Global Merger Control Update - May 2017

This is the quarterly Jones Day Global Merger Control Update, which will discuss recent developments in existing regimes and the emergence of new merger control regimes worldwide.

In recent years, there has been a surge in merger control enforcement around the world, beyond the major jurisdictions. There are currently over 110 jurisdictions with merger control regimes. Some are more active than others, but all must be taken into consideration when assessing the antitrust risks of a cross-border M&A transaction.

In this issue, we discuss recent key changes to the existing regimes in Austria, Chile, Germany, Hungary, India, and Ukraine. Although the changes are generally steps in the right direction, various provisions also result in subjecting international transactions to national merger control regimes that have little to no effect on their national markets. Nevertheless, not filing in such cases would amount to a breach of the stand-still obligation.

Also featured in this issue is the entry into force of the Philippines's new regime.

KEY CHANGES TO EXISTING MERGER CONTROL REGIMES

Germany and Austria Add a Transaction-Value Based Threshold

Germany. The new German law introduces a transaction-value based threshold of €400 million (approx. US$425 million). This change attempts to close a perceived enforcement gap, whereby certain mergers of considerable economic importance are not captured by the current thresholds, which are exclusively based on revenues. This gap is perceived to exist, in particular, in pharmaceutical and IT-related cases.

If the parties meet the combined worldwide turnover threshold (>€500 million, approx. US$531 million), and one party meets the domestic turnover threshold (>€25 million, approx. US$26 million), but neither the target nor any other party meets the second domestic turnover threshold (>€5 million, approx. US$5.3 million), a transaction is nevertheless notifiable, if:

The transaction value exceeds €400 million (approx. US$425 million), and The target has significant activities in Germany. The transaction value includes the purchase price (including all assets and other monetary payments that the seller receives from the acquirer in connection with the transaction) and the value of any liabilities of the seller assumed by the purchaser. In complex M&A transactions, the calculation of that value may not be straightforward, for example, in purchase agreements involving "earn out-clauses," whereby a portion of the purchase price is made conditional upon the target's future performance.

According to an explanatory memorandum, whether a target is "active" in Germany is to be established based on the location of the target's customersmore specifically, the location of the designated use of the products. According to this condition, a target would be "active" in Germany where, for example, users in Germany would benefit themselves from the services...