Liechtenstein. Heinz Frommelt. Sele Frommelt & Partners Attorneys at Law Ltd

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1 Sele Frommelt & Partners Attorneys at Law Ltd Heinz Frommelt Sele Frommelt & Partners Attorneys at Law Ltd Legislation and jurisdiction 1 What is the relevant legislation and who enforces it? is a member of the European Economic Area (EEA) since May European Union directives are implemented into s legal system. There is no automatic implementation of EU law, however, as the EEA Joint Committee has to state first that a directive is part of the EEA acquis. Only with a respective resolution of the EEA Joint Committee does the obligation to incorporate arise. Council Regulation No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation) regulates the control of mergers. The EEA Joint Committee has passed Resolution No. 78/2004 of 8 June 2004 confirming that the EC Merger Regulation is relevant for the EEA (Legal Gazette 2004 No. 234, LR ). has no national merger control or antitrust law. As a consequence, the EU competition law stated in annex XIV (competition) to the EEA agreement is applicable; in particular the EC Merger Regulation. The provisions of the EC Merger Regulation are directly applicable in with minor non-material adaptations as set out in annex XIV to the EEA Agreement. According to the EC Merger Regulation, mergers that do not meet the turnover thresholds of the EC Merger Regulation fall within the competence of the EC member states or the EFTA states authorities in charge of merger control. The Law on Persons and Companies (PGR) of 20 January 1926, in its presently valid version (Legal Gazette 1926, No. 4, LR 216.0), contains provisions on mergers of companies limited by shares (article 352a et seq PGR). Article 351 et seq PGR regulate national mergers within, whereas article 352a et seq PGR transpose Directive 2005/56/EC of 26 October 2005 on cross-border mergers of limited liability companies into law. In addition, the Law of 16 September 2009 on employee participation in cross-border mergers of limited liability companies, (Legal Gazette 2009, No. 269, LR ), in its presently valid version, has been enacted to transpose the said Directive into law. However, these provisions on mergers of companies limited by shares as well as on employee participation in cross-border mergers do not contain a merger control provision in the sense of a control to prevent anti-competitive consequences. They stipulate a mere legality control of the merger. The Office of Justice controls the legality of the cross-border merger with respect to the execution and formation of a new company limited by shares under law as a result of the merger. Further, it verifies the compliance with the Law on the employee participation in a cross-border merger of limited liability companies. Each of the following questions will contain a brief paragraph answering the question with respect to these national provisions. It needs to be kept in mind that they are only applicable for companies limited by shares. The Law of 23 May 1996 on the Execution of the Competition Rules in the EEA, (Legal Gazette 1996, No. 113, LR ) in its presently valid version, has been enacted in to govern the execution of the competition rules in the EEA. Pursuant to article 2 of the Law on the Execution of the Competition Rules in the EEA, the Office of Economic Affairs is the authority with jurisdiction for the implementation of the competition rules in, unless the jurisdiction of the national courts is provided. The Law foresees the necessary competencies for the Office of Economic Affairs to allow the surveillance authorities investigations and to assist them. Hence, as has no national merger and antitrust laws of its own, the following answers are mainly based on the EC Merger Regulation and the Commission Regulation (EC) No. 802/2004 of 7 April 2004 implementing the EC Merger Regulation. According to our information, has had no mergers with a Community or EFTA dimension since the entering into force of the EC Merger Regulation. As a consequence, has thus far had no practice or jurisdiction in this field. 2 What kinds of mergers are caught? Article 3 of the EC Merger Regulation defines a concentration as the change of control on a lasting basis, resulting from a merger of two or more previously independent undertakings or the acquisition of direct or indirect control of the whole or part of another undertaking. The concentration needs to have a Community dimension, which is stipulated in article 1 of the EC Merger Regulation. Certain thresholds need to be fulfilled, which will be outlined in question 5. Mergers of a company limited by shares with a limited liability company formed in accordance with the law of an EEA member state and having its registered office, central administration or principal place of business with the Community are regulated according to article 352a et seq PGR. 3 What types of joint ventures are caught? A joint venture is a relevant concentration under the EC Merger Regulation and thus, in, provided it performs on a lasting basis all the functions of an autonomous economic entity, is also caught. A distinction is made between a full-function joint venture and a non-full-function joint venture. Joint ventures are not caught under the merger provisions for companies limited by shares in the PGR. 4 Is there a definition of control and are minority and other interests less than control caught? As the EC Merger Regulation is applicable, control is defined according to article 3 of the EC Merger Regulation. It means in essence the possibility of exercising decisive influence on an undertaking regardless of the means. The ownership or the right to use all or 1

