon competition law infringements. Within this newly created administrative body, a distinction was made between the College of Competition Prosecutors (headed by the Prosecutor-General), which holds the Belgian Competition Authority’s investigative powers, and the Competition College, which holds the Competition Authority’s decision-making powers.3 The Competition College consists of two assessors (appointed in alphabetical order from the relevant (native Dutch or French-speaking) list of 20 nominated assessors) and the President of the Belgian Competition Authority, who presides over the Competition College.4 In merger control cases, the Competition College will decide whether to authorise a concentration in regular proceedings, whereas the Prosecutor will, in the first instance, decide whether to authorise mergers filed under the simplified merger procedure.
Regarding the substantive law on merger control, Book IV of the Code of Economic Law did not make any significant changes. Nevertheless, some deadlines for the Competition
1 Carmen Verdonck is a partner and Steffie De Cock is an associate at ALTIUS. The authors wish to thank Jenna Auwerx for her contribution in writing this article.
2 Code of Economic Law of 28 February 2013, Belgian Official Gazette 29 March 2013.3 Despite the Competition College formally holding the Belgian Competition Authority’s
decision-making powers, Book IV of the Code of Economic Law also grants certain decision-making powers to the College of Competition Prosecutors (for example, within the framework of the simplified merger procedure).
4 Articles IV.16 ff Code of Economic Law.
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Authority to reach a decision on a proposed merger have been shortened; the possibility for the Competition Authority to make preliminary references to the Supreme Court in merger control procedures was abolished; and Book IV of the Code of Economic Law no longer allows the Council of Ministers to overturn decisions of the Competition Authority.
Under Book IV of the Code of Economic Law, a pre-merger notification and approval for all concentrations above the legally established thresholds remains required. Concentrations must be notified to the Competition Authority where the undertakings concerned, taken together, have a total turnover in Belgium of more than €100 million, and where at least two of the undertakings concerned each have a turnover of at least €40 million in Belgium.5
In addition to Book IV of the Code of Economic Law, there are a large number of royal decrees regulating various aspects of merger control in Belgium.6 The Belgian merger control rules and case law are substantially influenced by European merger control rules and case law. The Belgian courts and Competition Authority have repeatedly stated that Belgian competition law should be interpreted in light of the European courts’ jurisprudence and the decisions and guidelines of the European Commission, to which reference is often made.
II YEAR IN REVIEW
In 2005 the notification thresholds were substantially increased, and in 2006 a simplified procedure was formally introduced into Belgian competition law. These changes resulted in a significant decrease in the number of notifications and a substantial increase in the number of mergers filed under the simplified procedure. In 2008 and 2009, the number of concentrations further declined as a consequence of the financial and economic crisis. From 2010, the number of notifications increased again. In 2015, 29 notifications were made and 31 final decisions were issued. Out of these final decisions, 24 were issued under the simplified procedure, four under the non-simplified procedure and three concerned procedural issues or revisions of commitments.
Concentrations 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Number of notifications 17 17 20 13 7 20 20 17 25 15 29
Number of final decisions 15 15 20 15 7 19 22 16 24 18 31
Number of non-simplified procedures 7 7 1 4 2 4 3 4 3 2 4
5 Article IV.7, Section 1 Code of Economic Law.6 The most important royal decrees are the Royal Decree of 30 August 2013 on procedures
with regard to the Protection of Economic Competition, Belgian Official Gazette 6 September 2013; and the Royal Decree of 30 August 2013 on the Notification of Concentrations of Undertakings in Accordance with Article IV.10 of the Code of Economic Law as inserted by the Acts of 3 April 2013, Belgian Official Gazette, 9 September 2013.
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Given that the decisions in simplified procedures are generally only a page long and only include the parties’ names, the markets in which they operate and the Prosecutor’s confirmation that the conditions for the simplified procedure were fulfilled, these decisions do not provide any guidance on procedural issues or substantive matters. Therefore, only the decisions taken in regular procedures or the Court of Appeal’s judgments are discussed here.
In March 2015, the Brussels Court of Appeal confirmed the Competition College’s conditional clearance decision of October 2013 in the Touring/Autoveiligheid case.7 In this decision, the Competition Council had ordered Touring Club to take all the necessary measures to ensure the operational and structural separation of its commercial activities and the target companies’ regulated activities.8 This conditional clearance decision was contested before the Court of Appeal because the appellants believed that the imposed commitments should have been structural rather than behavioural and that the commitments could not be monitored. The Court of Appeal dismissed the appeal by, among other things, noting that the imposed commitments were at least partially structural and were sufficiently concrete to be implemented by Touring Club and monitored by the Belgian Competition Authority, even if such monitoring was not explicitly stated in the conditional clearance decision.
On 8 June 2015, the Competition College cleared Altrad Investment Authority SAS’ acquisition of Hertel Holding NV.9 Both companies were active in industrial insulation, scaffolding and painting. Additionally, Altrad was also active in asbestos removal. After concluding that the concerned markets were the Belgian market for the delivery of industrial scaffolding services and the Belgian market for the delivery of industrial insulation services, the Prosecutor considered that the proposed transaction would not give rise to any non-coordinated, coordinated or conglomerate effects in these markets. The Prosecutor mainly referred to the fact that the majority of customers and competitors that responded to the information requests had not voiced any competition concerns. Moreover, the Prosecutor also took into account that the concerned markets were bidding markets in which there was no price transparency among the competitors. The Competition College shared the Prosecutor’s view, adding that usually at least four competitors took part in each bid and that the Dutch and German competition authorities had also cleared the transaction without imposing any conditions.
