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Everybody Wants to Rule Your Deal – A Practical Guide to ...


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Everybody Wants to Rule Your Deal – A Practical Guide to ...

  1. 1. Everybody Wants to Rule Your Deal – A Practical Guide to International Merger Control Dave Anderson Partner, Berwin Leighton Paisner LLP Brussels 9 October, 2007 [email_address]
  2. 3. Initial questions… <ul><li>Is everybody trying to rule my deal? </li></ul><ul><li>Why is everybody trying to rule my deal? </li></ul><ul><li>Who is trying to rule my deal? </li></ul><ul><ul><li>Jurisdiction </li></ul></ul><ul><li>What do we have to tell them? </li></ul><ul><ul><li>Notification </li></ul></ul><ul><li>How do I deal with all of these bodies trying to rule my deal? </li></ul><ul><ul><li>Process and timing </li></ul></ul>
  3. 4. Agenda for today <ul><li>Merger regimes worldwide – common features </li></ul><ul><li>Around the world tour of major regimes – EMEA, Asia-Pacific, Americas </li></ul><ul><li>Handling international merger control </li></ul><ul><ul><li>Where: jurisdictional information needed/filing decisions </li></ul></ul><ul><ul><li>What: notification requirements </li></ul></ul><ul><ul><li>How & when: process and timing </li></ul></ul><ul><li>Q & A </li></ul><ul><li>Reception </li></ul>
  4. 5. Merger control regimes – common features <ul><li>Jurisdiction – thresholds & exceptions </li></ul><ul><li>Notification – contacts & forms (Brussels effect) </li></ul><ul><li>Buyer usually files/responsible for filing </li></ul><ul><li>Fees </li></ul><ul><li>Suspension of closing/implementation </li></ul><ul><li>Investigations </li></ul><ul><ul><li>Phase I/phase II and duration </li></ul></ul><ul><ul><li>clear/block/change deals </li></ul></ul><ul><ul><ul><li>unwind, divestments, other commitments </li></ul></ul></ul><ul><ul><li>Powers - failure to file on time, failure to reply to information requests, complete without clearance </li></ul></ul><ul><li>Appeals </li></ul>
  5. 6. <ul><li>Around the world in minutes </li></ul><ul><ul><li>Jurisdictional thresholds </li></ul></ul><ul><ul><li>Procedure </li></ul></ul><ul><li>EMEA, Asia-Pacific, Americas </li></ul><ul><li>The ICN </li></ul><ul><ul><li>Guidelines and Recommended Practices </li></ul></ul><ul><ul><li>Training officials </li></ul></ul>The good, the ok and the ugly
  6. 7. EMEA (1) <ul><li>EC Merger Regulation – European Commission </li></ul><ul><li>EU Member States </li></ul>
  7. 8. EMEA (2) <ul><li>Switzerland </li></ul><ul><li>Israel </li></ul><ul><li>Russia </li></ul><ul><li>South Africa </li></ul><ul><li>Turkey </li></ul><ul><li>Ukraine </li></ul>
  8. 9. Asia-Pacific <ul><li>Japan </li></ul><ul><li>Korea </li></ul><ul><li>Australia and New Zealand </li></ul><ul><li>Welcome to the club </li></ul><ul><ul><li>China – New Anti-monopoly law – comes into force 1 August, 2008 </li></ul></ul><ul><ul><li>India – New Competition Act due to come into force by mid-2008 – including mandatory merger notification </li></ul></ul><ul><ul><li>Singapore – voluntary; market share tests </li></ul></ul>
  9. 10. The Americas <ul><li>USA </li></ul><ul><li>Canada </li></ul><ul><li>Mexico </li></ul><ul><li>Brazil </li></ul>
