The COVID-19 virus has led to unprecedented times in relation to containing and preventing the further spread of the virus. In these times, companies can be hard pressed to act swiftly and have an interest in trying to close any pending transaction.
During the past days, however, merger control regimes across the world have become affected by the COVID-19 pandemic, including in Denmark and the European Union.
The time limits for the Danish Competition and Consumer Authority (“DCCA”) to assess merger notifications pursuant to the Danish Act on Competition, section 12d (1)-(5), have been suspended by executive order no. 225 of 18 march 2020, section 7. According to the executive order, the suspension of time limits shall last for 14 days. A reassessment of the need for further suspension of time limits will be done after this period.
It is of note that the executive order entered into force on 18 March 2020 at 10:00 CET, and will be revoked on 30 March 2020. Therefore, the executive order is not in force for the full 14 days, as it is revoked on 30 March rather than 1 April, which could lead to uncertainty as to whether the time limits are suspended or not at the end of the period. If further suspension of the time limits have not entered into force on 30 March 2020, then the suspension will no longer be in effect.
In a press release, the DCCA stated that the COVID-19 situation provides challenges for the DCCA and the merging parties, as well as customers and competitors. Customers and competitors maintain an important role in market investigations conducted by the DCCA. Market investigations are dependent on information from the merging companies and third parties.
As a result of the COVID-19 situation, the DCCA finds it likely that time limits cannot be met in some cases, which in turn could lead to incorrect decisions, i.e. mergers being blocked when they should have been approved, or vice versa.
Finally, the DCCA stated that the DCCA would do its best to keep within the normal time limits, and encouraged potentially merging parties to contact the DCCA at first opportunity.
The EU Commission has requested merging companies to hold off on notifying any pending transactions for an indefinite period as a result of the COVID-19 pandemic. A number of measures has been put in place for the “time being”.
The Commission has stated that the DG COMP services are likely to face difficulties in collecting information from third parties in the coming weeks. Furthermore, the Commission’s staff may be limited in terms of access to information and databases and in terms of information exchange as the staff follows remote working measures.
There has been no official suspension of time limits for the Commissions handling of merger notifications.
Companies should take notice of these challenges when engaging in notifiable transactions. Neither companies’ duty to notify nor their standstill obligations are affected by the suspension of the time limits or possible inability by the competent authorities to assess merger cases. Therefore, companies should carefully consider the timing when signing transaction documents as the period between signing and closing may be prolonged.