On 23 June 2015, the Competition College conditionally lifted the commitments imposed on Proximus NV (previously known as Belgacom NV) in the context of the Belgacom/Wireless Technologies acquisition,10 under which Belgacom had acquired the ‘The Phone House’ distribution network.11 In 2011, the acquisition had been approved provided that Belgacom, among other things:
7 Decision of the Brussels Court of Appeal of 11 March 2015 in Case No. 2013/MR/31, VAB NV, VAB Rijschool NV, Rijscholen Sanderus NV/Belgian Competition Authority.
8 Decision No. BMA-2013-C/C-02 of 24 October 2013 in Case No. MEDE-C/C-13/0023, Koninklijke Belgische Touring Club/Autoveiligheid and Bureau voor Technische Controle.
9 Decision No. BMA-2015-C/C-15 of 8 June 2015 in Case No. MEDE-C/C-15/009, Hertel Holding NV/Altrad Investment Authority SAS.
10 Decision No. BMA-2015-C/C-20 of 23 June 2015 in Case No. MEDE-C/C-11/0010, Belgacom NV/ Wireless Technologies BVBA.
11 Decision No. 2011-C/C-55 of 23 December 2011 in Case No. MEDE-C/C-11/0010, Belgacom NV/ Wireless Technologies BVBA.
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a resold nearly half of the acquired The Phone House points of sale;b operated the points of sale of The Phone House as a multi-operator distribution
network for five years; andc operated a Chinese Wall policy for the multi-operator points of sale.
On 11 May 2015, Proximus filed a request to have the multi-operator commitment, including the obligation to operate a Chinese Wall in the multi-operator points of sale, lifted. This request would render the current The Phone House points of sale exclusive Proximus points of sale. In the 2011 decision, the right to lift this commitment was made conditional upon Proximus’ competitors’ total sales in The Phone House points of sale falling below 30 per cent due to the decisions of the competitors. After the Prosecutor found that this condition had indeed been met, he continued to investigate what the impact would be on the market for mobile telephony services by lifting the requested commitment. After this investigation, the Prosecutor found that the importance of The Phone House points of sale had steadily decreased since 2011 in favour of competitors’ own exclusive distribution networks. This finding suggested that Proximus’ possible foreclosure of customers after the transformation of The Phone House points of sale was rather unlikely. In this context, the Prosecutor also referred to the fact that changes in telecoms legislation making it easier to switch operators had strengthened the position of consumers, and that the increasing importance of joint offers (e.g., phone and subscription) and bundles of telecommunication services (e.g., mobile phone, landline, internet and TV) favoured competitors’ use of their own, respective exclusive distribution networks over the multi-operator model. The Prosecutor even noted that lifting the original commitment could have positive effects on competition by limiting possible collusion between competitors and by no longer inducing Proximus into diverting customers interested in competitors’ products and services to its own products and services. Nevertheless, the Prosecutor did find that the imposition of certain transitory commitments was necessary to limit potential competition concerns during the transformation phase of The Phone House’s points of sale to Proximus’ points of sale. Therefore, Proximus agreed to the following commitments: a to give competitors using The Phone House network the right to withdraw from the
network without any repercussions and within a relatively short time frame;b to inform consumers in a clear way about which competitors would still offer services
through the respective The Phone House points of sale;c to clearly inform customers when a respective point of sale would become an exclusive
Proximus point of sale; andd to appoint a monitoring trustee.
The Competition College agreed entirely with the Prosecutor and confirmed the Prosecutor’s point of view.
On 4 August 2015, the Competition College cleared De Persgroep NV’s acquisition of Humo NV’s share capital and the Story, TeVe-blad and Vitaya magazines, provided that certain commitments were respected.12 Both De Persgroep and the sellers, Sanoma Media Belgium NV and Sanoma BV, were, among their other activities, active in the Belgian market
12 Decision No. BMA-2015-C/C-24 of 4 August 2015 in Case No. MEDE-C/C-15/0017, Acquisition of Humo NV, Story, TeVe-blad and Vitaya by De Persgroep Publishing NV.
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for the publication of Dutch-language magazines. On the basis of the market investigation, the Prosecutor defined the concerned markets as the Belgian market for the publication of Dutch-language magazines for TV and infotainment (including TV programming) and the Belgian market for the sale of advertising space in Dutch-language magazines. The Prosecutor then continued by finding that the proposed transaction could give rise to anticompetitive effects on the first of these two concerned markets. First, the Prosecutor found that, given De Persgroep’s significant, post-transaction market share (more than 80 per cent) and the fact that only one other competitor remained active in that market, the proposed transaction could give rise to a price strategy in which De Persgroep could strategically use one of the acquired magazine titles to drive its only competitor out of the market and then increase market prices. The Prosecutor noted that it was also likely that the plurality of magazine titles would wither away after the transaction as De Persgroep had indicated that it wanted to create certain synergies. Second, the Prosecutor noted that De Persgroep, through its 50 per cent participation in a TV broadcasting company, could cause severe, post-transaction damage to its only competitor by foreclosing this competitor from obtaining the necessary TV programming information relating to the channels operated by the TV broadcasting company. In this context, to be able to clear the transaction, the Prosecutor suggested that commitments be made to remedy these competition concerns. In its decision, the Competition College did not rule on the exact market definition. However, the Competition College did share the Prosecutor’s view regarding the competition concerns and the necessity that commitments should be offered. However, the College also noted that in the absence of the merger, there would also be a real risk that the four magazines would disappear and that the survival chances would be higher after the merger with De Persgroep focusing on television and infotainment magazines than in the Sanoma group for which these magazines were no longer strategic. Consequently, the transaction was cleared provided the following commitments would be respected over a three-year period:a to keep the format and editorial content of the Story and TeVe-blad titles (and
also, to a certain extent, Humo) largely unchanged and, in the TV programming section of these titles, not to pay disproportionate attention to the channels of the TV broadcasting company in which De Persgroep had a 50 per cent ownership (as compared to the other TV channels);
b to first offer a title for sale to any interested buyers upon reasonable conditions in case De Persgroep would like to discontinue one of these titles;
c to ensure that the TV broadcasting company in which De Persgroep continued to have a 50 per cent ownership will respect a standstill obligation relating to the conditions, the quality and the time of making available the programming information relating to its current and future TV channels; and
d to appoint a monitoring trustee.
