Certain mergers, acquisitions, joint ventures (“M&A transactions”) or investments require approval from public authorities before they may be completed. There are various notifications that companies and their advisers need to take into account and that may furthermore vary by sector. Failure to make a legally required notification – or to await approval – may result in the transaction being reversed and may put companies at risk of large fines.
This blog provides a concise and abridged overview of the main notification requirements (regulatory filings) for the M&A practice in the field of economic regulation: (i) the merger notification to ACM; (ii) the merger notification to the Commission; (iii) the care-specific notification to the NZa; (iv) the notification under the Vifo Act; (v) the FSR notification; (vi) the telecoms notification; (vii) the gas/electricity notification; and (viii) the expected Defence-related industry security review.
Companies and their advisers should bear in mind that additional (sector-specific) notifications may be required in other areas (e.g. the notification to the SER (Dutch Social and Economic Council)).
(i) Concentration notification to ACM
The Netherlands Authority for Consumers and Markets (“ACM”) reviews M&A transactions in which:
- the companies jointly have more than €150 million annual worldwide turnover; and
- at least two of the companies involved each has an annual turnover of at least €30 million in the Netherlands.
ACM assesses whether the proposed concentration would significantly impede effective competition in all or part of the Dutch market. For that purpose, parties must submit a concentration notification to ACM. Depending on the activities of the parties involved, the notification must include information on the relevant markets and the parties’ market shares. Information must also be provided on the main competitors and customers in the relevant markets.
ACM has four weeks in which to assess the notification. Its approval decision is usually issued within that four-week period. That period may be extended (the clock is stopped) if ACM requests additional information from the parties. In a limited number of cases (two or three times a year on average), ACM decides that a licence is required to complete the concentration. It then conducts a more extensive investigation into the effects of the concentration on the relevant market. Formally, ACM has 13 weeks in this so-called second phase to conduct a further investigation and arrive at a decision. Again, the deadline may be extended by stopping the clock in the interim on the grounds of additional questions from ACM.
A concentration may not be completed until ACM grants approval. If the acquiring party already exercises control before that approval has been granted, that constitutes gun jumping. Failure to submit a notification, or the exercising of control before approval is granted, may lead to high fines. In 2022, ACM imposed a €1.85 million fine on a Dutch company for failing to report an acquisition to it in advance. More information on gun jumping and on the rules that apply between signing and closing can be found in this blog.
(ii) Merger notification to the Commission
The European Commission (the “Commission”) has the power to investigate proposed concentrations if they exceed EU notification thresholds. The notification thresholds applied by the Commission are significantly higher than those applied by ACM. A concentration may be notifiable to the Commission on two grounds.
The first ground:
- the companies involved jointly have a global turnover of more than €5 billion; and
- at least two of the companies involved each has a turnover of more than €250 million within the EU.
The second ground:
- the companies involved jointly have a global turnover of more than €2.5 billion;
- the companies involved jointly have a turnover of more than €100 million in each of at least three Member States;
- at least two of the companies involved each has a turnover of at least €25 million in each of at least three Member States under 2; and
- at least two of the companies involved each has an EU turnover in excess of €100 million.
The Commission procedure usually takes longer than that the ACM procedure. The Commission applies a so-called pre-notification phase, in which it asks the parties involved to complete the merger notification based on questions presented by the Commission. When the Commission considers the notification complete and it has been submitted, the first phase formally commences. The Commission then decides within 25 days. The entire procedure often takes several months.
The Commission – like ACM – may also impose fines for gun jumping. A case in point is the €124.5 million fine it imposed on Altice (see also this blog on, gun jumping).
(iii) Care-specific notification to the Dutch Healthcare Authority
The Dutch Healthcare Authority (“NZa”) is responsible for the care-specific merger review. An M&A transaction involving a healthcare provider (as the acquiring party or the target company) that provides healthcare with at least 50 persons must be notified to the NZa. The NZa reviews whether patient care will be jeopardised as a result of the acquisition. It furthermore checks whether the acquisition has been prepared with due care.
In the NZa notification, the parties involved state what will change in the provision of healthcare as a result of the merger, including any changes in the staffing and the number of locations where care is provided. In many cases, the staff and clients of the companies involved must also be informed of the proposed concentration. The NZa decides within four weeks whether the concentration may take place. It may also present formal questions. If the NZa does not yet have sufficient information to make a decision, its decision period is extended. More information can be found at www.zorgspecifiekefusietoets.nl.
The NZa may also impose fines for gun jumping. It imposed three fines on this ground in 2023.
(iv) Notification under the Vifo Act
The Wet veiligheidstoets investeringen, fusies en overnames (Investments, Mergers and Acquisitions Security Screening Act – the “Vifo Act”) mandates the notification of a merger, acquisition or certain investments in companies that:
- operate in the field of sensitive and highly sensitive technology;
- are vital providers; or
- are certain corporate campus operators.
Vital providers are specific companies active in the fields of heat transport, nuclear energy, air transport, port area, banking, financial market infrastructure, extractable energy, and gas storage. Whether a target company falls into one of these categories must be determined on the basis of Article 7 of the Vifo Act.
