

Mission Organization Chart Statutes Activities Plan Strategy Contacts National Legislation European Community Notification of Mergers Merger Decisions Other Cases and Decisions Non-notification cases Competition Authority European Commission Responsibilities National Bilateral Multilateral OECD WTO UNCTAD	FAQs WHAT EXACTLY CONSTITUTES A MERGER OR ACQUISITION? For the purposes of competition legislation - Law No. 18/2003 of 11 June – mergers and acquisitions, also referred to as concentrations, involve ( Article 8): a) the fusion of two or more formerly independent undertakings; b) the acquisition of direct or indirect control of an undertaking or a part of one or more undertakings; c) the creation or acquisition of a joint undertaking that functions on a long-term basis as an independent economic entity. There are, however, three situations in which acquiring control of an undertaking is not considered an act of concentration, on account of the specific circumstances: when an undertaking is undergoing a special recovery or bankruptcy process, the acquisition of shareholdings merely as a guarantee and acquisition by credit institutions of shareholdings in non-financial companies, when not prohibited by Article 101 of the General Credit Institution and Finance Company Regulations. Taking the de facto and de jure circumstances into account, the principle of control derives from the ability to exercise a decisive influence on an undertaking’s activities, in particular by acquiring: all or part of the share capital; ownership rights over or the right to use, or have the benefit of, all or part of the undertaking’s assets; rights or contractual positions that confer a dominating influence on the composition or decisions of an undertaking’s corporate bodies. UNDER WHAT CIRCUMSTANCES MUST A MERGER OR ACQUISITION BE NOTIFIED? The Competition Authority must be given prior notification of all mergers and acquisitions of undertakings when any one of the following conditions is fulfilled (Article 9): for a specific good or service they create or strengthen a share of >30% of the domestic market or a large part of it; in the last financial year, the group of undertakings participating in the merger or acquisition had a turnover in Portugal of >150 million euros, net of directly related taxes, provided that the individual turnover in Portugal of at least two of these companies was >2 million euros. Mergers and acquisitions carried out outside the country must also be notified if they fulfil any of the conditions indicated above. HOW IS A MERGER OR ACQUISITION NOTIFIED? Notifications are presented to the Competition Authority using the Notification Form, a legally approved model which is annexed to Regulation No. 2/E/2003 published in the government gazette, Diário da República, DR – II Série, de 25 de Julho. The notification form (in triplicate) must be accompanied by: the annual accounts, duly approved, for the previous three financial years and for each undertaking involved in the merger or acquisition; a copy of the agreements leading to the intended implementation of the merger or acquisition; a copy of any shareholders’ agreements, when relevant to the form and means of control. The notifying party may, of its own free will, attach any relevant studies for a proper assessment of the case (e.g. on consumer preference for certain products or product brands, consumer habits that demonstrate the importance of the merger or acquisition for the international competitiveness of the national economy). All entities participating in the merger or acquisition should indicate the information that is considered confidential (e.g. trade secrets). Notifications of mergers and acquisitions are subject to the payment of a fee (Article 56 a)) fixed by Regulation No 1/E/2003 published in the government gazette, Diário da República, DR – II Série, de 25 de Julho. Notification only has effect from the date on which the fee is paid. The respective receipt should be forwarded to the Competition Authority as soon as payment is made or be attached to the notification, if payment has already been effected. In the case of a decision to carry out an in-depth investigation, an additional fee is payable in accordance with the regulations mentioned above. To resolve any questions regarding the content of the notification, it is advisable for the notifying party to make contact with the Authority in advance. WHEN MUST A MERGER OR ACQUISITION BE NOTIFIED? Mergers and acquisitions subject to prior notification may not be implemented before notification or before they are the object of an explicit or tacit decision of non-opposition. The Authority must be notified of mergers and acquisitions subject to prior notification within seven working days of the signing of the agreement or, where applicable, by the publication date of the announcement of a take-over or exchange offer or the acquisition of partial control. WHO SHOULD PRESENT THE NOTIFICATION OF A MERGER OR ACQUISITION? In the case of a merger, notification is presented by the undertakings involved in the merger and, for the acquisition of joint control, by the persons or undertakings acquiring such control. These joint notifications must be presented by a common representative, with the power to dispatch and receive documents on behalf of all notifying parties. Where the acquisition of sole control is involved, notification is presented by the person(s) or undertaking(s) acquiring such control. IS THE NOTIFICATION OF A MERGER OR ACQUISITION MADE PUBLIC? Yes. To allow any interested third parties to present their observations, the Authority publishes the essential elements of the notification in two national newspapers, at the expense of the notifiers, within 5 working days of the date on which the notification has effect. Observations should be forwarded within 10 days of publication of the announcement. The Authority’s website also provides information on mergers and acquisitions that have been notified, with a concise description of the concentration in question and identification of the parties and business activities involved. HOW LONG MAY THE AUTHORITY TAKE TO REACH A DECISION ON A NOTIFIED MERGER OR ACQUISITION? The Authority must deliver its decision on a notified merger or acquisition within 30 working days of the date on which the notification has effect. If the Authority’s decision regarding a merger or acquisition is to open an in-depth investigation, the time-limit for the final decision shall be a further 90 working days from the date of such a decision. (These time-limits are suspended in the cases laid down by the law, in particular whenever additional information is requested from notifying parties.) CAN THE AUTHORITY REQUEST FURTHER INFORMATION FROM NOTIFYING PARTIES OR THIRD PARTIES? Yes. Whenever necessary, within the scope of the investigation (Article 34), the Authority may require notifying parties or third parties to provide additional information or documents. It will also set a reasonable time-limit for the purpose. WHAT IS THE PROCEDURE IF A NOTIFIABLE MERGER OR ACQUISITION IS NOT NOTIFIED? Whenever the Authority ascertains that a merger or acquisition subject to prior notification (since it fulfils any of the legal conditions) has been carried out but has not been notified, it will initiate official proceedings in accordance with the provisions of the law (Article 40). In this case, the Authority shall notify the non-compliant undertakings (participating in the merger or acquisition) that they should submit the respective notification in accordance with the law, within a reasonable period set by the Authority, though the Authority is not subject to the time-limits set for the investigation. WHAT ARE THE SANCTIONS OR FINES FOR FAILING TO NOTIFY A MERGER OR ACQUISITION? Failure to notify a merger or acquisition subject to prior notification (Article 9) is an administrative offence punishable with a fine, for each of the undertakings,not exceeding 1% of the previous year’s turnover (Article 43). When justified, the Authority may issue a decision demanding a periodic penalty payment not exceeding 5% of the average daily turnover for the previous year, for each day that has elapsed since the date on which the concentration should have been notified (Article 46). Thus, failure to notify a merger or acquisition subject to prior notification results in administrative offence proceedings for failure to comply with the legal obligation referred to above.