This transaction also gave rise to a procedural issue that was dealt with by the Competition College in a separate decision.13 A fine of €50,000 was imposed for negligently hindering the merger investigation as a result of the late submission of a market study in response to a simple information request. Given the short time frame in which merger investigations must
13 Decision No. BMA-2015-C/C-31 of 30 September 2015 in Case No. MEDE-C/C-15/0017, Acquisition of Humo NV, Story, TeVe-blad and Vitaya by De Persgroep Publishing NV.
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be conducted, the College noted that the parties had a special duty of care and, thus, without delay should have provided the Prosecutors with all the information that had been reasonably requested. The College noted that: the market study at issue was only submitted (a couple of hours) after the deadline for the Prosecutors to communicate their first objections to the parties in view of allowing them to propose commitments; and Sanoma had already been aware of the existence of this market study for two working days before the study was submitted. On that basis, the College judged that the late submission should be considered as hindering the investigation. The fact that the market survey would not have led the Prosecutor to come to a different conclusion was considered to be irrelevant. In its decision, the College for the first time applied the Guidelines on the calculation of fines to procedural infringements within the framework of merger investigations.14 The fact that there was no case-law precedent in which similar behaviour had been considered to hinder an investigation, that this was the first time that the Guidelines on the calculation of fines were applied as guidance for the calculation of a fine for a procedural infringement in the framework of a merger investigation and the lack of intent were considered to be mitigating circumstances.
The new competition authority also imposed for the first time a fine for gun jumping. In an agreement on 19 August 2015, Cordeel Group acquired full ownership and the majority of the shares in Imtech Belgium Holding and Imtech Belgium.15 Imtech Benelux Group and Imtech Nederland acted as vendor parties to the transaction. As Royal Imtech, Imtech’s holding company was declared bankrupt, the vendors were represented by liquidators. Due to the specific circumstances of this case (the bankruptcy of the vendor party), the transaction was implemented within a very short period of time and before notification. The takeover was widely covered by the press, and the Competition Authority contacted Cordeel of its own initiative to remind it of the applicable merger control rules. Only then did Cordeel start preparing the notification. In the first stage, the President of the Competition College granted, at Cordeel’s request, a waiver of the standstill obligation with retroactive effect, to ensure the lawfulness of the acts performed by the merged company. Secondly, concerning the merits, the Prosecutor concluded that the transaction was admissible, as it did not raise any competition concerns. However, the Prosecutor also proposed that the Competition College impose a fine for gun-jumping. Because a fine can only be imposed by the Competition College, and not by the Prosecutor, the Prosecutor refused to handle the notification according to the simplified procedure (which was dealt with by the Prosecutor) and required Cordeel to notify according to regular procedure for the case to be decided by the Competition College. The Minister of Economic Affairs intervened in this case. The Competition College cleared the transaction and only imposed a symbolic fine of €5,000 on Cordeel. It came to this decision by taking into account the special circumstances of the case, among others the extreme time pressure on the buyer as a consequence of Imtech’s imminent bankruptcy, the
14 Guidelines of the Belgian Competition Authority of 26 August 2014 on the calculation of fines for undertakings and associations of undertakings as set out in Article IV.70, Section 1, first subsection of the Code of Economic Law for infringements of Articles IV.1, Section 1 and/or IV.2 of the Code of Economic Law or of Articles 101 and/or 102 TFEU. As is apparent from the Guidelines’ title itself, they were, in principle, only intended to apply to infringements of the prohibitions on cartels and abuse(s) of a dominant position.
15 Decision No. BMA-2015-C/C-79 of 23 December 2015 in Case No. MEDE-C/C-15/0035, The acquisition of Imtech Belgium Holding NV and Imtech Belgium NV by Cordeel Group NV.
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fact that the concentration did not raise any competition concerns, the fact that Cordeel’s infringement had not been intentional and did not result in any benefits for Cordeel, and the proportionality in relation to the transaction’s value. The Competition College, however, explicitly noted the importance of the prior notification obligation whenever the turnover thresholds are met, even in non-problematic cases where no overlaps between the activities of the parties to the transaction exist and the transaction does not raise any competition law concerns.
On 30 November 2015, the Competition College decided that a transaction in which Kinepolis would buy four Utopolis cinema complexes raised serious doubts about its permissibility, and opened second stage proceedings.16 After this additional investigation and the dismissal of the first sets of commitments proposed by Kinepolis, the Prosecutor concluded that the transaction would still not be permissible for the following reasons: a The transaction would allow Kinepolis to create or to reinforce its dominant position
on the concerned local and national markets. This conclusion was already sufficient to declare the transaction impermissible.
b As a consequence of the proposed transaction, one of Kinepolis’ competitors, running four large cinema complexes in Flanders (a region in which Kinepolis was very active) would disappear.
c The transaction would hinder the growth of Kinepolis’ competitors in a saturated market in which growth would only be possible by taking over existing cinema complexes.
d It was very likely that the transaction would have many negative, unilateral consequences regarding consumers (price increases and decreases in offers), regarding competitors (scale economies, expansion possibilities and improved negotiation position) and regarding distributors (concerning the reinforcement of the existing market positions).