  10. 11. More good, less ugly – the ICN effect <ul><li>ICN Guidelines and Recommended Practices on mergers – major multilateral milestone </li></ul><ul><li>Reform successes – e.g., Belgium, Brazil, Czech, Estonia, Finland, Greece, US, Korea </li></ul><ul><li>Overall RP implementation </li></ul><ul><ul><li>2004 – less than 10% of ICN members had made changes </li></ul></ul><ul><ul><li>2006 – 50% of ICN members with merger control regimes had made changes; seven planning changes </li></ul></ul><ul><ul><li>Major jurisdictions are leading by example – US, EC, Brazil </li></ul></ul><ul><li>Peer pressure </li></ul><ul><li>Training new/young agencies/officials </li></ul>
  11. 12. Your deal – practical guide <ul><li>Where: filing decisions </li></ul><ul><li>What: notification requirements </li></ul><ul><li>How & when: process and timing </li></ul><ul><li>Substantive assessment </li></ul><ul><ul><li>market power </li></ul></ul><ul><ul><li>public interest </li></ul></ul>
  12. 13. Where - jurisdiction <ul><li>Deal-type/concentration analysis </li></ul><ul><ul><li>Mergers, acquisitions, disposals </li></ul></ul><ul><ul><li>Watch - JVs, minority stakes, assets, outsourcing </li></ul></ul><ul><li>Thresholds </li></ul><ul><ul><li>Turnover – main tool </li></ul></ul><ul><ul><li>Market share </li></ul></ul><ul><ul><li>Asset value </li></ul></ul><ul><li>Exceptions and special sectors </li></ul><ul><li>Buyer v.s. seller </li></ul>
  13. 14. Where - turnover <ul><li>Calculation - general rules </li></ul><ul><ul><li>Gross revenue (not profit) </li></ul></ul><ul><ul><li>Acquirer - “group” revenue </li></ul></ul><ul><ul><li>Target - only that part being sold </li></ul></ul><ul><li>Geographic allocation </li></ul><ul><ul><li>Main rule - location of customer </li></ul></ul><ul><li>Last financial year </li></ul><ul><ul><li>Adjust for post-year end acquisitions/disposals </li></ul></ul><ul><li>Special cases – financial/insurance sectors </li></ul><ul><li>Brussels rules used most often </li></ul><ul><li>Consider maintaining turnover information for merger control purposes </li></ul>
  14. 15. Where - market share <ul><li>It’s a bit early isn’t it? </li></ul><ul><li>Yes, but… </li></ul><ul><ul><li>Approx. 25 jurisdictions still use market share for establishing jurisdiction </li></ul></ul><ul><ul><li>Strong lobby from ICN and businesses to remove </li></ul></ul><ul><li>National market or relevant market? </li></ul><ul><ul><li>Portugal v.s. Brazil </li></ul></ul><ul><li>Aggregation needed? </li></ul><ul><ul><li>Spain v.s. UK </li></ul></ul><ul><li>ICN effect – Greece, Czech, Brazil, Slovenia, Portugal </li></ul>
  15. 16. Where - assessing jurisdiction <ul><li>Assessment boxes </li></ul><ul><ul><li>Box 1 - straightforward yes/no (and voluntary/mandatory) </li></ul></ul><ul><ul><li>Box 2 - unclear – more information required? </li></ul></ul><ul><ul><li>Box 3 - technical requirement – but candidate for not filing? </li></ul></ul><ul><li>Box 3 – candidates for not filing </li></ul><ul><ul><li>“ We may have to file where ? Are you crazy ?” </li></ul></ul><ul><ul><li>Possible factors in considering taking a view: </li></ul></ul><ul><ul><ul><li>limited/no effects: considering levels of local sales, local assets and local overlap </li></ul></ul></ul><ul><ul><ul><li>local sanctions/powers </li></ul></ul></ul><ul><ul><ul><li>aggressiveness of agency </li></ul></ul></ul><ul><ul><ul><li>risk tolerance </li></ul></ul></ul><ul><ul><ul><li>illegitimate exercise of jurisdiction – international law </li></ul></ul></ul><ul><li>Appointing coordinating outside counsel to manage jurisdictional assessment and notification process </li></ul>
