Navigating Icebergs: A Brief Survey of Non-Reportable Transaction Enforcement Around the World
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White & Case Antitrust lawyers Rebecca H. Farrington, Daniel J. Rosenthal and Nicholas Putz authored "A Brief Survey of Non-Reportable Transaction Enforcement Around the World", published by The Antitrust Source.
While antitrust investigations of transactions falling below the thresholds set for mandatory merger control filings (“non-reportable” transactions) is a well-known and entrenched part of U.S. antitrust oversight, a number of other jurisdictions around the globe also have antitrust authority over non-reportable transactions. As mergers and acquisitions are increasingly global, this poses a challenge to companies and their respective antitrust counsel at the outset of any transaction. Today, there are more than 150 merger control regimes around the world, nearly double the number of merger regimes in existence a little over ten years ago.1 Many jurisdictions outside the United States now allow for, and even seek out, investigations of acquisitions that are not subject to mandatory filings. For example, while the European Commission does not have jurisdiction to investigate and challenge non-reportable transactions, individual Member States within the Euro - pean Union do, and there are many other jurisdictions with similar authority.2 As a result, merging parties’ risk assessment should account for the possibility that, even where a transaction falls below filing thresholds, antitrust regulators may investigate a proposed or consummated transaction.
It is common practice for parties to evaluate merger control filing obligations at the outset of a transaction by evaluating the revenues, assets, and (if required) market shares of the parties. However, this assessment does not necessarily identify jurisdictions where notification is not required. Instead, such an assessment can detect where there may still be antitrust risk and the possibility of a non-reportable merger investigation under local law.
The decision to investigate a non-reportable transaction is generally not informed by predetermined thresholds but hinges more on fact intensive elements that are akin to market share thresholds.3 As described in more detail below, the following factors may indicate the degree of likely antitrust scrutiny of a non-reportable transaction: (1) high market shares, (2) a unique local nexus, (3) customer opposition, (4) the nature of the product, (5) nascent competition, (6) high barriers to entry, (7) national champions, and/or (8) the elimination of a close or disruptive competitor.
1 Peter Alexiadis et al., Merger Control: “Around the World in 80 Days: Management of the Merger Review Process of Global Deals,” 19 BUS. L. INT’L 201, 202 (2018). In 2008, approximately 80 countries had merger control regimes. Id. The authors thank the following individuals for providing valuable insight into non-reportable transaction enforcement in specific jurisdictions: Joyce Midori Honda and Thales de Melo e Lemos of Cescon Barrieu (Brazil), Jason Gudofsky of McCarthy Tétrault LLP (Canada), Luis Marín Tobar of LEXVALOR Abogados (Ecuador), Henri Capin-Gally, Roman Gonzalez Melo, and German Macias Salas of White & Case LLP (Mexico), Tamara Dini and Marion Lautar of Bowmans (COMESA), Philip Andrews and Ciarán Donohue of McCann FitzGerald (Ireland), Marius Juonys and Linas Petronaitis of Ellex Valiunas (Lithuania), Aksel Joachim Hageler and Lennart Garnes of SANDS (Norway), Zhan Hao, Song Ying, and Zhan Yang of Anjie Law Firm (China), Toshio Dokei, Takako Onoki, and Hideo Nakajima of White & Case LLP (Japan), Taekyu Kang, Juhyun Park, and Ji-Yeun Hong of Kim & Chang (South Korea).
2 Organisation for Economic Co-operation and Development, Investigations of Consummated and Non-Notifiable Mergers, Submission of the European Union to the OECD Working Party No. 3 on Co-operation and Enforcement 3 (Feb. 12, 2014).
3 Some have argued that market share thresholds are impractical as a default notification threshold without adequate antitrust agency guidance.Hugh Hollman & Benjamin Geisel, Six Easy Steps to Better Merger Control Reviews: Recommendations for Competition Agencies Across the Globe 4 ANTITRUST SOURCE (Dec. 2019), (“Market share tests are burdensome because they require the parties to expend con siderable effort to define relevant markets (often absent any clear market definition precedent) and assess the parties’ presence in such markets prior to even knowing whether a transaction is notifiable or not.”).
Reproduced with permission from The Antitrust Source.
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