On 25 March 2016, the Competition College of the Belgian Competition Authority approved Kinepolis’ acquisition of the Utopolis cinema complexes, after Kinepolis accepted some additional structural and behavioural conditions.17
First, Kinepolis must transfer the cinema complexes of Mechelen and Aarschot to a third-party buyer who could become an active competitor to Kinepolis and the other players in the market.
Second, regarding the cinema complexes of Turnhout and Lommel, the following behavioural conditions were imposed for a period of three years: a accepting vouchers that were sold by other cinemas in the framework of existing
cooperation contracts;
16 Decision No. BMA-2015-I/O-69 of 30 November 2015 in Case No. MEDE-I/O-15/0030, Kinepolis Group NV/Utopolis (Utopia NV). The acquisition was notified although it did not meet the merger control turnover thresholds. The approval of the Belgian competition authority was, however, required following a commitment imposed by the Belgian Competition Authority upon the constitution of the Kinepolis joint venture, not to build or acquire any further cinemas without the prior approval of the Belgian Competition Authority.
17 Decision No. BMA-2016-IO-12 of 25 March 2016 in Case No. MEDE-I/O-15/0030, Kinepolis Group NV/Utopolis (Utopia NV).
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b a prohibition upon closing the cinema complexes; and c monitoring customer satisfaction concerning the relationship between the price and
quality of the cinema experience.
On 28 January 2016, in a transaction concerning, on the one hand VikingCo NV (Mobile Vikings), VikingCo International NV and Jim Mobile, and, on the other hand Medialaan NV, the Competition College agreed with the Prosecutor’s proposal and accepted the takeover of VikingCo NV (Mobile Vikings), VikingCo International NV and the client data of Jim Mobile by Medialaan NV, a Flemish media concern.18 This transaction was part of the commitments offered in response to the European Commission’s objections arising from the larger acquisition by Liberty Global (which is the majority shareholder of Telenet) of Base. Consequently, the transaction was conditional upon the European Commission’s approval of the Base takeover. After the European Commission’s approval of the transaction, Medialaan NV would become active as a mobile virtual network operator (MVNO) and therefore enter into competition with the other actors in the Belgian retail market for mobile communications.
On 15 March 2016, the Competition College of the Belgian Competition Authority approved, subject to certain conditions, the merger of two supermarket chains active in Belgium, Delhaize Group and Ahold.19 The transaction was notified to the Belgian Competition Authority following the decision of the European Commission of 22 October 2015 to refer the case to the Belgian Competition Authority. The case was referred at the request of the parties under Article 4(4) of the Merger Regulation based on the fact that the only significant overlap in the parties’ activities in Europe was in Belgium. In its draft decision, the Prosecutor concluded that the transaction would probably not significantly impede effective competition on the market for the purchase of daily consumption goods. For the market for the sale of daily consumption goods via hypermarkets, supermarkets and discounters, the Prosecutor deemed the structural commitments offered necessary to respond to the following concerns: a The parties would reach high market shares in different local areas after the merger.
This would lead to high market concentration in these areas. b High barriers to entry in the sector would hinder the entrance of new players on the
market. c After the merger, the competitive pressure between the two merging undertakings
would disappear. d It could be assumed that the disappearance of the competitive pressure between the
two merging undertakings after the merger also had the effect of diminishing the competitive pressure with regard to other retailers.
e The chances of coordinated effects on the relevant market after the merger would be quite real.
18 Decision No. BMA-2016-C/C-03 of 28 January 2016 in Case No. MEDE-C/C-15/0043, The acquisition of the Jim Mobile client data of BASE Company NV, of VikingCo NV and VikingCo International NV of BASE Company NV and the shareholders of VikingCo International by Medialaan NV.
19 Decision No. BMA-2016-C/C-10 of 15 March 2016 in Case No. MEDE-C/C-16/0002, Merger of Delhaize NV and Royal Ahold NV.
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The Competition College decided that the cumulative effect of competition concerns in different small local markets for the sale of daily consumption goods resulted in serious doubts regarding the merger’s permissibility. As the parties could not guarantee they would keep the two supermarket chains separate after the merger with one or different business models, the Competition College took into account the most restrictive form of integration of the two chains for its decision. In its analysis regarding non-coordinated effects, the Competition College stated that the Prosecutor had identified the markets as raising serious doubts concerning where the parties had a market share of about 40 per cent or more and where the market share of the second player on the market was half or less than the market share of the parties. The Competition College agreed with this analysis.
Furthermore, the Competition College decided that the last version of the commitments offered on 16 February 2016 was sufficient to remove its concerns about the merger’s permissibility. The commitments concerned the transfer of eight Ahold and five Delhaize franchise stores, and a few stores that were not yet opened, to a buyer that had the financial power, proven relevant expertise and necessary incentives to keep the stores as an active and viable competitor of the merged enterprise and other competitors. Until these divestments, the Ahold and Delhaize shops need to be operated independently in Belgium.
