Management of economic concentration
The acquisition process begins with a deal search, where potential target companies are identified and analysed. The results of the analysis are compiled in a due diligence report. The next step is the negotiation with the corresponding target companies and the drafting of a term sheet regarding the conditions of the acquisition. The acquirer then prepares a binding offer to the target company, which lays down the basics of the concentration contract.
National control of economic concentration
Prior notification of the transaction to the authorities responsible for the protection of competition is necessary. The goal of this notification is to obtain the necessary authorisation of the transaction.
The notification must be sent to the National Competition Commission (la Comisión Nacional de la Competencia, CNC). The following transactions must be notified: a) Acquiring a 30% or more share of the relevant product or service market, or 30% of a determined geographical market; b) When the company’s global turnover for the last accounting year exceeds 240 million Euros, as long as at least two of the relevant companies each have a sales volume exceeding 60 million Euros in the Spanish market.
All the aforementioned transactions, except the acquisition with exclusive control, must be notified. The transaction cannot be completed until the National Competition Commission has given its explicit or conclusive approval. The transaction then finds itself in a suspended state. Notification is not necessary in cases of suspension cancellation as well as in cases of public takeovers. The suspension cancellation only happens in exceptional circumstances and only after a request explaining the negative effects of the suspension.
Two stages of procedure
As soon as the transaction is duly notified, investigative management has a one month time frame to draft a report and a decision proposal. The Competition Commission’s Council then decides in a resolution. In this resolution, the council can:
- authorize the economic acquisition
- impose conditions upon the parties
- agree to begin the second procedure phase
- transfer the case to the European Commission; or (v) order the cancellation of the process.
During a two month period from the day the 2nd phase is introduced, investigative management publishes a listing of all concrete facts which is available to the parties. Investigative management, under consideration of the decision proposal, gives the Council a resolution. In this resolution, it can:
- authorize the economic acquisition
- impose certain condition upon the parties
- forbid the economic acquisition or
- order the cancellation of the procedure. This resolution can be forwarded to the Minister’s Council by the Economics and Finance Ministry within a 15 day period out of reasons of public interest.
The following table illustrates this process:
|Application||Threshold values||Deadlines|| |
|Deadline: before completion of the transactionSuspension: the transaction is suspended until it is authorised Fee: An application fee between 3.000 and 6.000 euros, depending on the company’s turnover.||1. Acquisition or increase of a market share of 30% or more of the relevant national market for products or services or of the geographical market as part of the relevant market (Exception: a market share of 50% will be considered if the acquired company’s the global business or the funds acquired in the past financial year don’t exceed 10 million Euros.or2. The common size of the company’s global business in the last year exceeds 240 million Euros, whenever two of the involved companies` business volume exceed 60 million Euros each.||Preapplication:1 or 2 weeks before the formal application. First PhaseOne month for the decision as to whether the Acts are to be forwarded (this deadline can be postponed if all the relevant documents have not been sent or if the transaction is set to take place within a regulated sector).Second PhaseTwo months after forwarding the acts to the Council.Final decisionThe Ministry of Economics can forward the documents to the Ministers` Council within 15 days to obtain its authorisation. The Ministers` Council decides within a month on the decision taken by the CNC council||No notificiation despite CNC warning: A fine worth 1% of the company’s total turnover for the previous year. No application/Completion of the transaction before authorisation: A fine worth up to 5% of the previous year`s turnover or up to 10 million euros.Violation of the final decision: A fine worth up to 10% of the previous year’s turnover.Handing in false or misleading information: A fine worth up to 1% of the previous year’s turnover.Hindering the investigation process: A fine worth up to 1% of the previous year’s turnover.|
This article is not considered as legal advice