Pre-Merger Notification Guide ITALY Chiomenti Studio Legale CONTACT INFORMATION Stefania Bariatti Chiomenti Studio Legale Via XXIV Maggio, 43 00187 Rome, Italy 39.02.721571 stefania.bariatti@chiomenti.net www.chiomenti.net 1. Is there a regulatory regime applicable to mergers and similar transactions? The main provisions on Italian merger control are set forth by Law No 287 of 10 October 1990 (articles 5, 6, 16-19, as lastly amended by Law No 27 of 24 March 2012) (Competition Act), which provides for the protection of competition on the national market, as well as Presidential Decree No 217 of 30 April 1998, which regulates investigation procedures pursuant to the Competition Act. With respect to film distribution and operating movie theatres, Section 13(1) of Law No 153 of 1 March 1994 sets special thresholds for merger notifications. 2. Identify Applicable National Regulatory Agency/Agencies. The Competition Act is enforced by the Italian Antitrust Authority (Autorità Garante della Concorrenza e del Mercato, IAA) with seat in Rome (www.agcm.it). Additional provisions govern merger control in some economic sectors, which provide for the exercise and coordination of the respective powers of the IAA and sector authorities. The main provisions concern: the banking and financial sector, where Law No 262/2005 provides for the distribution of powers between the IAA and Bank of Italy; the telecommunications and radio and television broadcasting sector, where Law No 249/1997 and Legislative Decree No 177/2005 establish the competence of the Italian Communication Authority (Autorità per le Garanzie nelle Comunicazioni, ICA);
the insurance sector, where the respective powers of IAA and the sector authority (Istituto per la Vigilanza sulle Assicurazioni private e di Interesse Collettivo, ISVAP) are governed by Article 20(4) of the Competition Act; and the energy sector, where a specific power of imposing conditions and restraints on undertakings is granted to the prime minister under Law No 239/2004, Article 1(29). Additional Comments: Bank of Italy s web site: www.bancaditalia.it (Italian and English) ICA s web site: www.agcom.it (Italian and English) ISVAP s web site: www.isvap.it (Italian and partially English) The IAA is a collegiate body, which was originally composed of five members who take their decisions by majority vote. Decree Law No 201 of 6 December 2011, converted by Law No 214/2011, reduced the number of members from five to three; however such provision does not apply to members already appointed as of the date the Decree enters into effect. Thus, the IAA is currently composed of four members. Its Chairman and Members are appointed jointly by the Presidents of the Senate and the Chamber of Deputies. The Secretary General of the IAA is appointed by the Minister of Productive Activities upon a proposal of the Chairman of the IAA,and is responsible for overseeing the organization and operations of the staff and the offices. 3. Is there a supranational regulatory agency (e. g., the European Commission) that has, or may have exclusive competence? If so, indicate. In cases where the thresholds set forth in the EC Merger Regulation are met, the European Commission is the competent authority and the Competition Act does not apply. 4. Are there pre-merger filing requirements; if so, where are they published? Until June 2005, there was no specific procedure for requesting informal guidance from the IAA. A notice was then diffused by the IAA, providing guidelines for prenotification of concentrations that exceed the second turnover threshold (see below, question 7). The parties may submit a written description of the transaction to be discussed with IAA s officials. During this informal phase further information may be requested. It is also possible to ask for information or clarification by IAA officials on specific matters on an informal basis. Informal opinions given by officials, however, are not binding on the IAA.
