What were the previous thresholds?
Prior to these changes, a concentration had to be notified to the Italian Competition Authority ("ICA") if two cumulative thresholds were met:
- the aggregate Italian turnover of all the undertakings involved exceeded €499 million in the previous fiscal year; and
- the Italian turnover of the target exceeded €50 million in the previous fiscal year.
What are the new thresholds introduced by the Law on Market and Competition?
The revised text maintains a set of two cumulative thresholds but slightly reduces the amount of the first one and modifies the second one, requiring notification of a merger to the ICA if:
- all parties' combined Italian turnover exceeds €492 million; and
- the individual Italian turnover of each of at least two companies involved in the transaction exceeds €30 million.
As was the case prior to 29 August, these thresholds will be adjusted each year to reflect the increase in the Gross National Product price deflator. The ICA has now officially confirmed what we had anticipated in our previous newsflash, notably that with regard to transactions that were not closed prior to entry into force of the new rules, the obligation to notify such transactions will have to be assessed against the new thresholds even if the contracts bringing about such transactions were signed before the new provisions were adopted/entered into force.
What are the consequences of these amendments for companies?
Even if the new thresholds might seem, at a first glance, not significantly different from the previous ones, these amendments may have important consequences, in particular in the case of joint ventures or the joint acquisition of a target company.
As explained above, the system prior to 29 August focused on the Italian turnover of the target, as well as the combined Italian turnover of all the parties concerned by the transaction. The result of this was that if a company with little or no turnover in Italy acquired a target with very significant turnover in Italy (i.e. exceeding €499 million, either individually or when combined with the buyer's (small) Italian turnover), then the transaction was notifiable.
Following the implementation of the revised thresholds, in the case of a straight acquisition, if the buyer has a large turnover in Italy, then the acquisition of a smaller target with Italian turnover below the previous €50 million threshold, but above €30 million, will be notifiable. However, if the buyer has a turnover below €30 million in Italy, then even the acquisition of a large Italian company may not be notifiable due to the need to have at least two parties with a non-insignificant turnover in Italy.
The changes have an even more significant impact in respect of joint ventures and the joint acquisition of a target. The new rules mean that such transactions will meet the filing thresholds if they involve at least two parents with a significant turnover in Italy, irrespective of the size of the target (which could in theory not even be active in Italy at all). Previously, the target itself also had to have sizable turnover in Italy to trigger a filing.
Preliminary conclusions
The revised thresholds introduced by the Law on Market and Competition are generally to be welcomed, since they bring the Italian system more into line with the EU model. There are, however, a few points that it is important to be aware of:
- the revised thresholds are still very high for a country with a large number of small and medium companies; in particular, the requirement that the combined Italian turnover of all parties to the transaction must exceed €492 million is still high; and
- by eliminating – in practice – any requirement that the transaction has effects on the Italian market, the revised thresholds result in a system which suffers from a similar defect to the EU model, in that a notification will be required in respect of an acquisition of joint control over assets or the creation of a joint venture with no (or only insignificant) activity in Italy, provided that the companies acquiring joint control or creating the joint venture have significant turnover in Italy themselves.
