Cross-border merger regulations in Spain and the European Union
Since Spain is a member state of the European Union (EU), both have similar laws concerning the regulation of cross-border mergers. However one has to take into account that Spain enforces its own laws, which can cause conflicts with the european law. Thus, there are some difference that should be known.
Both, EU Regulation 139/2004 and Article 101 of the Treaty on the Functioning of the European Union (TFEU) regulate mergers in the European Union. The Regulation contains the exact procedure to follow, if mergers between enterprises have to be controlled.
First of all, the notification of a merger must be made either following the conclusion of an agreement, the announcement of a public bid, the acquisition of control or after manifestation of the good faith to do so. The initial investigation of the merger starts on the date when the Commission receives that notification.
The detailed investigation consists of the request for information, inspections and interviews carried out by the competent Authorities of the Member States and the Commission. As set out in Article 10 (1) of the Regulation 139/2004, decision shall be taken within 25 working days at most after receipt of the notification, except for the exemptions specified in the Regulation.
The second stage is the initiation of the procedure when one of the exceptions apply. A declaration of incompatibility is preceded by a written statement of objections, with an authorisation for the parties to have access to the files and to request a formal oral hearing.
Lastly, the Member States and the Advisory Committee meet and deliver an opinion. The deadline of the second stage begins on the date of the Article 6 (1) c Regulation 139/2004 decision. After this deadline, the final decision (as referred to in Article 8 of the Regulation 139/2004) must be taken within 90 working days of the initiation of procedure, or within 105 working days if the parties propose commitments later than 55 working days from the initiation of proceedings.
Article 101 TFEU prohibits anticompetitive cooperation between undertakings which affects trade between the Member States.
Regarding the Spanish law on cross-border mergers, Law 3/2009 on Structural Changes in Commercial Companys (Modificaciones Estructurales de las Sociedades Mercantiles) regulates this topic. The main purpose of this law is to regulate, in detail, the applicable requirements and procedures of certain corporate transactions that affect the own corporate structure of this companies. This law facilitates cross-border mergers between companies from the EU and the European Economic Area (EEA). Additionally, it reduces the numerous legislative and administrative hurdles that Spanish companies face when merging with other EU/EEA entities.
As a general rule, mergers that concern foreign involvement are not subject to considerable restrictions in Spain. However, there are some specific sectors that are subject to some restrictions, including the following: energy, insurance, transport, telecommunications and finance.
Regarding private mergers and acquisitions (M&A) transactions, there are no particular public disclosure requirements, besides those ensuing from corporate merger procedures. On the other hand, there is certain information, that must be available to employees, creditors and shareholders of the company.
The merger control procedure in Spain is divided into two stages. The first stage beginns when the Investigation Directorate of the NCC (National Competition Commission, Comisión Nacional de la Competencia) analyses the transaction and submits a report and draft decision to the NCC Council. Last-mentioned will then approve the merger, with or without remedies that the parties may have offered, if it does not raise serious competition concerns.
However, if the merger raises serious competition concerns then a second stage is initiated where the Investigation Directorate issues a declaration of objections pinpointing the key concerns.
The interested parties and any third party with a legitimate interest, may submit contentions to the statement of objections and a hearing may take place before the NCC Council who will choose whether to forbid the merger, or to approve it with or without remedies or conditions.
Justine Matthys & Karl H. Lincke
This article is not considered as legal advice