Q&A: merger notification and clearance in Luxembourg
- Articles and memoranda
- Posted 07.01.2025
Notification and clearance timetable
Filing formalities
What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?
The Bill of Law No. 8296 on the control of concentrations between undertakings does not provide for a specific filing deadline. Mergers must be filed prior to their realisation once the concerned party/parties are in a position to present a project that is sufficiently advanced. This may be the case in particular when the parties have reached an agreement in principle, signed a letter of intent or announced a public offer.
Regarding sanctions for not filing, pursuant to article 18 of the Bill, if a party fails to notify a concentration before it is put it into effect, the Authority may impose fines not exceeding 10 per cent of the total worldwide turnover in the last financial year of the undertakings concerned.
Which parties are responsible for filing and are filing fees required?
The party responsible for filing depends on the kind of transaction.
In the case of the acquisition of control, the obligation to notify is incumbent on the acquiring natural or legal person(s). In the case of a merger or the creation of a joint venture, all the concerned parties must notify jointly.
Concerning filing fees, according to article 3(7) of the Bill, the Authority shall be authorised to collect fees from the notifying parties to meet its operating costs. The amount of fees and their implementation shall be determined by a Grand-Ducal Regulation. Nevertheless, the commentary to the Bill rather suggests that the filing should remain free of charge.
What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?
Article 5 of the Bill provides for a standstill obligation: transactions have to be suspended until clearance by the Authority.
However, in the case of special and justified needs, the parties may apply for a waiver allowing them to proceed, by derogation, with the actual implementation of all or part of the concentration without having to wait for the Authority’s clearance.
Upon notification, the Authority must take a decision within 25 working days. The waiting period may be suspended if the notifying parties have failed to communicate all or part of the requested information within the set time limit, when they fail to inform the Authority as soon as a new fact has arisen that should have been notified if it had occurred prior to notification, or where third parties have failed to communicate information for reasons attributable to the notifying parties.
According to article 27 of the Bill, if the Authority has not provided a decision within 25 working days of a notification was submitted (potentially extended in the case of lacking information), the merger is deemed to have been authorised.
Pre-clearance closing
What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?
The Bill provides that companies failing to notify a concentration before it is put into effect or implementing a concentration during the standstill period may face a fine of up to 10 per cent of their total worldwide turnover in the last financial year.
Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?
The Bill does not provide for exceptions for foreign-to-foreign mergers. When there is scope, they may be subject to fines for violation of the standstill obligation (up to 10 per cent of their total worldwide turnover in the last financial year).
What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?
Not applicable. The regime not yet being in force, there are no precedents or guidance to rely on.
Public takeovers
Are there any special merger control rules applicable to public takeover bids?
Pursuant to article 5 of the Bill, the standstill obligation does not apply to the implementation of a public takeover bid whereby control is acquired through more than one seller by means of a series of transactions in securities (including those that are convertible into other securities admitted to be traded on a trading platform), provided that:
- the concentration is notified to the Authority without delay; and
- the acquirer does not exercise the voting rights attached to the holdings concerned, or only to safeguard the full value of its investment and on the basis of an exemption granted by the authority.
Furthermore, article 6 of the Bill foresees that the Authority may use its self-referral power also in the case of public takeover bids within 60 working days of the date on which one of the undertakings involved in the merger publicly announces its intention to make a takeover bid or in the case such a takeover bid is made but not yet accepted.
Documentation
What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?
There is no regulatory guidance at this stage on the formal and content of filings under the future regime. The Bill provides for a simplified filing regime. In line with article 5(5) of the Bill, a Grand-Ducal Regulation shall lay down the details of the procedures for filing and their content, including for the simplified notification.
With regard to the supply of false information, inexact or wrong information my render the notification file incomplete and delay the review procedure. If the parties omit information, provide an inaccurate statement, inaccurate information or misleading information in their filing, they may be subject to fines amounting to up to 1 per cent of their total worldwide turnover in the last financial year.
As far as missing information is concerned, the Authority may at any time ask the notifying parties, and undertaking or association of undertakings or any natural person to provide any necessary information.
Investigation phases and timetable
What are the typical steps and different phases of the investigation?
The Bill provides for two review phases.
In addition, the commentary to the Bill refers to an optional and informal pre-notification phase but there are no further details on this at this stage.
Phase I
A Phase I decision must intervene within 25 working days from the date of submission of a notification deemed complete.
Article 27 of the Bill specifies the possible outcomes of Phase I. The Authority may decide that the transaction does not fall within the scope of the law, authorise it, or consider that an in-depth review is necessary if it has serious doubts of harm being caused to competition.
If no decision is taken by the Authority within 25 working days (unless extended), the merger is deemed to be accepted.
Phase II
In Phase II, the Authority would further examine whether the merger is likely to significantly impede competition, in particular by creating or strengthening a dominant position. It would also assess whether the merger will sufficiently contribute to economic progress to offset harm to competition.
The Authority must take a decision within 90 working days, starting from the opening of Phase II (unless suspended).
In Phase II, the parties may propose commitments to remedy the anticompetitive effects of the merger. Such proposals must be proposed at least 25 working days before the end of the review period.
The conseiller instructeur (instructing councillor) shall notify the parties of his report and the documents on which it is based. The parties have 15 days to present their observations.
The parties may ask for a hearing.
Phase II ends with a motivated decision authorising the merger, authorising it under conditions or forbidding it and, where appropriate, ordering the parties to take all measures necessary to restore adequate competition.
If no decision has been taken within the given time periods, the merger is deemed authorised.
What is the statutory timetable for clearance? Can it be speeded up?
Pursuant to article 27 of the Bill, if the Authority has not adopted a decision within 25 working days of a complete notification, the merger is deemed to have been authorised.
Pursuant to article 31 of the Bill, when a merger is subject to a Phase II review, the Authority takes a decision within 90 working days of its opening.
This time frame may be suspended or extended in certain instances, for example, if the parties fail to communicate requested information.
Similarly, the Phase II time limits may be extended in certain circumstances for a total duration of maximum 30 days with the agreement of the parties.
There is no decision practice yet allowing to specify average duration of procedures.
This article was written by Partner Katrien Veranneman and Associate Jean-Pierre Roemen and was reproduced with permission from Law Business Research Ltd. This content was first published in Lexology Panoramic: Merger Control. For further information, please visit [Panoramic - Lexology].