TerraLex Cross-Border Guide to Pre-Merger Notification Guide

Yes.

N/A

Pursuant to Article 27 of the Dutch Competition Act, three types of transactions are caught and deemed to be a concentration: - a merger between two or more previously independent undertakings;

• an acquisition of direct or indirect control by one or more undertakings, of the whole or parts of one or more other undertakings; or
• the creation of a joint undertaking which performs on a lasting basis all the functions of an autonomous economic entity.

**Exception for trading by financial institutions:**If credit institutions, financial institutions or insurance undertakings acquire shares in another undertaking for the purpose of reselling such shares, this is not deemed to constitute a concentration as long as they do not exercise the voting rights attached to the shares with a view to determining the competitive behaviour and provided that the disposal of the shares takes place within one year of the acquisition.

Exception for financial holding companies: If a financial holding company acquires shares in another undertaking, this is not deemed to constitute a concentration as long as the financial holding company uses its voting rights exclusively to maintain the full value of the investment and not to determine directly or indirectly the competitive conduct of the undertaking.

**Exception for trustee: **If control is acquired by a bankruptcy trustee or similar person relating to liquidation, winding up, insolvency, cessation of payments, compositions or analogous proceedings this is not deemed to constitute a concentration.

Concentrations which fall within one of the three categories mentioned under 3) shall be notified to the Netherlands Authority for Consumers & Markets (‘Autoriteit Consument & Markt’, hereinafter ‘ACM’) if in the preceding calendar year:

• The combined aggregate worldwide turnover of the undertakings concerned exceeds €150 million; and
• At least two of the undertakings concerned had a turnover in the Netherlands exceeding €30 million each.

Different thresholds apply to concentrations in the health-care sector and for pension funds. Prior notification of a concentration in the health-care sector is required if in the preceding calendar year:

• The combined aggregate worldwide turnover of the undertakings concerned exceeds €55 million;
• At least two of the undertakings concerned had a turnover in the Netherlands exceeding €10 million each; and
• At least two of the undertakings concerned generated turnover with health-care activities of at least €5.5 million each.

Concentrations in the healthcare sector may have to be notified to the Dutch Healthcare Authority and await a (positive) decision of this authority before the concentration can be notified to the ACM (see question 19).

Prior notification of a concentration of industry-wide, occupational or company pension funds is required if in the preceding calendar year:

• The combined aggregate gross premiums written of the undertakings concerned exceeds €500 million; and
• At least two of the undertakings concerned received from Dutch residents at least €100 million each.

Concentrations that need to be notified to the European Commission do not need to be notified to the ACM.

There is no mandatory notification system in New Zealand. However, the prohibition in the New Zealand Commerce Act against mergers that would have the effect or likely effect of substantially lessening competition in a market apply to joint ventures if they:

• involve the acquisition by one party of the shares or assets of another party (which could be the joint venture party); and
• the acquisition of those shares or assets could have the effect or likely effect of substantially lessening competition in a market.

There is no mandatory notification system in New Zealand. However, the prohibition in the New Zealand Commerce Act against mergers that would have the effect or the likely effect of substantially lessening competition in a market applies if the substantial lessening of competition would occur in a market in New Zealand even if the transaction occurs overseas.

Multinational mergers that affect markets in New Zealand are therefore captured.

Comprehensive information on a proposed merger is required in a merger notification, including details of the parties and businesses, the proposed transaction, competitors and customers, suppliers, the relevant markets and the likely effects of the proposed merger on the level of competition in those markets. Supporting evidence must also be provided.

It typically takes between one to two months to prepare this information.

In principle, no. However, in exceptional cases the ACM can be asked for a waiver from the provision of certain information, for example if certain information cannot be produced.

Yes, companies that report merger have to pay an upfront fee of €17,450 in the “notification phase”. If companies need an additional licence from the ACM, they must pay €34,900 extra for the “licence phase”. These costs will not be reimbursed if the merger application is withdrawn.

There is no deadline for notification, but the transaction must be notified before completion. As soon as parties have an intention to engage in a transaction, this can be notified. A binding agreement is not necessary, but the ACM will usually ask for a document in which the intention is laid down (e.g. a letter of intent).

The transaction cannot be carried out before it is cleared by the ACM. Article 34 of the Dutch Competition Act stipulates that the completion of a concentration is prohibited before this intention is notified to the ACM and subsequently a period of four weeks has passed. This period is suspended if the ACM asks formal questions to the notifying parties. However, the ACM can grant an exemption from this prohibition in case of a ‘public bid’ or on ‘important grounds’ such as liquidation of the undertaking which will be acquired.

A similar waiting period of thirteen weeks applies in the ‘licence phase’.

Phase I – four weeks (‘notification phase’) After the notification, a waiting period of four weeks applies in which the ACM investigates the notification and the transaction may not be completed. Within the four-week time period, the ACM renders a decision whether or not an additional licence is required (Phase I). The prohibition to complete a concentration within the four-week time period does not apply in case of a public bid (if immediately notified to the ACM and as long as they do not exercise voting rights). Furthermore, in exceptional cases the ACM can grant an exemption from the prohibition “on important grounds” if requested by one of the parties.

As of 2009, it is standard practice for the ACM to publish a short-form decision unless:

• A licence and further investigation are required;
• Parties have submitted remedies or changed the notification;
• Interested parties have raised objections to the concentration; or
• The short-form decision deviates from advice about the concentration from the Dutch Healthcare Authority or the Dutch Media Authority.

A short-form decision often results in a faster process and obtaining the decision before the four-week deadline expires.