5. What kinds of transactions are "caught" by the national rules? (Identify any notable exceptions) The Italian definition of concentration corresponds to the EU definition as provided by Regulation No 139/2004 and the relevant EU practice. A concentration arises when: i) two or more undertakings merge; ii) one or more persons controlling at least one undertaking or one or more undertakings, acquire the direct or indirect control of the whole or parts of one or more undertakings, whether through the acquisition of shares or assets, or by contract or by any other means; and iii) two or more undertakings create a joint venture by setting up a new company (article 5 of the Competition Act). Additional comments: Control is acquired: in the specific situations set out in Article 2359 of the Italian Civil Code; by the holding of rights, contracts or other legal relations which, separately or in combination, and having regard for the considerations of fact and law involved, confer the possibility of exercising decisive influence on an undertaking through: i) the ownership of rights over all or part of the assets of an undertaking; ii) rights, contracts or other legal relations which confer a decisive influence over the composition, resolutions or decisions of the board of an undertaking. Control is acquired by persons or undertakings or groups of persons or undertakings, which: are the holders of the rights, beneficiaries under the contracts or are parties to other legal relations or have the power to exercise the rights deriving form the holders of the rights, beneficiaries under the contracts or parties to other legal relations. 6. Is there a "size of transaction" threshold? No general size of transaction threshold is provided. A special size of transaction threshold is established for concentrations in the film distribution market (please see below, comments to question 7). 7. Is there a "size or turnover of the parties" test; if so, what is it and how are size and turnover to be calculated? The current turnover of the parties test, that will apply until 31 December 2012, requires prior notification of concentrations when either of the following thresholds are met: the combined aggregate turnover in Italy of all the undertakings concerned exceeds EUR 468 million; or
the aggregate turnover in Italy of the undertaking being acquired exceeds EUR 47 million. Starting from 1 January 2013, a concentration will require prior notification when both the threshold provided above are met, namely: the combined aggregate turnover in Italy of all the undertakings concerned exceeds EUR 468 million; and the aggregate turnover in Italy of the undertaking being acquired exceeds EUR 47 million. The IAA applies the criteria set out in the European Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (OJ 2008/C 95/01) with the exception of the following situations where specific sectors are involved: for transactions involving banks and financial institutions, the relevant turnover is equal to the value of 10% of their total assets (excluding memorandum accounts); for transactions involving insurance undertakings the relevant turnover is equal to the value of the premiums collected; for concentrations in the film distribution market notification is required where, as a result of the concentration (irrespective of the abovementioned turnover thresholds) any undertaking would hold in any of the 12 main towns within film distributions zones, directly or indirectly: o a market share above 25% of the turnover from film distribution and o more that 25% of the operating movie theaters. (The 12 main towns are Rome, Milan, Turin, Genoa, Padua, Bologna, Florence, Naples, Bari, Catania, Cagliari and Ancona). Additional Comments: These thresholds are updated by the IAA on a yearly basis to take account of inflation. 8. Is geographic scope/national market effect of transaction an issue with respect to filing or approval requirements? If so, specify. Concentrations must be notified to the IAA if the thresholds indicated above are met. However, as a matter of exception, concentrations involving foreign-registered undertakings which do not realise at the time of the transaction and did not realise during the previous three years a turnover in Italy, either directly or indirectly, are not subject to filing. These operations are, however, subject to filing whenever, following the concentration, the undertaking starts doing business on the Italian market. 9. Is the filing voluntary or mandatory? What are the penalties for noncompliance? Notification of a concentration is mandatory if the thresholds are met.
In case of a failure to notify, the IAA can impose on the Parties responsible for the notification a fine up to 1% of their annual worldwide turnover for the previous financial year achieved through the activities involved in the concentration. 10. Time in which a filing must be made. A concentration must be notified before it has taken place (that is, before the acquiring company is able to exercise a substantial influence on the strategic decisions of the target company) but after the Parties have reached a binding agreement on the essential terms of the transaction. In particular: as to mergers, they have to be notified before the execution of the formal deed of merge; if control is acquire through a share purchase, the transaction is deemed to be duly notified in advance if the performance of the agreement transferring control is conditional upon the approval of the IAA; joint ventures established by incorporation of a new company must be notified before the deed of incorporation is filed with the companies register. If the launch of a take over bid can give rise to a concentration, it must be notified to the IAA simultaneously with the filing to the Italian Stock Exchange Supervisory Authority (Commissione Nazionale per le Società e la Borsa). 11. Form and Content of Initial Filing. Initial filing is made in Italian using the official form, which is published on the website of the IAA. The notification must end with a signed statement by the notifying Party/ies indicating that the signatory/ries is/are responsible for the truth and accuracy of the information contained in the notification form. The form must be signed by the legal representative/s or by a representative under a power of attorney which does not need to be certified by a public notary. The Parties must provide a copy of: all the documents related to the transaction; a copy of the annual reports and balance sheets for each of the last three financial years; in case of a public takeover bid, a copy of the offer document; studies, surveys and any other additional documents useful for the overall assessment of the transaction. 12. Are filing fees required? Until 31 December 2012 the filing fee is set in the amonunt of 1,2 per cent of the transaction value, ranging between a minimum of Euro 3,000 and a maximum of Euro 60,000. The instructions on the payment and the criteria applicable to determining the value of the transaction are published on the IAA s website The fee is due by the notifying party before submitting the filing. A copy of the payment must be provided with the form.