FAQs

WHAT EXACTLY CONSTITUTES A MERGER OR ACQUISITION?

For the purposes of competition legislation - Law No. 18/2003 of 11 June – mergers and acquisitions, also referred to as concentrations, involve ( Article 8):

a) the fusion of two or more formerly independent undertakings;

b) the acquisition of direct or indirect control of an undertaking or a part of one or more undertakings;

c) the creation or acquisition of a joint undertaking that functions on a long-term basis as an independent economic entity.

There are, however, three situations in which acquiring control of an undertaking is not considered an act of concentration, on account of the specific circumstances: when an undertaking is undergoing a special recovery or bankruptcy process, the acquisition of shareholdings merely as a guarantee and acquisition by credit institutions of shareholdings in non-financial companies, when not prohibited by Article 101 of the General Credit Institution and Finance Company Regulations.

Taking the de facto and de jure circumstances into account, the principle of control derives from the ability to exercise a decisive influence on an undertaking’s activities, in particular by acquiring:

all or part of the share capital;
ownership rights over or the right to use, or have the benefit of, all or part of the undertaking’s assets;
rights or contractual positions that confer a dominating influence on the composition or decisions of an undertaking’s corporate bodies.

UNDER WHAT CIRCUMSTANCES MUST A MERGER OR ACQUISITION BE NOTIFIED?

The Competition Authority must be given prior notification of all mergers and acquisitions of undertakings when any one of the following conditions is fulfilled (Article 9):

for a specific good or service they create or strengthen a share of >30% of the domestic market or a large part of it;
in the last financial year, the group of undertakings participating in the merger or acquisition had a turnover in Portugal of >150 million euros, net of directly related taxes, provided that the individual turnover in Portugal of at least two of these companies was >2 million euros.

Mergers and acquisitions carried out outside the country must also be notified if they fulfil any of the conditions indicated above.

HOW IS A MERGER OR ACQUISITION NOTIFIED?

Notifications are presented to the Competition Authority using the Notification Form, a legally approved model which is annexed to Regulation No. 2/E/2003 published in the government gazette, Diário da República, DR – II Série, de 25 de Julho.