III THE MERGER CONTROL REGIME
As mentioned in Section 1, concentrations must be notified in Belgium if the undertakings concerned, taken together, have a total turnover of more than €100 million in Belgium,20 and if at least two of the undertakings concerned each have a turnover of at least €40 million in Belgium, unless the concentration has a ‘Community dimension’21 and thus must be notified to the European Commission. The relevant turnover is the consolidated sales turnover in Belgium during the preceding financial year. On the seller’s side only the Belgian turnover generated by the target company (or companies) (or sold business) should be taken into account.22 The parties must obtain approval for the proposed concentration before it can be implemented.23
In 2006, the ‘significant impediment to effective competition’ test was introduced in Belgian competition law as the substantive test for clearance, aligning it with the EU Merger Regulation. A particular feature of the Belgian merger control system is that if the post-merger joint market share of the parties in any relevant horizontal or vertical market does not exceed 25 per cent, then the transaction must be approved by the Competition College.24
The first step in the notification procedure usually consists of pre-notification contacts with the Competition Authority, in particular with the Prosecutor. The Code of Economic Law does not oblige the parties to make pre-notification contacts, but it is recommended25
20 Article IV.7, Section 1 Code of Economic Law.21 Article IV.11 Code of Economic Law.22 Article IV.8 Code of Economic Law.23 Article IV.10, Section 5 Code of Economic Law.24 Article IV.61, Section 2, 2° Code of Economic Law.25 The Rules adopted by the General Assembly of the Competition Council regarding the
simplified notification of concentrations of 8 June 2007 recommend contacting the College
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and has become standard practice. In principle, a formal notification may only be submitted after the informal approval of the Prosecutor-General has been obtained in the context of such pre-notification contacts. These contacts can take place via telephone or email, or in face-to-face meetings. The discussions usually take place based on a draft notification. These contacts have several purposes, including:a the parties and the Prosecutor can discuss a number of essential points (such as
whether the concentration must be notified, whether the simplified procedure could be used and what information must be provided);
b reducing the risk of the Prosecutor finding the notification to be incomplete (which has a significant impact on the notification’s timing);
c the Prosecutor can, at the parties’ request, exempt the notifying parties from providing certain information,26 which can make the notification less onerous; and
d they allow the parties to understand the Prosecutor’s point of view on, for example, the market definition, and to more accurately estimate whether Phase I clearance is likely to be granted.
For the notification itself, the parties must use the ‘CONC C/C form’.27 By completing this form, the parties provide a wide range of information on, among other things, the concentration, the parties, their economic activities, the relevant markets and the effects of the concentration on the relevant markets. The information provided must be correct and complete;28 otherwise the notification cannot have any effect.29 In general, the notification obligation falls on the party acquiring control through the concentration.30 In the case of a merger between two formerly independent companies, the obligation falls on both parties.31 The concentration must be notified after the agreement’s conclusion and before its implementation. Nevertheless, the parties can notify a draft agreement if they declare that it will not significantly differ from the proposed agreement on all relevant points from a competition law perspective.32
of Competition Prosecutors at least two weeks before notification (see Section III.i, infra). Until further notice, these Rules remain applicable also after the entry into force of Book IV of the Code of Economic Law.
26 Article 5, Section 4 of the Royal Decree on the notification of concentrations.27 Annexed to the Royal Decree on the notification of concentrations. For the simplified
procedure, form CONC C/C-V/S is used, which is annexed to the Rules adopted by the General Assembly of the Competition Council regarding the simplified notification of concentrations of 8 June 2007.
28 Article 4, Section 1 of the Royal Decree on the notification of concentrations.29 Article 5, Section 2 of the Royal Decree on the notification of concentrations.30 Article IV.10, Section 2 Code of Economic Law.31 Ibid.32 Article IV.10, Section 1 Code of Economic Law. In Case No. 98-C/C-11 of the Competition
Council of 28 July 1998, Promedia CV/Belgacom Directory Services NV, Belgian Official Gazette 18 September 1998, p. 30,441, the Council ruled that an agreement that had not yet been approved by the works council was not sufficiently binding to be notified.
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The notification must be made in Dutch or in French.33 The documents attached to the notification must be filed in their original language. If that language is not Dutch, French or English, a translation into the notification language must be added.34 The notification, including its annexes, must be sent to the Belgian Competition Authority for the attention of the Prosecutor-General in three copies, either by registered post or by courier with acknowledgment of receipt, using the address indicated on the Belgian Competition Authority website. At the same time, an electronic copy of the notification and its annexes must be sent by email to the Secretariat of the Belgian Competition Authority for the attention of the Prosecutor-General, using the email address indicated on the Belgian Competition Authority website.35
As is the case in European merger control, the parties must suspend the implementation of the merger until it has been cleared.36 Failure to respect this standstill obligation can result in fines of up to 10 per cent of the notifying parties’ annual turnover.37 In exceptional circumstances, the President can permit the parties to implement the merger before it has been approved, but such an exemption must, in principle, always be requested before the merger’s implementation.38 Failure to notify a merger can result in fines of up to 1 per cent of the notifying parties’ respective annual turnovers.39 The same fines may apply if incorrect or incomplete information is provided in a notification or a request for information, if the information is not provided on time or if the notifying parties hinder or prevent the investigation.40
The Belgian Competition Act makes a distinction between the simplified merger procedure and the regular merger procedure.
i Simplified procedure
On 1 October 2006, the simplified merger procedure was introduced in Belgian competition law. Before that date, the simplified procedure was based on ‘soft law’. It was only on 8 June 2007 that the General Assembly of the Council approved this procedure’s detailed rules and thus replaced the previous ‘soft law’ rules.41
33 Article IV.10, Section 3 Code of Economic Law.34 Article 3, Section 4 of the Royal Decree on the notification of concentrations.35 Article 3, Section 2 of the Royal Decree on the notification of concentrations.36 Article IV.10, Section 5 Code of Economic Law.37 Article IV.70, Section 1 and Article IV.72 Code of Economic Law.38 Article IV.10, Section 7 Code of Economic Law; See for a recent application also the decision
No. BMA-2015-C/C-79 of 23 December 2015 in Case No. MEDE-C/C-15/0035, The acquisition of Imtech Belgium Holding NV and Imtech Belgium NV by Cordeel Group NV Cordeel, discussed above.
39 Article IV.71, Section 2 Code of Economic Law.40 Article IV.71, Section 1 Code of Economic Law. See also decision No. BMA-2015-
C/C-31 of 30 September 2015 in Case No. MEDE-C/C-15/0017, Acquisition of Humo NV, Story, TeVe-blad and Vitaya by De Persgroep Publishing NV, in which the Competition College ruled that the Guidelines on the calculation of fines may be used as guidance for the calculation of such fines.
