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INTERNATIONAL TRANSACTIONS
AND COMPETITION LAW
Index
1. Why are competition / antitrust issues
important?
2. Merger control
3. Distribution systems
4. Cartels and state aids
Index
1. Why are antitrust issues important?
2. Merger control
3. Distribution systems
4. Cartels and state aids
Why are antitrust issues important?
CONSEQUENCES OF INFRINGEMENTS
Significant finesUp to 10% of the turnover of the the group + sanctions on directors/managers
Civil consequences
Nullity of agreementsDivestment or mergersDamages: class actions
1
Other risks Exclusion from public tenders
Imprisonment of directors/manag
ersEE.UU/UK + disqualification
Why are antitrust issues important? 1
EUROPEAN COMMISSION FINES
COMPANY YEAR TOTAL FINE (MILLIONS EUR)
Intel / Abuse of dominant position
2009 1,060
Saint Gobain / Cartel 2008 896
E.ON / Cartel 2009 553
GDF Suez / Cartel 2009 553
Microsoft / Abuse of dominant position
2008 497
ThyssenKrupp / Cartel 2007 479
Siemens AG / Cartel 2007 396
Index
1. Why are antitrust issues important?
2. Merger control
3. Distribution systems
4. Cartels and state aids
Merger control 2
Key issues
What is merger control?
When does a merger exist?
Where must the merger be notified?
How must the notification be done?
Which are the assessment criteria?
Time frame
Merger control 2.1
What is it?
Formal revision procedure
Authorisation usually prior to execution... attention to for gun jumping!
Almost 100 countries with different merger procedures
And supranational authorities: EU v authorities of the 27 EU Member States (coordination mechanisms)
Merger control 2.2
Concept may differ from country to country
Stable change in control (EU)
Types: Mergers Asset/share acquisitions Trademark acquisitions Management contracts Acquisition of goodwill
Joint ventures: mergers or restrictive agreements?
Merger control 2.3
Where to notify?
Determine whether thresholds are met in the countries where the target or the parties (JVs) operate
If the EU thresholds are met, Member States do not have jurisdiction
Types of threshold: “Easy”: turnover “Difficult”: market share
..... of the “affected companies” (including the business group)
Merger control 2.3
EU: (i) EUR 5,000M worldwide turnover of all the affected companies; + (ii) at least 2 of the companies’ turnover in EU > EUR 250M; (iii) 2/3 exception
UK: Target’s turnover in UK > GBP 70M // and voluntary notification if there is an overlap and >25% market share
Spain: alternative thresholds:
Turnover in Spain > EUR 240M of the business group affected + at least 2 companies must each have > EUR 60M
30% market share (no overlap needed)
Where to notify: EU-UK-Spain?
Merger control 2.3
Complex thresholds, reviewed annuallly
Value of the transaction: above
- 63,4 MUSD
or
- 254 MUSD,
in assets value or net annual sales
Where to notify? US
Merger control 2.4
Official form:
Ordinary
Abbreviated
Procedure: Pre-notification
First investigation phase
Second investigation phase (complex cases)
Spain: Third phase (Council of Ministers)
How to notify?
Merger control 2.5
Does the merger “significantly” hinder competition?
Substantially impeding effective competition (SIEC test), i.e. creation or strengthening of dominant position
Possibility of increasing prices, discriminating between clients, forcing out competitors
Excessive vertical integration
Which are the assessment criteria?
Remedies: commitments v conditions
Merger control 2.6
Early identification of notification requirement:
Contract drafting
Identification of jurisdictions Notification preparation (complex)
Risk/convenience of file being refererred between authorities
“Second phase” risk
Calendar
Coordination with takeover calendar
Index
1. Why are antitrust issues important?
2. Merger control
3. Distribution systems
4. Cartels and state aids
Distribution systems 3
EU:Automatic authorization:
- Exemption Regulation 2790/1999 (under review):
- Max. market share: 30%
- No black clauses: (i) market distribution; (ii) resale prices
- If exclusive, 5 years; extension accepted only with express agreement
- “Self-assessment” of agreements
Index
1. Why are antitrust issues important?
2. Merger control
3. Distribution systems
4. Cartels and state aids
Cartels and state aids 4
“Secret” agreements between competitors (conspiracy) to fix prices, distribute markets, boicot, fix tenders
Due diligence and reps & warranties (risk of repayment aids)
Cartels
Impact of leniency programs
Reps & warranties in corporate acquisitions
State aid
Thank you!