An article by Halldór Hallgrímsson Gröndal and Tómas Aron Viggósson, lawyers at the Competition Authority and specialists in merger investigations.
Preliminary discussions are an important part of the Competition Authority's merger procedure, and the policy is to give them an even greater role in merger investigations. In short, pre-notification discussions are an informal dialogue between the merging parties and the Competition Authority regarding a prospective merger. Pre-notification discussions give merging parties the opportunity to engage with the Competition Authority and provide information before a merger is formally notified to the authority. The discussions provide an opportunity to discuss pending issues, such as potential competitive effects, market definitions and the scope of the information to be submitted with the merger notification.
Preliminary discussions are no less important for the Competition Authority, as they can significantly increase the efficiency of the proceedings. Pre-notification discussions allow the Competition Authority to familiarise itself with relevant issues, initiate internal work and even data collection, and finally, to review a draft merger notification and provide comments on the same document. Pre-notification discussions can thus lead to a focus on specific aspects of a merger notification, whilst less detailed information on other matters may not be required.
Thus, pre-notification discussions can be of significant benefit to the merging parties, as there can be great advantages in laying the groundwork for a merger case through notification in cooperation with the Competition Authority. It is in the parties' best interests for the merger notification to contain all the information required at the time of submission, as a sufficient merger notification triggers the deadlines within which the Competition Authority has to investigate a merger. Similarly, it is important that the merger review does not take longer than necessary. Pre-notification discussions can speed up the review process or, at the very least, bring the timing of the review under the parties' control in cooperation with the Competition Authority.
Article 4 of Regulation No 1390/2020 deals with the pre-notification phase and status meetings. The provision stipulates that the Competition Authority is authorised to engage in communications with the merging parties in the pre-notification phase of a merger. The purpose of such communication is to prepare for the handling of a potential merger case and to ensure that all relevant information held by the merging parties is available at the start of the proceedings. Furthermore, such discussions may cover other matters, such as potential notification obligations, market definitions, and possible competition concerns and their remedies. The aim is that this preparation will lead to a faster and even more thorough handling of merger cases.
Under certain circumstances, merger parties are permitted to submit a so-called short-form merger notification in accordance with paragraph 6 of Article 17a of the Competition Act. It can be of great importance to the merging parties whether a full merger notification (longer notification) must be submitted, or whether it is permissible to submit a short notification, as required by the provisions of Regulation no. Regulation No. 1390/2020 is more detailed with regard to standard (long) merger notifications.
The merger parties“ communications in the run-up to a potential merger are likewise a prerequisite for the Competition Authority to apply Article 7. of Article 17a of the Competition Act, and allows the merging parties to notify a merger by means of a short notification, notwithstanding that the conditions set out in points (a) to (d) of paragraph 6 of Article 17a of the Competition Act are not met. See in this regard the explanatory notes to section 7 of Article 17a of the Competition Act, i.e. the bill which became Act No. 103/2020, on Article 5: "A prerequisite for the Competition Authority to grant such an exemption is that the merging parties and the Authority have had communications in the period preceding the notification, which leads the Competition Authority to consider that it is able to grant the exemption. It is clear that such an exemption can lead to considerable savings for the merging parties, as less work is required for the preparation of a shorter merger notification than a longer one..”
Pre-notification consultations in the run-up to a merger notification are the norm in European competition law, and their implementation there serves as a model for consultations here, as is indeed generally the case with the merger provisions of competition law.
Mergers are free to request pre-hearing discussions in the run-up to a merger case. However, how useful they may prove to be depends primarily on what information is provided alongside the request for pre-hearing discussions, and also on the timeframe available for the case. It is desirable that a request for pre-merger discussions is accompanied, on the one hand, by information about the merger in question, e.g. in the form of a memorandum or a slide presentation, which provides information on the companies concerned, the relevant market(s), the effects of the merger on competition and the planned date for notification of the merger, and, where applicable, a draft merger filing. Whilst it is important that the above-mentioned information is available, it is equally important that the Competition Authority has sufficient time to familiarise itself with the relevant documents and to provide comments that are useful to the merging parties.
A request for a meeting (pre-notification discussions) at short notice without adequate information being provided, e.g. an analysis of the potential competitive effects or a draft merger filing, may therefore be of little use to both the merging parties and the Competition Authority. At the level of the European Commission, pre-notification discussions can begin many months before the merger notification is submitted, and the Commission's pre-notification guidelines suggest that discussions should begin at least a few weeks before the planned notification date. It is then noted that the first pre-notification meeting will normally be based on a detailed summary of the case or, where applicable, a draft merger filing.
To ensure that preliminary discussions are beneficial to the parties, it is also a requirement that all documents to be discussed during the preliminary discussions, whether a memorandum, a slide presentation or a draft merger filing, are sent in good time or at least 3 working days before the relevant meeting, in accordance with the same instructions. It has become standard practice in European competition law not to submit merger filings unless, following pre-notification discussions, it is certain that the filing already contains sufficient information. It should also be noted that effective pre-notification discussions can increase the likelihood of a case being concluded earlier than would otherwise be the case, i.e. at the first-phase investigation stage.
In the practice of merger cases at the European Commission, it is generally the experience that mergers and merger notifications that are not preceded by pre-notification discussions require more detailed information from the merging parties about the companies, markets, competitive conditions, and the effects of the merger, and thus a more detailed review by competition authorities of such matters.
Thomas Aron Viggoson
Halldór Hallgrímsson Gröndal
The authors are experts at the Competition Authority.
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