The notification form (in triplicate) must be accompanied by:

the annual accounts, duly approved, for the previous three financial years and for each undertaking involved in the merger or acquisition;
a copy of the agreements leading to the intended implementation of the merger or acquisition;
a copy of any shareholders’ agreements, when relevant to the form and means of control.

The notifying party may, of its own free will, attach any relevant studies for a proper assessment of the case (e.g. on consumer preference for certain products or product brands, consumer habits that demonstrate the importance of the merger or acquisition for the international competitiveness of the national economy).

All entities participating in the merger or acquisition should indicate the information that is considered confidential (e.g. trade secrets).

Notifications of mergers and acquisitions are subject to the payment of a fee (Article 56 a)) fixed by Regulation No 1/E/2003 published in the government gazette, Diário da República, DR – II Série, de 25 de Julho.

Notification only has effect from the date on which the fee is paid. The respective receipt should be forwarded to the Competition Authority as soon as payment is made or be attached to the notification, if payment has already been effected.

In the case of a decision to carry out an in-depth investigation, an additional fee is payable in accordance with the regulations mentioned above.

To resolve any questions regarding the content of the notification, it is advisable for the notifying party to make contact with the Authority in advance.

WHEN MUST A MERGER OR ACQUISITION BE NOTIFIED?

Mergers and acquisitions subject to prior notification may not be implemented before notification or before they are the object of an explicit or tacit decision of non-opposition.

The Authority must be notified of mergers and acquisitions subject to prior notification within seven working days of the signing of the agreement or, where applicable, by the publication date of the announcement of a take-over or exchange offer or the acquisition of partial control.

WHO SHOULD PRESENT THE NOTIFICATION OF A MERGER OR ACQUISITION?

In the case of a merger, notification is presented by the undertakings involved in the merger and, for the acquisition of joint control, by the persons or undertakings acquiring such control.

These joint notifications must be presented by a common representative, with the power to dispatch and receive documents on behalf of all notifying parties.

Where the acquisition of sole control is involved, notification is presented by the person(s) or undertaking(s) acquiring such control.

IS THE NOTIFICATION OF A MERGER OR ACQUISITION MADE PUBLIC?

Yes. To allow any interested third parties to present their observations, the Authority publishes the essential elements of the notification in two national newspapers, at the expense of the notifiers, within 5 working days of the date on which the notification has effect. Observations should be forwarded within 10 days of publication of the announcement.

The Authority’s website also provides information on mergers and acquisitions that have been notified, with a concise description of the concentration in question and identification of the parties and business activities involved.

HOW LONG MAY THE AUTHORITY TAKE TO REACH A DECISION ON A NOTIFIED MERGER OR ACQUISITION?

The Authority must deliver its decision on a notified merger or acquisition within 30 working days of the date on which the notification has effect.

If the Authority’s decision regarding a merger or acquisition is to open an in-depth investigation, the time-limit for the final decision shall be a further 90 working days from the date of such a decision.

(These time-limits are suspended in the cases laid down by the law, in particular whenever additional information is requested from notifying parties.)

CAN THE AUTHORITY REQUEST FURTHER INFORMATION FROM NOTIFYING PARTIES OR THIRD PARTIES?

Yes. Whenever necessary, within the scope of the investigation (Article 34), the Authority may require notifying parties or third parties to provide additional information or documents. It will also set a reasonable time-limit for the purpose.

WHAT IS THE PROCEDURE IF A NOTIFIABLE MERGER OR ACQUISITION IS NOT NOTIFIED?

Whenever the Authority ascertains that a merger or acquisition subject to prior notification (since it fulfils any of the legal conditions) has been carried out but has not been notified, it will initiate official proceedings in accordance with the provisions of the law (Article 40).

In this case, the Authority shall notify the non-compliant undertakings (participating in the merger or acquisition) that they should submit the respective notification in accordance with the law, within a reasonable period set by the Authority, though the Authority is not subject to the time-limits set for the investigation.

WHAT ARE THE SANCTIONS OR FINES FOR FAILING TO NOTIFY A MERGER OR ACQUISITION?

Failure to notify a merger or acquisition subject to prior notification (Article 9) is an administrative offence punishable with a fine, for each of the undertakings,not exceeding 1% of the previous year’s turnover (Article 43). When justified, the Authority may issue a decision demanding a periodic penalty payment not exceeding 5% of the average daily turnover for the previous year, for each day that has elapsed since the date on which the concentration should have been notified (Article 46).

Thus, failure to notify a merger or acquisition subject to prior notification results in administrative offence proceedings for failure to comply with the legal obligation referred to above.