Concentrations with a Belgian dimension
Concentrations between undertakings (commonly referred to as “mergers”) can have many industrial or commercial objectives such as extending into new markets, which can be beneficial to consumers and to the economy. For example, by combining their activities, undertakings can develop new products or reduce their production or distribution costs, which can improve the operation of the market to the benefit of consumers.
However, certain mergers can impede the operation of the market, in particular by creating or strengthening a dominant actor. In these cases, such mergers could lead to higher prices as well as reduced choices or innovation.
As such, any merger of a certain scope in terms of turnover (see below) requires the prior approval of the BCA and, in certain cases, of the European Commission.
A “merger” within the meaning of CEL IV refers to an operation that results in a lasting change of control of an undertaking, in other words, the possibility of exercising decisive influence over its activity. A merger can in particular occur when two independent undertakings decide to integrate, when one undertaking or one person having control of an undertaking purchases another undertaking or part of its activities (acquisition), or when two undertakings create a lasting common undertaking between them (joint venture).
It is only necessary to notify the BCA of mergers that meet the following turnover thresholds as laid out in IV.7 CEL:
- undertakings with a total turnover in Belgium of more than EUR 100 million; and
- at least two of the undertakings each generate a turnover in Belgium of at least EUR 40 million.
Concentrations with a European dimension
Large-scale operations generally have effects that extend beyond national borders. In such cases, they require an examination by the European Commission. Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings defines under which conditions a merger is said to have a European dimension. There are two options:
- The first requires:
(i) a combined worldwide turnover of the undertakings concerned of more than EUR 5,000 million
(ii) a turnover of more than EUR 250 million within the European Union for at least two of the undertakings concerned.
- The second requires:
(i) a combined worldwide turnover of the undertakings concerned of more than EUR 2,500 million
(ii) a combined turnover of the undertakings concerned of more than EUR 100 million in at least three Member States
(iii) a turnover of more than EUR 25 million for at least two of the undertakings concerned in each of the three Member States referred to in point (ii), and
(iv) a turnover of more than EUR 100 million within the European Union for at least two of the undertakings concerned.
Nevertheless, mergers reaching these thresholds do not have to be declared to the European Commission if each of the undertakings concerned generates more than two thirds of its total European Union turnover within a single Member State.
Mergers subject to investigation by the European Commission do not require to be investigated by the BCA. However, under certain conditions, the Commission may refer a merger that had been submitted to it to the BCA. One of these conditions is the fact that the merger could appreciably affect competition within the Belgian market.
The Competition Prosecutor General must be informed of mergers by means of the form appended to the royal decree relative to the notification of corporate mergers, indicated in Article IV.10 CEL. Undertakings must declare the merger after the signing of the agreement or of the draft agreement, and before the merger comes into effect. The undertakings cannot carry out the merger operation until the BCA has cleared the merger. However, in certain cases, the President can grant an exemption to this prohibition (Art. IV.10, §§5 and 7 to 8 CEL).
For the practical provisions of the notification, prior contact with the BCA secretariat is recommended. Until the BCA adopts specific guidelines, the European Commission’s Best Practices Guidelines on merger control are applied by analogy.
Like the European Commission, the BCA strives to make the best possible use of the time prior to the actual notification, and it invites the notifying parties to contact the Investigation and Prosecution Service before announcing the merger. The contacts during the pre-notification period are intended to informally help the notifying parties to ensure that the notification form has been duly filled in prior to being submitted, in the absence of which the strict time limits for investigation of a merger cannot begin. During these initial exchanges, any competition problems (damage theories) can be flagged and discussions can be started with regard to the information to be provided by the notifying parties for examination purposes.
Investigation and decision
In view of their nature or of the small market shares of the undertakings concerned, certain mergers are unlikely to raise competition problems. The notifying parties can then request the application of the simplified procedure (Art. IV. 63 § 1 CEL):
- If the competition prosecutor finds that the application conditions for the simplified procedure have been met, he provides the notifying parties with a decision indicating the clearance of the merger within 15 business days. The Competition College accepts this decision as a clearance decision.
- If the application conditions for the simplified procedure are not met or if there are serious doubts regarding the clearance of the merger, the competition prosecutor sends a decision to the notifying parties within 15 business days, which terminates the simplified procedure.
For more clarifications, please refer to the Communication relative to the specific rules for the simplified notification of mergers (in French) and the Communication relative to the additional rules for the simplified notification of mergers (in French).