41 Rules adopted by the General Assembly of the Competition Council regarding the simplified notification of concentrations on 8 June 2007.
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The simplified procedure is highly practical, and today the vast majority (about 80 per cent) of notifications are made using this procedure.
The simplified procedure has two essential characteristics: first, the Prosecutor (and not the Competition College) examines the merger and decides whether to authorise it; second, the simplified procedure is very short, as the Prosecutor has to make a final decision within 15 working days of having received the notification. The amount of information that must be filed is also substantially less than in the regular procedure.
The parties can choose the simplified procedure for the following categories of concentrations:42
a two or more undertakings acquire joint control over a joint venture on condition that the joint venture is not active or is only active to a small degree on the Belgian market, when the joint venture’s turnover or the turnover of the brought-in activities in Belgium, or the turnover of both, is less than €40 million; and the total value of the transfer in assets to the joint venture in Belgium is less than €40 million;
b none of the parties to the concentration are active on the same product and geographical markets, or on a product market situated upstream or downstream of a product market on which one or more parties to the concentration is active;
c two or more of the parties to the concentration are active on the same product market and geographical market (horizontal relationship), on condition that their joint market share is less than 25 per cent; or one or more parties to the concentration are active on a product market upstream or downstream of a product market on which another party to the concentration exercises activities (vertical relationship), on condition that their individual or joint market shares amount to less than 25 per cent; and
d a party acquires sole control over an undertaking over which it already exercises joint control.43
As mentioned above, the Prosecutor has only 15 working days from the notification44 to decide whether the conditions for the simplified merger procedure apply and whether the
42 Point II.3.2 of the Rules adopted by the General Assembly of the Competition Council regarding the simplified notification of concentrations of 8 June 2007 states that, in special circumstances, the simplified procedure cannot be applied. This can be the case where it is impossible to determine the exact market shares of the parties (e.g., on new or less-developed markets) or where markets with high entry barriers or a high degree of concentration are concerned. In decision No. BMA-2015-C/C-79 of 23 December 2015 in Case No. MEDE-C/C-15/0035, The acquisition of Imtech Belgium Holding NV and Imtech Belgium NV by Cordeel Group NV Cordeel, discussed above, gun-jumping was also considered to be a special circumstance to set aside the simplified procedure.
43 Point II.1 of the Rules adopted by the General Assembly of the Competition Council regarding the simplified notification of concentrations of 8 June 2007.
44 Article IV.63, Section 6 Code of Economic Law. Please note that Article I.1 Code of Economic Law defines working days as all calendar days with the exception of Sundays and statutory holidays. This means that Saturdays are in principle to be considered as working days. In comparison with what was the case under the former Competition Act, where
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concentration raises any objections45 or doubts as to its permissibility.46 If the Prosecutor fails to come to a decision before the deadline, the merger is deemed to have been approved.47 If the Prosecutor concludes that either the conditions for applying the simplified procedure are not fulfilled or the concentration raises objections, the use of the simplified procedure will be rejected and a full notification under the regular procedure must be made.48 Moreover, the timetable for the regular proceedings will only start running after the new filing is made, as the simplified notification will be deemed to have been incomplete from the start. If the Prosecutor accepts that the conditions for the simplified procedure apply and does not find any objections, the merger must be approved. In this respect, it is also useful to refer to a peculiarity of Belgian merger control that obliges the Authority to approve any merger where the parties’ Belgian market share does not exceed 25 per cent, which will often be the case in simplified merger filings. The Prosecutor informs the parties of the decision by post, which is deemed by law to have the value of a decision of the Competition College for the application of Book IV of the Code of Economic Law.49
Even though the simplified procedure is formally included in Book IV of the Code of Economic Law, it still entails some uncertainty for the parties. First, there is uncertainty as to timing. As set out above, a ruling that the simplified procedure cannot be used means that the parties have to start regular proceedings from scratch. Even if the Prosecutor during the pre-notification contacts indicates that the concentration qualifies for the simplified procedure, nothing is certain, especially given the wide interpretation of the ‘no objection’ criteria, which can allow third parties to force the notifying parties into a regular notification by filing objections. This uncertainty is increased by the absence of any right to appeal against a Prosecutor’s decision to revert to the regular procedure.
ii Regular procedure
The regular procedure is divided into two phases (Phase I and Phase II), which each consist of an instruction and a decision stage. Once a complete notification has been filed, the Prosecutor will open a Phase I procedure. At this point, a summary of the notification is
the Prosecutor was given 20 working days to come to a decision and Saturdays were not considered to be working days, the deadline has thus been substantially shortened by the entry into force of Book IV of the Code of Economic Law.
45 Article IV.63, Section 3 Code of Economic Law. This criterion was widely interpreted in case law. In the Belgian Airports/Brussels South Charleroi Airport case, the Prosecutor refused the application of the simplified procedure merely because a third party voiced an objection against the concentration (Case No. 2009-C/C-27 of 4 November 2009, Belgian Official Gazette 22 January 2010).
46 Article IV.63, Section 5 Code of Economic Law. Strangely, this paragraph (‘doubts as to the permissibility’) does not use the same criterion as paragraph 3 (‘no objection’).
47 Article IV.63, Section 6 Code of Economic Law.48 For example, Decision No. ABC-2014-C/C-03 of 26 March 2014 in Case No.
CONC-C/C-13/0030, Tecteo/EDA – Avenir Advertising, which was notified under the simplified procedure but had to be renotified under the regular procedure as some of the market definitions were contested and the transaction raised multiple competition concerns according to the auditor.
