Regulation of Concentrations

Introduction

Regulations on Control of Concentrations, 2002 (Legal Notice 294 of 2002 as, subsequently, amended by Legal Notice 299 of 2002) have been enacted in virtue of section 32 of the Competition Act, 1994, (Act XXI of 1994) to control and regulate the creation of ‘concentrations’ defined as meaning:

  • the merging of 2 or more previously independent undertakings* (i.e. mergers including de facto mergers); or
  • the acquisition by 1 or more undertakings of a direct or indirect control^ of 1 or more other undertakings or parts thereof,

whether within Malta or outside Malta when the aggregate turnover in Malta of all the undertakings concerned in the preceding financial year exceeds € 1,747,030~. The determining factor, consequently, is that all the undertakings concerned must have a turnover from sales in Malta and not that they have assets in Malta.

The Regulations come into force on the 1st January, 2003.

Primarily they draw on the EC Merger Regulations and on the U.S. experience particularly when it comes to the ‘substantial lessening of competition’ test by which the unlawfulness of a concentration is assessed and to the efficiency defence.


Joint Ventures

The creation of ‘full-function joint ventures’ (i.e. joint ventures performing on a lasting basis all the functions of an autonomous economic entity) may also constitute a ‘concentration’ in terms of the said Regulations.

Joint ventures that are not ‘full-function joint ventures’ as defined above and joint ventures that have as their object or effect the co-ordination of the competitive behaviour of undertakings that remain independent shall be appraised by the Director of the Office for Fair Competition in terms of articles 5# and 7> of the Competition Act and, in particular, the Director shall take into consideration whether:

  • the parent companies retain to a significant extent activities in the same market as the joint venture or in a market which is downstream or upstream from that of the joint venture or in a neighbouring market closely related to that of the joint venture; and
  • the co-ordination affords the undertakings concerned the possibility of eliminating competition in respect to a substantial part of the products or services in question.

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