When planning to acquire shares or interests in a company, you can determine not only the legal, financial and tax risks but also the competition law obligations that may arise when carrying out the planned transaction.
In order to make a decision about acquiring or investing in a company, buyers/investors usually want to recognise the above-mentioned risks in good time by carrying out a due diligence review of the company. The resulting due diligence report gives the buyer/investor a detailed insight into the legal, financial or tax risks of the company so that both parties can recognise the risks and agree on the changes that need to be made prior to the transaction in order to mitigate the risks and make a purchase decision.
The scope of the due diligence review is determined depending on the business activity and risks in the industry as well as the risk appetite of the buyer/investor in question. When determining the scope of the due diligence, it is increasingly common for buyers/investors to focus on the competition law perspective to reach clear conclusions after the due diligence regarding the impact on the market and the measures to be taken to ensure compliance with competition law and regulations when carrying out the transaction.
When assessing an option in which the conclusions of the due diligence indicate the formation of a market concentration or the acquisition/strengthening of a dominant position, measures may need to be taken to ensure compliance with the requirements of the competition law. In this case, it is necessary to actively communicate with the Competition Council and/or prepare a timely report on the contemplated transaction.
The report must be submitted in cases where the contemplated transaction is likely to result in one of the following situations:
To determine whether a merger report is necessary, it is necessary to assess whether the following turnover criteria are met:
Communication with the Competition Council before the transaction is finalised is essential, as it enables an assessment of the current situation and the situation after the transaction, what potential problems may arise during the implementation of the transaction and, last but not least, enables long-term savings of time and resources for all parties involved in the transaction.
Persons willing to carry out the transaction may, at their discretion, submit a report to the Competition Council, even if they have not met the above mandatory criteria, to ensure that no unforeseen burdens arise within one year of the transaction.
The report and the accompanying documents required by the Competition Council for its assessment must contain at least the following information:
If you do not hear from the Competition Council within one month of submitting the report, the transaction is deemed to have been approved. One month is the shortest period of time to be considered when acquiring/merging a company in order to avoid hasty actions regarding the transactions before the set deadline. Overall, the procedure before the Competition Council can take up to four months, depending on the type of report to be submitted.
Based on the findings of the due diligence, identifying risks at an early stage of the contemplated transaction can mitigate the risks and implement the measures recommended in the research report in time to achieve timely completion of the transaction.
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