This guide provides an overview of merger control laws in Malta and spans jurisdictional and turnover test thresholds, process, timetable, and sanctions. It is intended to guide the reader in understanding the key elements of the merger control regime, and should not be treated as a comprehensive guide to Malta's merger control regime.
Overview
Malta's merger control regime is mainly contained in the Control of Concentrations Regulations ("Regulations") (Subsidiary Legislation 379.08). The regime is mandatory, which means that if a transaction meets the relevant jurisdictional thresholds, the Malta competition authority (the Office for Competition at the Malta Competition and Consumer Affairs Authority (MCCAA)) will have jurisdiction to review the transaction and to impose remedies to address any substantial lessening of competition which may result post-transaction. The Director General (Competition) heads the Office for Competition and is tasked with determining whether a concentration is compatible with upholding competition on the Maltese market upon the concentration being notified.
Where parties proceed to complete a transaction without the parties having first sought clearance from the MCCAA, they run the risk of substantial fines and may be ordered by a court to unwind and divest the transaction, among other things.
Throughout 2023, transactions which were notifiable to the Office for Competition in Malta spanned a range of industries, including naval services and the maritime industry, gaming and gambling, furniture, freight forwarding, and the health, medical and pharmaceutical industries.
As the Maltese market and economy continues to grow and develop, we have noticed a continuing trend in investigations entering Phase II reviews, particularly where parties involved have a significant local presence on the local market and notably in the grocery retail, telecommunications and transport industries.
When must a transaction be notified?
A transaction is notifiable in Malta if it falls under the definition of a "concentration" and the transaction meets the turnover threshold test.
A concentration occurs where:
- Two previously independent undertakings merge; or
- One or more undertakings or one or more persons already controlling at least one undertaking, acquire, whether by purchase of securities or assets, by contract or by any other means, direct or indirect control of the whole or parts of one or more other undertakings.
The creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity (ie a "full-function joint venture") also constitutes a concentration.
The turnover threshold test is cumulative. It is met where:
- The concentration's combined aggregate turnover exceeds €2,329,373.40; and
- Each of the undertakings concerned had a turnover in Malta equivalent to at least 10% of the combined aggregate turnover in Malta of the undertakings concerned.
How is control defined under the Regulations?
Control results from the possibility of exercising decisive influence on an undertaking, in particular:
- through ownership or the right to use all or part of the assets of an undertaking; or
- through rights or contracts which confer decisive influence on the composition, voting or decisions of the organs of an undertaking; provided that even persons or undertakings not holding such rights or entitled to such rights under the contract concerned are deemed to have acquired control if they have the power to exercise the rights deriving therefrom.
What form does the notification take?
Where notifiable, concentrations must be notified using the Concentration Notification Form (Form CN) found in the Schedule to the Regulations. It may also be accessed here: https://mccaa.org.mt/Section/Content?contentId=1235%20
The notification form is quite extensive, and information required spans background information and details of the concentration, ownership and control, personal and financial links and previous acquisitions, supporting documentation, market definitions, information on affected markets, general conditions on affected markets, general market information, cooperative effective of a joint venture, and other general matters. Supporting documentation will span the transaction documents, financial statements of the parties, and where there is an affected market, copies of analyses, reports, studies and surveys submitted to or prepared for any member(s) of the board of directors, the supervisory board or the shareholders' meeting for the purpose of assessing or analysing the concentration with respect to competitive conditions, competitors (actual and potential), and market conditions.
Are there any filing fees?
Yes, a notification fee of €163.06 must be paid by the notifying party or parties on submission of the notification form.
Are foreign-to-foreign transactions caught within the scope of Malta's merger control regime and is a local presence required?
Yes, the merger control regime applies to concentrations occurring within or outside of Malta, and a transaction may be notifiable even if the parties are not legally present in Malta and the transaction is subject to a foreign law. The determining criterion is the location of turnover generated by the transaction. Where turnover originates from customers located in Malta, then the transaction will be subject to mandatory notification if the minimum thresholds are met.
Are pre-notification meetings required?
Pre-notification meetings are optional but highly recommended.
How is the merger filing timetable determined?
- Time to file
A concentration must be notified before its implementation and within 15 working days from the conclusion of the agreement, the announcement of the public bid or the acquisition of a controlling interest.
- Time to review
Review of a notification commences once it is deemed complete and starts off with a Phase I investigation. A Phase I decision must be taken within six weeks from the day following the receipt of a notification or of complete information, provided that no remedies or commitments are required to be submitted by the parties and approved by the authority, and that there are no stop-the-clocks via requests for information. Where commitments are submitted by the parties on a finding that the transaction raises serious doubts as to its lawfulness, the 6-week period may be extended to 2 months, if commitments are submitted by the end of the fifth week from the date of notification.
In some circumstances, some transactions may qualify for a fast-tracked simplified notification, which benefits from a reduced four-week period. If there is no decision taken within this time limit, the concentration is deemed unconditionally cleared.
Where during a Phase I notification the Director General considers that the concentration raises serious doubts as to its lawfulness, there may be a Phase II investigation initiated. In a Phase II review, the Director General may proceed with a decision as follows:
- Clearing the concentration and declaring it lawful;
- Clearing subject to conditions and commitments to render the concentration lawful;
- Prohibiting the concentration. This may require separation, where the concentration has already been implemented.
A Phase II decision must be taken as soon as it appears that the serious doubts as to lawfulness have been removed or addressed and at the latest within four months from the date when the Phase II proceedings began. Where the parties concerned submit commitments following the initiation of Phase II and by not later than the end of the third month following the initiation of proceedings, they can request that the four-month time limit be suspended for up to one month for proper consideration of their commitment.
What are the applicable sanctions where a transaction is not notified?
Persons, undertakings and, or associations of undertakings that intentionally or negligently fail to notify a concentration may be subject to a court-imposed penalty of not less than €1,000 and not more than €10,000.
Additionally, undertakings involved may be subject to a fine of not more than ten percent of the total worldwide turnover for the business year preceding the judgement imposing the penalty.
The undertakings or assets brought together may also be subject to an order to be separated, for joint control to cease, or subject to any other action that may be appropriate to restore the conditions of effective competition.
What sanctions may be imposed if a transaction is implemented before clearance is obtained (ie gun-jumping)?
A penalty of up to 10 per cent of the total turnover of the undertaking concerned in the preceding financial year can be imposed on the persons or undertakings concerned where the concentration is implemented intentionally or negligently before it has been notified.
Are mergers notifiable to any other authority?
There may be more than one authority that is interested and requiring notification of the transaction. The response to this question will always be industry- and transaction-specific, as this may also change depending on the identity and location of the parties. The Malta Gaming Authority and the Malta Financial Services Authority may require such prior notification.
Does Malta have a foreign direct investment (FDI) regime?
Transactions involving a direct investment for a foreign investor require mandatory notification to the National Foreign Direct Investment Screening Office (the "Office") in accordance with the National Foreign Direct Investment Screening Office Act (the "Act"), where the transaction aims to establish or maintain lasting and direct links in order to carry on an economic activity within certain sensitive sectors in Malta.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