49 Article IV.63, Sections 3 and 4 Code of Economic Law.
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published in the Belgian Official Gazette and on the Competition Authority’s website. The Prosecutor gathers information and submits a reasoned draft decision to the Competition College, who takes the final decision to either approve the merger (possibly subject to certain conditions) or to open a Phase II procedure.
Book IV of the Code of Economic Law contains fixed time frames for both the decision and the investigation. Once the concentration has been notified, the Prosecutor must submit a reasoned draft decision to the Competition College within 25 working days of the day after the notification.50 A copy of this report will also be sent to the parties and a non-confidential version to the representatives of the employee organisations of the undertakings involved.51 If the file is incomplete, the time period only starts when the complete information is received. If commitments are presented, the time limit is extended by five working days.
No less than 10 working days after the communication of the Prosecutor’s reasoned draft decision, the Competition College organises a hearing during which the parties and any interested third parties are heard.52 From the moment the Prosecutor’s draft decision is submitted, the parties must be given full access to the file, except for confidential submissions from third parties. Third parties, on the other hand, only have a right of access to the file in limited circumstances. The Competition College must decide whether to approve the merger within 40 working days from the day after the notification.53 This deadline is extended by 15 working days in cases where commitments are proposed. Furthermore, the parties can request an extension of the deadline after the investigation has ended.54 This extension may be particularly relevant if the parties need more time to convince the Competition College of their case, offer commitments, etc., to avoid the opening of a Phase II investigation.
If the Competition College has serious doubts about approving the merger, it can order an additional investigation under the Phase II procedure. The parties have 20 working days after such a decision to propose commitments.55 Furthermore, the Prosecutor must submit its revised draft decision within 30 working days of the decision.56 The parties may submit their written observations within 10 working days of the submission of the revised draft decision. If the parties submit written observations, the Prosecutor may submit an additional draft decision within five working days.57 A hearing must be held no less than 10 working days after the submission.58 The Competition College must decide whether to approve the merger within 60 working days of initiating the Phase II procedure.59 This deadline can be extended at the parties’ request.
50 Article IV.58, Section 4 Code of Economic Law.51 Article IV.58, Section 4 Code of Economic Law.52 Article IV.60, Sections 1 and 2 Code of Economic Law.53 Article IV.61, Section 2 Code of Economic Law.54 Article IV.61, Section 3 Code of Economic Law.55 Article IV.62, Section 1 Code of Economic Law.56 Article IV.62, Section 2 Code of Economic Law. This deadline shall be extended by a period
equal to the period used by the parties to present commitments, if any.57 Article IV.62, Sections 3 and 4 Code of Economic Law.58 Article IV.62, Section 5 and Article IV.60 Code of Economic Law.59 Article IV.62, Section 6 Code of Economic Law. This deadline shall be extended by a period
equal to the period used by the parties to present commitments, if any.
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If the Competition College fails to make a Phase I or Phase II decision by the deadlines set out above, the merger is deemed to have been approved.
The Competition Act does not grant interested third parties the right to access the file, but only to be heard by the Competition College.60 However, the Supreme Court61 has somewhat limited this principle by ruling that, in exceptional circumstances, an interested third party can obtain access to the file to the extent that this access is limited to a non-confidential version and that such access is strictly necessary to allow the third party to set out its views on the merger. In practice, it seems that the Competition College is more inclined to refuse access than to grant it. However, in the Mediahuis decision, the Brussels Court of Appeal confirmed that the Belgian Competition Authority is obliged to give access to the concentration file that was submitted to the Competition College during the appeal proceedings.62
Once a decision has been taken, notifications must be sent to the parties, the relevant minister, anyone who might have an interest and anyone who has requested to be kept informed. The decisions are also published in the Belgian Official Gazette and on the Competition Authority’s website.63 Before publication, the President of the Competition College will decide which, if any, passages in the decision are confidential,64 and will invite the parties to submit their views on this confidentiality.
Appeals against decisions made by the Competition College can be made to the Brussels Court of Appeal and, subsequently, the Supreme Court. The appeal could be against the Competition College’s decision to approve or refuse a merger or against default approvals when the Competition College failed to make a decision by a specified deadline.65 The appeal could be lodged by the parties, by interested third parties who have requested to be heard by the Competition College and by the Minister of Economic Affairs. The appeal must be lodged within 30 days of the notification of the decision.66
Before the Court of Appeal, the parties present their arguments in writing and at a hearing. The Minister of Economic Affairs can also submit written arguments to the Court of Appeal. Since the entry into force of Book IV of the Code of Economic Law, the Belgian Competition Authority, represented by the President, can also intervene as a party in the proceedings and submit written arguments. At any time, the Court of Appeal can call the parties to the case before the Competition College when there is a risk that the appeal may affect their rights or obligations.67 In cases concerning the admissibility of concentrations, the Court of Appeal does not have full jurisdiction, but will only rule with the power of annulment.68
60 Article IV.62, Section 5 and Article IV.60 Code of Economic Law.61 Court of Cassation, 22 January 2008, Tectéo/Brutélé.62 Decision of the Brussels Court of Appeal of 19 November 2014 in Case No. 2013/MR/30,
De Persgroep NV/Belgian Competition Authority and Corelio NV and Concentra NV. 63 Article IV.66, Section 2 Code of Economic Law.64 Article 65 Code of Economic Law.65 Article IV.79, Section 1 Code of Economic Law.66 Article IV.79, Sections 3 and 4 Code of Economic Law.67 Article IV.79, Section 5 Code of Economic Law.68 Article IV.79, Section 2 Code of Economic Law. This was recently confirmed in the decision
of the Brussels Court of Appeal of 19 November 2014 in Case No. 2013/MR/30, De
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An appeal to the Court of Appeal does not suspend the Competition College’s decision,69 and it continues to have full effect until the Court of Appeal issues its judgment. However, at the request of one of the parties, the Court of Appeal can order the suspension of the Competition College’s decision. In practice, the suspension of a College decision usually is of limited interest to the parties, as they are bound by the suspension obligation of the merger until it is approved. However, in the Cable Wallon case, it turned out to be useful when the Court of Appeal overruled a tacit admissibility decision and reopened the investigation.70 On the other hand, a suspension might be useful to third parties who have appealed against a decision to ensure that the merger is not implemented.