A company is active in the field of sensitive technology if its products are listed in Annex I to the Dual Use Regulation (Regulation (EU) 2021/821). This list includes products and technologies suitable for both civilian and military applications. Goods on the EU Common Military List are also designated as sensitive technology. Quantum technology, photonics technology, semiconductor technology and High Assurance products constitute highly sensitive technology. Some other goods in Annex I to the Dual Use Regulation and the military goods list are also classified as highly sensitive.
It is important for companies to be aware that a notification requirement applies already in the case of an investment as a result of which 10% or more of the voting rights are acquired in a company that is active in the field of highly sensitive technology.
The notification must be submitted to the Bureau Toetsing Investeringen (Investment Screening Bureau – the “BTI”). The BTI assesses whether the change of control or acquisition of significant influence has national security implications. This includes consideration of the acquirer’s reputation and the Netherlands’ strategic dependence on the target company. Like ACM and the Commission, the BTI works with several phases. The first phase formally lasts eight weeks. In that phase, the BTI decides whether a review decision is required. It may also ask formal questions in this first phase, which suspends the eight-week period (“stop the clock”). If a review decision is required, another eight-week period commences. At this stage, the BTI examines whether the investment can go ahead subject to certain conditions. The above deadlines may be extended. More information can be found in this, this and this blog and at www.wetvifo.nl.
A special notification requirement furthermore applies to certain companies that (briefly stated) have access to sensitive Defence information. Those companies then have an ABDO status (meaning that General Security Requirements for Defence Contracts apply to them). When a company with an ABDO status is acquired, that acquisition must be notified to the MIVD (Military Intelligence and Security Service). After the notification has been made, the MIVD states within four weeks whether there are any security concerns relating to the change of control. Decisions of the BTI are not published.
(v) Notification under the Foreign Subsidies Regulation
The Foreign Subsidies Regulation (“FSR”) has recently given the Commission the ability to screen M&A transactions (and tenders) in which a company has received a subsidy from a non-EU state (a ‘third country’). The Commission assesses whether the subsidy distorts the internal market.
A turnover/value threshold and a financial contribution threshold apply to concentrations. The turnover threshold for M&A transactions means that the target company or at least one of the merging companies or the joint venture (i) is located in the EU; and (ii) has a turnover of at least €500 million. The financial contribution received by the companies involved must total more than €50 million in the three years preceding the notification.
The Commission has 25 working days in which to perform the preliminary assessment of M&A transactions from the time of notification (equivalent to the Commission notification under the regular merger control rules). After this preliminary assessment, the Commission may decide to close the investigation if it appears that the subsidy will not lead to a distortion of the internal market. If the Commission cannot yet arrive at that conclusion, an in-depth investigation is launched. The Commission has 90 working days for that investigation. It has 20 days for the preliminary assessment in the case of open tenders and 110 working days for an in-depth investigation of such tenders.
A dawn raid was conducted in the Netherlands at a Chinese baggage scanning company under FSR regulations in April 2024 already. See also this blog for more information.
(vi) Telecoms notification
The BTI must be notified of the acquisition of predominant control over certain larger telecoms companies, which include certain larger companies that are active in data centres or hosting services or that provide an internet hub. The specific type of company and the relevant thresholds are set out in the Dutch Telecommunications Act.
As under the Vifo Act, the acquisition of a minority interest or other form of ‘predominant control’ over a telecoms company may also be notifiable. Examples include transactions that allow the acquirer:
- alone or acting in concert with other parties to exercise at least 30% of the voting rights in the telecoms company; or
- alone or acting in concert with other parties to appoint or remove from office more than half of the managing directors or supervisory directors of the telecoms company.
The BTI assesses whether the transaction may jeopardise the public interest. Possible risks are that the acquirer may (whether or not deliberately) cause vital functions of the company to fail, or may breach the confidentiality and continuity of dedicated communication services. The BTI considers the identity and reputation of the acquirer, among other things, when making its assessment.
(vii) Electricity & gas notifications
Certain M&A transactions in the energy sector must also be notified to the BTI. The BTI assesses, among other things, the financial reliability of the company involved and its reliability in terms of safeguarding security. It also assesses how the company is managed and to what extent it is acting transparently. The technical expertise of the company involved is also assessed.
The notification requirement applies to changes of control over production facilities with a nominal electrical capacity in excess of 250 MW, or a company managing such a production facility. A change of control over an LNG facility or an LNG company must also be notified. The rules for such notifications are set out in the Electricity Act and the Gas Act These decisions of the BTI are also not published.
(viii) Coming soon: Defence-related industry security review
A bill is currently up for consultation that introduces a new security review specifically for the Defence-related industry. If the bill is passed in this form, it will create a notification requirement for investments in companies that are:
- essential armed forces suppliers; or
- military goods or transport suppliers.
An essential armed forces supplier is defined as follows:
- a company that provides a general economic interest service for Defence under the bill; or
- a company designated to implement the Defence strategic supply plan.
A military goods or transport supplier is defined as follows:
- a company operating in the field of military goods included in the EU Common Military List; or
- a company that has entered into an agreement for at least three years with the state to provide certain transport capacity suitable for immediate deployment by the armed forces on call at short notice.
The notification will also be assessed by the BTI. The assessment is expected to be similar to the assessment under the Vifo Act. Defence-specific qualifications will also be considered, for instance whether the acquirer is able to contribute to NATO activities.
Please feel free to contact us if you have any questions about any the above notification processes.
More information on the Vifo Act and FDI-related questions can be found in the wetvifo.nl information portal.
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