The Lexpert Guides to the Leading US/Canada Cross-Border Corporate and Litigation Lawyers in Canada profiles leading business lawyers and features articles for attorneys and in-house counsel in the US about business law issues in Canada.
Issue link: https://digital.carswellmedia.com/i/138095
INTERNATIONAL MERGER NOTIFICATION "India's Competition Act was initially passed in 2002, but its merger review provisions underwent numerous revisions before finally coming into force in 2011." or turnover in India of less than INR 7.5 billion (approximately C$140 million). In April 2013 the CCI released guidelines that exempt acquisitions of less than a 15 percent share interest (provided that the purchaser does not already control a competing entity). Intra-group reorganizations are "normally" exempt, but it is not clear what circumstances would deny the "normal" exclusion. Timing of Reviews cation. However, 2007 amendments introduced a mandatory filing requirement and a prohibition on closing prior to approval of the Competition Commission of India (CCI). These amendments intensified calls for further changes to the merger notification regime. Between the 2007 amendments and the coming into force of the merger review provisions of the Competition Act in 2011, some further regulations and guidance documents attempted to limit the scope of their application and provide merging parties with greater certainty. For example, a transaction must now have a minimum financial nexus with India to be notifiable. Notification Thresholds As at the date of writing, the Indian Competition Act requires pre-merger approval of the CCI for transactions that meet one of the following thresholds: A) > Following the transaction, the group to which the parties will belong must have: • assets in India in excess of INR 60 billion (approximately C$1.1 billion); • worldwide assets in excess of US$3 billion, with at least INR 7.5 billion (approximately C$140 million) in India; • turnover in India in excess of INR 180 billion (approximately C$3.4 billion); or • worldwide turnover in excess of US$9 billion, with at least INR 22.5 billion (approximately C$420 million) in India; or B) > Alternatively, the parties to the transaction have one of the following (it is unclear what, if any, entities other than the vendor and purchaser themselves (e.g., their subsidiaries and/or parent entities) count towards this threshold): • assets in India in excess of INR 15 billion (approximately C$280 million); • worldwide assets in excess of US$750 million, with at least INR 7.5 billion (approximately C$140 million) in India; • turnover in India in excess of INR 45 billion (approximately C$840 million); or • worldwide turnover in excess of US$2.25 billion, with at least INR 22.5 billion (approximately C$420 million) in India. However, no filing is required if the entity to be acquired has assets in India of less than INR 2.5 billion (approximately C$45 million), Unlike many jurisdictions that do not specify a time within which a notification must be filed (other than requiring that clearance be obtained prior to closing), if an Indian notification is necessary, it must be submitted within 30 days of board approval or the execution of the acquisition agreement. If a notification is not filed on time, the CCI may impose a fine up of to 1 percent of the total worldwide turnover or assets of the parties. In one recent case, the CCI imposed a fine of about C$200,000 on a US company for a late notice of its proposed acquisition of a European entity that had an approximate 36 percent interest in an Indian company, even though the CCI found that the transaction had no impact on the Indian market (see "CCI approves Titan International – Titan Europe deal" (Apr. 8, 2013), http://www.moneycontrol.com/news/business/cci-approvestitan-international-titan-europe-deal_848188.html). Once a notification is filed, the CCI has an initial 30-day review period, subject to extension by the CCI for up to an additional 210 days. However, regulations require the CCI to endeavor to complete its reviews within 180 days. BRAZIL In May 2012, significant amendments to Brazil's competition laws came into force. Historically, Brazil's merger notification regulations had a very expansive scope and potentially required filings for many mergers that did not have any impact in Brazil. Specifically, under the old law, in addition to other potentially applicable thresholds, a notification was required if one of the parties (including the parties' affiliates) had gross turnover in or into Brazil of at least BRL 400 million (approximately C$200 million), whether or not that turnover had any relation to the merger at hand. The new Brazilian Competition Act addresses some of the prior law's problematic aspects, but also raises a number of new concerns. Notification Thresholds The Brazilian Competition Act requires parties to a proposed "concentration" that satisfies certain thresholds to notify the Administrative Council for Economic Defense (CADE), one of two Brazilian competition authorities, prior to completion of the transaction. While the prior notification thresholds required only one party to have turnover in Brazil, under the new law a concentration is subject to notification only if (a) one of the economic groups involved in the transaction had gross revenues in Brazil of at least BRL 750 million (approximately C$375 million) in the prior year, and (b) at least one other economic group involved in the transaction had gross revenues in Brazil of at least BRL 75 million (approximately C$37.5 million) in the prior year. While the requirement for two parties to have revenues in Brazil is an improvement, as the current threshold references revenues only at the group level, it could still capture acquisitions of foreign entities with no conceivable competitive impact in Brazil. Further, the definition of "economic group" is broad, and includes any entities in which a company subject to common control of the relevant party holds a 20 36 | LEXPERT • June 2013 | www.lexpert.ca C-00-Firm.indd 36 13-05-17 10:06 AM