National merger control regime finally on its way in Luxembourg
07 September 2023
07 September 2023
On 23 August 2023 the Ministry of Economy introduced before the Luxembourg parliament (Chambre des Députés) a draft bill of law (bill of law no. 8296) (the "Bill") that introduces a mandatory national notification and screening procedure for mergers concerning certain entities operating in Luxembourg (merger control). The rules for the new Luxembourg merger control regime have been primarily inspired by the ones applicable in France and Belgium.
Under the Bill any merger operation (opération de concentration) that does not fall under the EU merger control regime set out in Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) must be notified to the Luxembourg competition authority, the Autorité de la concurrence du Grand-Duché de Luxembourg, (the "Competition Authority") if it meets both of the following criteria:
(1) the aggregate turnover realised in Luxembourg by all the enterprises (or groups of natural persons) concerned by the merger operation must exceed 60 million Euro (on a cumulative basis and excluding taxes); and
(2) at least two of the enterprises or group of physical or legal persons participating in the merger operation concerned must generate a turnover in Luxembourg of at least 15 million Euro (excluding taxes).
The notification of such a merger operation will be published by the Competition Authority on its website and will lead to a mandatory stand-still of the project which can only be resumed and completed once the Competition Authority has authorised the merger operation (article 5 of the Bill).
The control procedure before the Competition Authority, as contemplated by the Bill, will consist of two different phases (Phase I and Phase II). With respect to Phase I, the Competition Authority must decide within 25 working days starting with the receipt of the complete notification whether the merger operation is to be approved or whether a serious doubt exists that the intended project could negatively impact on the competition in the relevant market. In the latter case a Phase II analysis is to be initiated during which a more profound examination will be conducted within a period of 90 working days.
The Bill, however, also contemplates a simplified notification procedure (article 3 (4) of the Bill) for projects that in principle should not cause any competition issues and the conditions of which will further be determined by a grand-ducal regulation.
The Bill also takes into consideration Luxembourg's position as an international financial centre, by excluding from the scope of the notification obligation credit institutions as well as other financial institutions or insurance companies whenever they acquire or trade interests on a temporary basis with the intention to re-sell them at a later stage while the exercise of the voting rights attached to those interests can only be exercised according to stringent conditions set out in article 2 (5) of the Bill.
Furthermore, in its chapter 10 the Bill provides for specific rules with respect to merger operations initiated in the context of early intervention, recovery or resolution measures under the law of 18 December 2015 on the failure of credit institutions and certain investment firms.
In addition to the above, an explicit obligation for the Competition Authority to exchange information with the financial sector supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF), or, as the case may be, the insurance sector supervisory authority, the Commissariat aux Assurance (CAA), in case any of the parties involved in the merger operation is subject to the supervision of either of these two authorities, is also included in the Bill (article 12 of the Bill).
Finally, the Bill contemplates a number of specific powers that the Competition Authority can apply in a discretionary manner, in order to allow it to exercise its prerogatives in an efficient way. This includes carrying out inspections and interviews, ordering injunctions as well as requesting information.
The imposition of fines and penalties in case of non-compliance with specific orders and injunctions will also be possible.
Given that this new legislative project is still at an incipient stage major aspects of the bill might still change during the ongoing parliamentary process. We will keep you updated in this respect.
Should you require any assistance or further information on this new legislative project please do not hesitate to contact our Luxembourg Ashurst team.