  16. 17. What – notification information <ul><li>Deal details </li></ul><ul><li>Parties’ details/turnover/subsidiaries </li></ul><ul><li>Internal documents assessing deal </li></ul><ul><li>Substantive information </li></ul><ul><ul><li>Relevant markets </li></ul></ul><ul><ul><li>Market shares – parties and competitors </li></ul></ul><ul><ul><li>“ Story telling” – e.g., entry barriers, buyer power </li></ul></ul><ul><li>Top customer, supplier, competitor contact details </li></ul><ul><li>Power of attorney/ translations/ signatures/ authenticated copies </li></ul><ul><li>Pushing back when needed </li></ul><ul><ul><li>Some regimes focus on form not substance </li></ul></ul><ul><ul><li>The weird and wacky – when to go with it, when not to </li></ul></ul>
  17. 18. How – timing tips <ul><li>Building merger control timing into deal timing </li></ul><ul><ul><li>Preparation of filing </li></ul></ul><ul><ul><li>Pre-notification contacts/drafts </li></ul></ul><ul><ul><li>Suspension of closing and clock stopping </li></ul></ul><ul><ul><li>Contract – conditions/drop dead dates </li></ul></ul><ul><li>Getting the clocks running </li></ul><ul><ul><li>How early can we file? </li></ul></ul><ul><ul><li>How early do we have to file – filing deadline jurisdictions </li></ul></ul><ul><ul><li>Priority timing </li></ul></ul><ul><ul><ul><li>filing deadline jurisdictions </li></ul></ul></ul><ul><ul><ul><li>substantive “lead” jurisdictions </li></ul></ul></ul><ul><ul><ul><li>longest investigation periods </li></ul></ul></ul><ul><ul><li>Is there a short-form/simplified procedure? </li></ul></ul>
  18. 19. How – process tips <ul><li>Internal team – BD/marketing/strategy </li></ul><ul><ul><li>Notification information </li></ul></ul><ul><ul><li>Post-filing requests for information </li></ul></ul><ul><li>Aim to tell the same basic story everywhere </li></ul><ul><ul><li>“ Template” filing – deal/parties/substantive story </li></ul></ul><ul><ul><li>May be asked for “waivers”: int’l cooperation </li></ul></ul><ul><li>Previous/next filings </li></ul><ul><ul><li>What did we say last time? keep filings to hand </li></ul></ul><ul><ul><li>Merger filings as part of exit/growth strategy </li></ul></ul><ul><ul><ul><li>avoiding hostages to fortune </li></ul></ul></ul><ul><li>Dealing with the agencies </li></ul><ul><ul><li>Their agendas, capabilities, know-how </li></ul></ul>
  19. 20. How – post-filing/clearance tips <ul><li>Information requests </li></ul><ul><ul><li>Fast reactions to avoid/minimise clock stopping </li></ul></ul><ul><li>Will third parties be involved/consulted? </li></ul><ul><li>What form does the clearance decision take? </li></ul><ul><li>Published – protect business secrets </li></ul><ul><li>Advising agencies about other clearances (peer pressure/timing) </li></ul><ul><li>Post-clearance obligations (Germany, Greece) </li></ul><ul><li>Fees (pre/post filing) </li></ul>
  20. 21. Summary <ul><li>Is merger control relevant </li></ul><ul><li>Obtaining turnover/asset information </li></ul><ul><li>Assessing jurisdictional thresholds </li></ul><ul><li>Identifying any lead jurisdictions on timing and substance </li></ul><ul><li>Preparing notifications – coordination </li></ul><ul><li>Getting the clocks running </li></ul><ul><li>Keeping them running </li></ul><ul><li>Clear and close! </li></ul>
  21. 22. Everybody wants to rule your deal – a practical guide to international merger control Dave Anderson Partner, Berwin Leighton Paisner LLP Brussels 9 October, 2007 [email_address]