Wikborg Rein newsletter: "White paper on amendments to Norwegian merger control rules
| 25. mars 2008Read or download the newsletter "White paper on amendments to Norwegian merger control rules" from our Competition law group.
White paper on amendments to Norwegian merger control rules
In a white paper presented on 7 March 2008, the Ministry of Government Administration and Reform proposes certain important amendments to the Norwegian Competition Act. The main area affected by the changes is the Norwegian merger control regime.
The proposed amendments that will affect the most transactions are: (i) repeal of the deadline for merger filing in Norway; (ii) automatic suspension of all concentrations that are subject to merger filing in Norway; and (iii) more detailed information requirements for the standardised notification.
Repeal of merger filing deadline
A so-called “standardised notification” (“alminnelig melding”) must be sent to the Norwegian Competition Authority for all mergers, acquisitions and other concentrations that involve companies with a turnover in Norway exceeding certain thresholds. The thresholds were raised as of 1 January 2007, but are still very low. Read our newsletter on the revised notification thresholds here.
Under current rules, merger filing in Norway must take place no later than the conclusion of a binding transaction agreement. In practice, the Norwegian Competition Authority will grant the notifying party or parties a three day extension of the time-limit to prepare the notification.
The white paper proposes to repeal the current deadline. This amendment was not included in the discussion paper presented by the Ministry in October 2007. However, as pointed out by Wikborg Rein and other parties who commented on the discussion paper, the current deadline will become obsolete when automatic suspension of all concentrations is introduced (see below). Since the parties will be prohibited from implementing the transaction before it is cleared, it is not necessary to set a deadline for the merger filing. It is in the parties’ interest to file as soon as practically possible in order to avoid delay to the implementation of the transaction.
Automatic suspension
The Ministry proposes to introduce automatic suspension of all concentrations that are covered by Norwegian merger control rules.
From the day the Competition Authority receives a standardised notification of a concentration, it has a deadline of 15 working days to initiate more detailed investigations of the case by requiring the parties to submit a so-called “complete notification”. The proposed amendment will prevent the parties from implementing the transaction until the expiry of these 15 working days, even in cases that do not raise any competition concerns.
The purpose of automatic suspension is to avoid the situation where the practical implementation of a possible decision by the Competition Authority to prohibit the concentration or to clear it subject to conditions (that is, divestments or other types of remedies) is prevented or made difficult by previous actions that cannot be reversed. The prohibition may apply to voting at the shareholders’ meeting and board meetings and various other steps required to implement a transaction, such as changes in the management or sales of assets. Violations of the implementation prohibition can lead to fines of up to 10 percent of the parties’ annual turnover.
In principle, the proposed automatic suspension of all concentrations corresponds to the automatic suspension required for concentrations notified to the European Commission under the EC Merger Regulation (Article 7 of the Regulation). However, since the Norwegian notification thresholds are very low, the suspension requirement will apply to a very significant number of concentrations that do not raise any competition issues, including transactions that only involve companies that are not established in Norway (foreign-to-foreign transactions).
Automatic suspension means that it will be even more important than before that the parties to a transaction address the issue of possible merger notification in Norway as early as possible. In some cases the parties may wish to submit the Norwegian merger notification prior to signing the final transaction documents in order to avoid delay to the implementation of the transaction due to the automatic suspension requirement.
More detailed standardised notification
The proposed amendment to the standardised notification requirements implies that the parties shall have to state their five most important competitors, customers and suppliers for each overlapping market, even if the overlap is marginal.
Currently, it is only necessary to provide information about relevant markets where the merging parties have overlapping activities and where their combined market share exceeds 20 percent. Many transactions will involve a certain overlap between the parties’ businesses, depending on how the markets are defined. Generally speaking, the present 20 percent threshold implies that market information must only be provided in transactions where at least one party is relatively large or where the transaction affects niche markets or local markets. Even today an assessment must be made of potential overlaps, but the 20 percent threshold in many cases makes it possible to confirm without very detailed investigations that a potential overlap will in any case not exceed this threshold.
For more information, contact:
Mads Magnussen, e-mail: mma@wr.no, tlf 22 82 75 05
Our partner Mads Magnussen heads Wikborg Rein’s EU/EEA and competition law group. Magnussen is the former Legal Director of the Norwegian Competition Authority.
Wikborg Rein’s EU/EEA and competition law group
Wikborg Rein’s EU/EEA and competition law group consists of 15 lawyers specialising in competition law, public procurement law, state aid and general EU/EEA law. Wikborg Rein has one of Norway’s largest and most experienced practice groups within these areas. Our lawyers are experienced in handling large and complex cases within most business areas.