• Phase II- 13 weeks (‘licence phase’)

If the ACM decides that a licence is required, the undertakings involved must submit an application for a licence to the ACM. Within 13 weeks of receipt of the application, the ACM must decide whether a licence will be granted (Phase II). Within this time period it is prohibited to complete the concentration. Only ‘on important grounds’ an exemption can be granted.

• “Stop the clock”

The time stages in Phase I and II can be suspended if the ACM needs further information concerning the notification and asks formal questions to the parties.

If parties fail to make a mandatory notification, complete the transaction in the four-week waiting period or engage in a transaction despite a prohibition, this may result in a void transaction. In addition, the ACM can impose a penalty fine of up to €900,000 or 10% of the turnover of the acquirer in the previous calendar year (whichever is higher). This fine can be doubled in case of recidivism within a five-year period. Furthermore, the ACM has the possibility to impose periodic penalty payments in order to compel an undertaking to stop the infringement.

If parties give incorrect or incomplete information, the ACM can impose a penalty fine of up to € 900,000 or 1% of the turnover of the undertaking in the previous calendar year (whichever is higher). This fine can be doubled in case of recidivism within a five year period.

If the ACM granted an exemption from the notification obligation under certain conditions and these conditions were not met, it may result in a fine imposition of up to €900,000 or 10% of the turnover of the acquirer in the previous calendar year (whichever is higher). This fine can be doubled in case of recidivism within a five-year period.

From case law it follows that, if the seller post transaction loses control, the seller is not an ‘undertaking concerned’. Consequently, there is no obligation on the seller to notify and the seller cannot be fined for gun-jumping.

If the four-week waiting period expires without a decision from the ACM, the transaction is deemed cleared. If the ACM decided that an additional licence is necessary and subsequently has not decided on this matter in thirteen weeks, the licence is deemed issued. A (third) party may raise an appeal against any decision of the ACM within six weeks. The competent court is the District Court of Rotterdam (Chamber of Administrative Law). Subsequently, the judgment of the District Court can be appealed at the Court of Appeal for Trade and Industry in The Hague.

No.

The ACM is an independent government organization entrusted with the enforcement of the Dutch Competition Act and with a number of specific laws for the energy, postal, telecommunication and transport sector. The ACM was founded on 1 April 2013 as a result of the merging of the Dutch Competition Authority with the Dutch Independent Post and Telecommunications Authority (‘OPTA’) and the Dutch Consumer Authority.

The ACM may inspect both business and private premises of undertakings and certain employees. The ACM is empowered to impose fines on undertakings and individuals for the infringement of the competition rules.

During the notification procedure, the merger filing enjoys full confidentiality. After the decision of the ACM has been taken, third parties could try to request the disclosure of certain parts of the merger file based on the Public Access Act. However, article 7 of the Establishment Act of ACM contains a special provision that works as an exception on the rights of access based on the Public Access Act. This means that a party requesting access to certain documents from ACM, will generally be rejected. The ACM is obliged to provide reasons why documents fall under the confidentiality guaranteed by Article 7 Establishment Act of ACM. In general, this not problematic. Please note that even when there is a disclosure obligation under the Public Access Act, confidential (business) information is still protected.

The ACM will assess whether the transaction will lead to a significant impediment to effective competition in particular as a result of the creation or strengthening of a dominant position. The European guidelines on the assessment of horizontal mergers and non-horizontal mergers are used to assess the effects on the market.

There is no (formal) pre-notification phase, parties may however ask for a pre-notification meeting with ACM. In possible problematic cases this is recommended. Parties are normally asked to provide a draft notification for these meetings. The ACM will assess this draft and address possible issues, provide comments and request addition information in a pre-notification meeting. Parties will have to incorporate their answers in the notification.

It is possible to have several pre-notification meetings with the ACM. After these meetings parties will notify the concentration and the formal time limits will apply (see question 11).

After a decision (Phase I or Phase II) is rendered by the ACM an appeal against the decision can be made within six weeks. The competent court is the District Court of Rotterdam (Chamber of Administrative Law). Subsequently, the judgment of the District Court can be appealed at the Court of Appeal for Trade and Industry in The Hague.

If the ACM has refused to grant a licence, the Minister of Economic Affairs may in certain circumstances grant a licence for an envisaged concentration in response to a request. The decision of the Minister can be challenged.

The Netherlands Authority for the Financial Markets (‘Autoriteit Financiële Markten’) is the main regulator monitoring public takeovers. It approves prospectuses and offer memoranda. In addition, a bidder must obtain a statement of no objection from the Dutch Central Bank (‘De Nederlandsche Bank’) for proposed acquisitions of financial institutions with registered offices in the Netherlands.

A health care supplier (employing at least 50 persons active in the supply of healthcare) is prohibited from completing a concentration with any party without prior clearance of the Dutch Healthcare Authority. The Dutch Healthcare Authority will review the expected quality and accessibility of health care. A health care supplier is furthermore prohibited to notify the concentration to the ACM (if the thresholds are met) without the prior clearance or exemption of the Dutch Healthcare Authority.

Material changes to the (ownership or organisation of an) undertaking can trigger the obligation to obtain advice from the works council of the undertaking concerned and to inform the trade unions and the Social and Economic Council of the Netherlands.

Changes with respect to control in a production plant with a rated electrical output of over 250 MW or an undertaking managing such a production plant, must be reported to the Minister of Economic Affairs by one of the parties involved. The same applies for any change in control with respect to control in a LNG plant or LNG undertaking. The notification has to be made four months before the change of control. The Minister may prohibit or impose regulations on the change of control on the grounds of public safety, security of supply or security of delivery.