Background
The Control of Concentrations Regulations (S.L. 379.08) require the parties to a merger or acquisition to notify their transaction to the Office for Competition (OC) where the transaction brings about a lasting change of control and when in the preceding financial year:
a) the aggregate turnover in Malta of the parties exceeded
€2,329,373.40; and
b) each of the parties had a turnover in Malta equivalent to at
least 10 percent of the combined aggregate turnover in Malta of the
parties concerned.
Specific provisions exist for determining turnover. Reference should thus be made to the Regulations for this purpose.
Upon notification, the OC assesses the transaction and its impact on the market. The Regulations prohibit those mergers or acquisitions that could lead to a substantial lessening of competition in the Maltese market or a part thereof. In practice, most transactions are cleared unconditionally by the OC as they do not pose a threat to competition in the market. Problems usually arise where the transaction alters the market structure and provides the merged or acquiring undertaking with the ability to exercise market power, as where it results in the undertaking having a strong market share in a market where few players and high barriers to entry and expansion exist.
Deadlines and obligations
The Regulations are characterised by strict deadlines within which (i) the parties must notify their transaction, and (ii) the OC must review the merger or acquisition.
During the COVID-19 outbreak these legal deadlines continue to apply. No Legal Notice has been published to suspend or extend the deadlines and no official position has been released so far communicating any possible suspension or extension of these deadlines.
In the circumstances, the OC will continue to receive notifications and assess them within the timeframes currently stipulated in the law. Importantly, parties to transactions must note that they remain legally bound to notify their transaction to the OC:
(i) prior to its implementation; and
(ii) within fifteen working days following the conclusion of the
agreement, the announcement of the public bid, or the acquisition
of a controlling interest.
Penalties are provided under the law where the parties intentionally or negligently (i) fail to notify the transaction in line with the Regulations, or (ii) implement the transaction prior to notification or before it is cleared by the OC.
Submission of Notification Form and documents
Usually an original of the notification form and two copies together with accompanying documents are required to be delivered in physical format to the OC. However, given the current situation, the OC's position is that, during this outbreak, it will be requiring a scanned copy of the notification form and supporting documents to be submitted electronically. The OC will, however, retain the discretion to ask for physical copies where it deems this necessary. It is always best to get in touch with the OC before submitting the notification for guidance on any arrangements that may be in place, such as, for the payment of the mandatory notification fee.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.