IV OTHER STRATEGIC CONSIDERATIONS
As is the case in all merger control proceedings, time is of the essence. Under the Belgian merger control system, a third party could try to prolong merger procedures to the disadvantage of its competitors. A third party could, for instance, prevent the merging parties from enjoying the benefits of the simplified (and much faster) procedure by raising objections to the merger. This practice appeared to work, even in cases where such objections are based on rather weak arguments.
Regarding timing, it should be noted that the deadline imposed on the Prosecutors to issue decisions in simplified merger filings has been shortened from 20 to 15 working days (with it being understood that Saturdays are now also considered as working days). Therefore, it becomes even more important to start pre-notification contacts well before the actual merger filing. In case of a simplified procedure, it is also advisable to start pre-notification contacts to obtain as much certainty as possible about the Prosecutor’s preliminary view on whether the conditions for a simplified procedure are fulfilled and on the extent of the information that should be provided to convince the Belgian Competition Authority that the simplified procedure’s conditions indeed apply.
V OUTLOOK AND CONCLUSIONS
In 2015, the number of notifications filed and the notification decisions issued significantly increased compared to previous years. Moreover, a significant number of concentrations were filed under the regular merger control procedure. Two of these decisions gave rise to fines for procedural infringements, one for negligent obstruction and one for gun-jumping. It is clear that the Belgian Competition Authority expects the parties to a concentration to act diligently, and that it will fine undertakings that omit to notify or do not reply in a timely manner to requests for information in merger proceedings, with or without intent.
From the decisions that have already been issued under the regular merger control procedure since the entry into force of Book IV of the Code of Economic Law, it can be seen that it is not uncommon for approval decisions to be linked to complying with certain commitments. In this context, it should be noted that, as is the case under European
Persgroep NV/Belgian Competition Authority and Corelio NV and Concentra NV.69 Article IV.79, Section 2 Code of Economic Law. 70 Brussels, 25 January 2008, Tecteo, Brutélé, Case 2008/MR/1.
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competition law, both behavioural and structural remedies can be accepted. Whereas the Belgian Competition Authority seemed to be more inclined to impose behavioural remedies in the past, in recent decisions structural remedies have also been imposed (e.g., in the Delhaize/Ahold merger or the Kinepolis/Utopolis case).
Finally, a legislative proposal is currently pending concerning amending Belgian competition legislation. In this respect, there have been calls to introduce a ‘stop the clock mechanism’ in Belgian merger proceedings. It is also proposed to increase the maximum fines from 10 per cent of the Belgian turnover to 10 per cent of the worldwide turnover of the infringing undertakings. The amendments to the Belgian competition legislation are expected to be adopted in the final quarter of 2016/first quarter of 2017. In the next months, however, the current provision defining working days including Saturdays will already be amended to exclude Saturdays again from this definition for competition law proceedings, meaning that the Belgian Competition Authority will have a little more time to come to a decision in merger control proceedings.
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Appendix 1
ABOUT THE AUTHORS
CARMEN VERDONCKALTIUSCarmen Verdonck is a partner in the commercial and competition team at Altius. She advises a wide range of domestic and multinational clients on all aspects of Belgian and EU competition law, including strategic alliances, cartel investigations, the establishment and operation of distribution systems, technology licensing, abuses of dominant positions and state aid. She has also assisted various multinational clients in the design and implementation of compliance programmes and training courses. In merger control cases, Ms Verdonck has assisted various clients in obtaining merger control clearance from the Belgian Competition Authority and the European Commission, and in the coordination of merger filings in numerous other countries. She holds a bachelor’s degree in law from the University of Leuven (1995 Lic Jur magna cum laude) and an LLM in European law from the University of Bristol (1996). She has been a member of the Brussels Bar since 1996, and is president of the Association pour l’Etude du Droit de la Concurrence; a member of the legal committee of the Belgian Franchising Federation; a board member of the International League of Competition Law; and a member of the Women’s Competition Network. Ms Verdonck has been appointed as assessor in the newly formed Belgian Competition Authority. Ms Verdonck is also maître de conférences at the University of Liège and lectures on Belgian competition law in the LLM programme in European competition and IP law. She has written numerous articles and other publications on competition law.
STEFFIE DE COCK ALTIUSSteffie De Cock is an associate in the competition and commercial team at Altius. She specialises in all aspects of competition law at the European and national levels, including cartel cases, distribution networks, abuse(s) of dominance, and state aid. She also assists domestic and multinational clients in the setting-up of compliance programmes. Steffie has experience in drafting and reviewing a broad range of commercial contracts. In merger
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control cases, she assisted various clients in obtaining merger control clearance from the Belgian Competition Authority. Ms De Cock obtained her Master of Laws at the University of Leuven. Afterwards she complemented her Master of Laws with a Master Complémentaire en Droit Européen from the University of Brussels. In 2012, Steffie studied on an LLM programme at the University of Stellenbosch, South Africa. Furthermore, Steffie was the winner of the Best Advocate General award at the ELMC pleading competition Regional Final.
ALTIUSHavenlaan 86C B414 Avenue du Port1000 BrusselsBelgiumTel: +32 2 426 14 14 Fax: +32 2 426 20 [email protected]@altius.comwww.altius.com