2 sele Frommelt & Partners Attorneys at Law Ltd part of the assets of an undertaking or the rights or contracts that confer decisive influence on the composition, voting decisions of the organs of an undertaking are particular examples of the possibility to exercise decisive influence on an undertaking. Other interests less than control are not caught. Control is not defined nor are minority and other interests less than control caught by the merger provisions for companies limited by shares in the PGR. 5 What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated? A concentration needs to have a Community or EFTA dimension. If the combined aggregate worldwide turnover of all the undertakings concerned is more than e5 billion and the aggregate Communitywide turnover or EFTA-wide turnover of each of at least two of the undertakings concerned is more than e250 million, unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover of EFTA wide turnover within one and the same EC member state or EFTA state, the threshold is met. Even if the thresholds for a concentration with a Community or EFTA dimension are not met, the provisions of the EC Merger Regulations are nevertheless applicable in the following cases: the combined aggregate worldwide turnover of all the undertakings concerned is more than e2.5 billion; in each of at least three EC member states or EFTA states, the combined aggregate turnover of all the undertakings concerned is more than e100 million; in each of at least three EC member states or EFTA states, included for the purpose of the above point, the aggregate turnover of each of at least two of the undertakings concerned is more than e25 million; and the aggregate Community-wide turnover or EFTA wide turnover of each of at least two of the undertakings concerned is more than e100 million, unless each of the undertakings concerned achieves more than two-thirds of its aggregate Community-wide turnover or EFTA wide turnover within one and the same EC member state or EFTA state. Further information depends on the competent authority: for example, the forms differ (see question 16) or the request can be made by the ESA (see question 26). We are not aware of circumstances in which transactions falling below these thresholds may be investigated. So far no concentrations falling under the EC Merger Regulation have been notified to the European Surveillance Authority (ESA). Neither has a case falling below the thresholds of the EC Merger Regulation been referred to the ESA. The merger provisions of the PGR do not contain jurisdictional thresholds. 6 Is the filing mandatory or voluntary? If mandatory, do any exceptions exist? The notification of concentrations with a Community or EFTA dimension to the Commission is mandatory. However, the notification may already be made if the involved undertakings demonstrate good faith to conclude an agreement or to make a public bid that would result in a concentration with a Community or EFTA dimension (article 4 EC Merger Regulation). According to article 4 section 4 of the EC Merger Regulation, a concentration may be referred to a certain EC member state or EFTA state, if the concentration may significantly affect competition in a distinct market and should, therefore, be examined by that EC member state or EFTA state. If the case is referred by the Commission, no notification is required. The filing of the merger to the Office of Justice is mandatory insofar as the merger only becomes effective upon the entry in the Commercial Register (articles 351h 352h PGR). 7 Do foreign-to-foreign mergers have to be notified and is there a local effects test? Pursuant to recital 10 of the EC Merger Regulation, a concentration with a Community or EFTA dimension is deemed to exist, regardless of whether the involved undertakings have their seat or their principal fields of activity in the Community, on condition they have substantial operations there and exceed the thresholds. Hence, foreign-to-foreign mergers may also fall under the EC Merger Regulation, if the above prerequisites are met. There is no local effects test. Foreign-to-foreign mergers do not have to be notified according to article 352a et seq PGR. 8 Are there also rules on foreign investment, special sectors or other relevant approvals? The merger of undertakings for collective investments in transferable securities (UCITS) requires the prior approval of the Financial Market Authority (FMA), if the merging UCITS has its registered office in (article 39 of the Law of 28 June 2011 on Certain Undertakings for Collective Investment in Transferable Securities (Legal Gazette 2011, 295, LR ), in its presently valid version. The rules on the merger of UCITS applies mutatis mutandis to other structural measures. Several laws state filing requirements in case of significant participations in an undertaking or the controlling influence on an undertaking such as the Banking Law, the Law on Tender Offers, the Law on Financial Conglomerates, the Law on