INTERNATIONAL TRANSACTIONS AND COMPETITION LAW. Index 1. Why are competition / antitrust issues important? 2. Merger control 3. Distribution systems 4.

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!