First phase of the procedure
The first phase begins when the Competition Prosecutor General receives the notification, provided that it is complete. The competition prosecutor defines the markets concerned and examines the merger’s likely effects on them. To this end, he can request information from the notifying parties and can also send information requests to competitors, customers and suppliers.
In his analysis, the competition prosecutor in particular considers the need to protect effective competition within the relevant markets, to uphold the choice possibilities of suppliers and users, and to protect the interests of consumers.
Within 25 business days after the notification, the competition prosecutor files a draft decision with the Competition College. This time limit can be extended by five business days if commitments are offered in response to the concerns expressed in the competition prosecutor’s letter that informs the notifying parties of his opinion that the proposed merger would significantly impede competition within the Belgian market.
The Competition College hears the parties during a hearing, and adopts a decision within 40 business days after acceptance of the notification. This time limit is extended by 15 business days if the undertakings submit commitments in an effort to ensure the clearance of the merger (Art. IV.61, §2 CEL). It can also be extended at the request of the parties (Art. IV.61, §3 CEL).
The Competition College declares as cleared:
- mergers that do not significantly impede effective competition, in particular by creating or reinforcing a dominant position; and
- mergers in which the undertakings concerned jointly control less than 25% of any relevant market, whether through horizontal or vertical relations.
When necessary, the undertakings can offer commitments in order for the merger to be authorised. These commitments consist of the conditions that the undertakings undertake to respect in order to ensure that the operation will have no harmful effects on competition.
However, if there are serious doubts as to the merger’s eligibility, the Competition College can decide to launch an additional investigation procedure (also known as the “second phase”).
Second phase procedure and decision
When there are serious doubts as to the merger’s eligibility, the Competition College can decide to launch the so-called second phase procedure. In this case, the competition prosecutor performs an additional investigation and provides the Competition College with a reviewed draft decision within a time limit of 30 business days (after the decision to launch the second phase procedure).
At the latest 20 business days after the start of the procedure (i.e. the second phase), the notifying undertakings can submit commitments in order to obtain an eligibility decision. When this is the case, the procedure is extended at the request of the notifying parties and for the duration that they propose, but no more than 20 business days.
The Competition College issues its decision within a time limit of 60 business days after its decision to launch a second phase. When the parties propose commitments, the procedure is extended by a maximum of 20 business days.
At the end of the second phase, the Competition College issues one of the following decisions:
- the merger is eligible without conditions;
- the merger is eligible, but with conditions or requirements guaranteeing that the undertakings concerned will respect the commitments offered by them; or
- the merger is not eligible.
For an overview of the procedure relative to mergers, simplified diagrams are available:
- diagram relating to merger control: simplified procedure (in French);
- diagram relating to merger control: first phase procedure (in French);
- diagram relating to merger control: second phase procedure (in French).
Fines and periodic penalty payments
The Competition College can also impose the following fines and periodic penalty payments (Art. IV. 70 ff CEL):
- fines amounting to 10% of the turnover for undertakings that proceed with the merger before it has been deemed truly eligible; or that do not adhere to prohibition decisions or to conditional clearance decisions;
- periodic penalty payments of up to 5% of the average daily turnover for undertakings that do not comply with prohibition decisions or conditional clearance decisions, or that proceed with a merger before it has been cleared;
- fines of up to 1% of the turnover for undertakings that do not declare a merger that falls within the scope of Book IV CEL;
- fines of up to 1% of the turnover for persons, undertakings or associations of undertakings that do not collaborate within the framework of an investigation.
The undertakings concerned, the Minister and third parties justifying an interest (and that have asked to be heard by the Competition College) can appeal the decisions of the Competition College – including tacit clearance decisions resulting from the expiry of the time limits – before the Market Court of Brussels. This appeal must be filed within 30 days of the notification of the appealed decision.
Additional forms and information
Form appended to the royal decree of 30 August 2013 relative to notifications of company mergers targeted in Article IV.10 of the Code of Economic Law, inserted by the laws of 3 April 2013: Form CONC C/C relative to a merger notification in compliance with Article IV.10 of the Code of Economic Law
Form CONC C/C-V/S relative to a merger notification in compliance with Articles 9 and 61 of the law on the protection of economic competition of 15 September 2006: Form appended the rules specific to a simplified merger notification of 8 June 2007(in French)