The filing fee has been abolished by Law No 27/2012 with effect from 1 January 2013. 13. Is There An Automatic Waiting Period? If so, specify. Notification of a transaction does not automatically oblige the Parties to suspend the implementation. However, if the IAA opens an in-depth investigation, it can order the Parties to suspend implementation until proceedings have been concluded. This does not apply to notified take over bids provided that the acquired voting rights are not exercised pending the decision of the IAA. 14. Are There Time Limits Within Which The Regulatory Agency Must Act? Can they be shortened by the parties or be extended by the regulatory agency? Within 30 calendar days of receiving notification, the IAA must issue a decision to either: clear the transaction, or open an in-depth investigation. In the latter case, the IAA must adopt a final decision within 45 days of opening the investigation. This period may be extended for a further period of not more than 30 days if the undertakings fail to supply the information and the data in their possession upon request. The 30-day term starts only if the filing is complete. Therefore, if the parties fail to supply the information and data in their possession or if the information submitted is materially inaccurate, incomplete or untrue, the IAA requires to complement the filing and documents and the 30-day term will start anew when complete information is submitted. In this case, the IAA can start an in-depth investigation after the 30-day deadline. There are several exceptions to the 30-day term: in case of concentrations in the banking sector, the IAA issues its authorisation within 60 days from the date of the notification; in case of concentrations in the insurance or telecoms and media sectors, the IAA submits a draft decision to the ISVAP or the ICA, respectively, within 30 days of filing. These authorities should issue a non-binding opinion within the next 30 days. Therefore, the term for the IAA decision extends accordingly. If the IAA opens an in-depth investigation, it will request the 30 days non-binding opinions to ISVAP and to ICA at the end of this stage of the proceedings; in the case of takeover bids, the clearance or the decision opening the investigation, as the case may be, must be adopted within 15 days of filing. The IAA shall notify the undertakings and entities concerned that an investigation is being opened. These undertakings or entities may have access to documents, submit representations by the deadline set at the moment of notification, and make submissions at any stage during the investigation. A final hearing may be held before the proceedings are formally closed.
Under article 14(2) of the Competition Act, the IAA has the power to: conduct inspections of the undertaking s books and records and make copies of them, availing itself of the cooperation of other government agencies where necessary; produce expert reports and economic and statistical analyses and consult experts on any matter of relevance to the investigation. 15. What is the substantive test for clearance? The substantive test is whether the merger can create or strengthen a dominant position on the Italian market with effect of eliminating or restricting competition appreciably and on a lasting basis. 16. What are the common Post-Filing Procedures: Requests for further information, etc? The most common post-filing procedures are: i) request for further information, ii) questioning of third parties (ie. customer, competitors, suppliers), iii) inspections. 17. Describe the sanctions for not filing or filing and incorrect/incomplete notification. Failure to notify: the IAA can impose on the Parties responsible for the notification a fine up to 1% of their annual worldwide turnover for the previous financial year. 18. Describe the procedures if the agency wants to challenge the transaction? The IAA can prohibit a concentration or clear it subject to conditions and obligations. During both stages of the proceeding the IAA may indicate the Parties those elements of the notified transaction which are likely to distort competition and ask the Parties to eliminate them. Negotiation are often carried out between the IAA and the Parties during which the IAA may ask for, or the Parties can offer, structural undertakings or behavioural undertakings in order to maintain an effective degree of competition on the market. Additional Comments: Following the publication of the decision to open an in-depth investigation on the IAA s website, interested parties may ask to participate in the proceeding in order to submit written observations. Third interested parties may also have access to documents held by the IAA. The Consiglio di Stato has ruled that third parties are allowed to challenge IAA s decisions provided that they have a relevant legal interest in the case (judgment No 1113/05 of 18 January 2005).
19. Describe the penalties applicable to the implementation of a merger before clearance or of a prohibited merger? Since clearance is not a condition precedent for closing, no sanctions can be imposed if the merger is implemented prior to clearance, unless the IAA has ordered that the implementation is stayed (see Question 13). The IAA can impose fines, ranging from 1% to 10% of the annual worldwide turnover of the business of the undertakings forming the concentration if: a prohibited concentration is implemented or an order by the IAA to restore conditions of effective competition and remove effects that caused the distortion has not been complied with. 20. Describe, briefly, your assessment of the regulatory agency's current attitudes/activities. The Italian provisions concerning concentrations are widely inspired to the EU merger control legislation and practice. The IAA closely follows up the analysis carried out by the European Commission in its merger practice. 21. Other Important Information: Decisions issued by the IAA can be challenged before the Lazio Regional Administrative Court (Tribunale Amministrativo Regionale per il Lazio, TAR Lazio) within 60 days from their notification to the filing parties (Article 33 of the Competition Act). The judgments of TAR Lazio can be appealed before the Administrative Supreme Court (Consiglio di Stato).