the disclosure of important participations of quoted companies, the Law on the surveillance of insurance companies, the Asset Management Law and the Law on Investment Funds. Notification and clearance timetable 9 What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice? The EC Merger Regulation does not determine deadlines for filing. However, the notification of the concentration needs to be made before its implementation. Pursuant to article 14(2) of the EC Merger Regulation, the ESA and the European Commission may impose fines, when a concentration is intentionally or negligently not notified prior to its implementation, unless expressly authorised by article 7(2) or by a decision taken pursuant to article 7(3) of the EC Merger Regulation. The merger plan must be filed with the Office of Justice at least one month prior to the shareholders general meeting, which is intended to resolve on the consent. If the merger plan is publicly accessible without cost on the website of each company, it is sufficient to place a notice on the website of the Office of Justice referring to the companies websites providing the merger plan and its publication date (article 351d sections 1 and 2 PGR). 10 Who is responsible for filing and are filing fees required? The parties to the merger or those acquiring joint control need to notify the concentration. In all other cases, the notification needs to be effected by the person or undertaking acquiring control (article 4(2) of the EC Merger Regulation). The company management of the transferring and of the absorbing company has to file the merger and its consequences to the Office of Justice. However, the management of the absorbing company has the right to file the merger for the transferring company (article 351g section 1 PGR) as well. 2 Getting the Deal Through Merger Control 2014

3 Sele Frommelt & Partners Attorneys at Law Ltd 11 What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance? A concentration may not be implemented either before its notification or until it has been declared compatible with the common market, unless a derogation has been granted (article 7 of the EC Merger Regulation). For a cross-border merger of a company limited by shares, the Commercial Registry will verify whether the conditions precedent for a merger have been fulfilled and will issue a pre-confirmation (article 352e PGR). Within six months after the issuance of the pre-confirmation, all involved companies need to file the merger plan as well as a possible agreement with the Office of Justice, which controls the legality of the cross-border merger with respect to its execution and the formation of a new company limited by shares under law as a result of the merger. Furthermore, it verifies the compliance with the Law on the employee participation in a cross-border merger of limited liability companies (article 352f PGR). The registration of a cross-border merger in the Commercial Registry is only admissible after a legality control according to article 352f PGR (article 352h section 1 PGR). The merger only takes effect after it has been entered in the Commercial Register of the absorbing company and it may only be entered in the Commercial Register of the absorbing company after it has been entered for the transferring companies (article 351h PGR). The transfer of the assets and liabilities and the dissolution of the transferring companies takes effect together with the entry of the merger in the Commercial Register. 12 What are the possible sanctions involved in closing before clearance and are they applied in practice? The ESA and the European Commission may fine a person or an undertaking for closing before clearance (article 14 of the EC Merger Regulation). There are no recent cases where sanctions have been imposed. There are no specific sanctions for closing before clearance for mergers of companies limited by shares in the PGR. Article 351l PGR states the liability of the members of the company management of the transferring company in relation to their shareholders for their negligent or wilful behaviour in the course of the preparation and accomplishment of the merger. 13 Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers? Sanctions could be applied in cases involving closing before clearance in foreign-to-foreign mergers, if they have substantial operations in an EC member state or an EFTA state and exceed the thresholds. However, no such case has been reported for. 14 What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger? No such solutions exist in which it would be acceptable to permit closing before clearance. 15 Are there any special merger control rules applicable to public takeover bids? the concentration is notified to the European Commission or the ESA without delay; and the acquirer does not exercise the voting rights attached to the securities in question or does so only to maintain the full value of its investments based on a derogation granted by the European Commission or the ESA. mergers of companies limited by shares under the PGR. 16 What is the level of detail required in the preparation of a filing? The special forms provided for in the annexes of Commission Regulation (EC) No. 802/2004 of 7 April 2004 implementing the EC Merger Regulation must be used for a notification of a concentration pursuant to the EC Merger Regulations: form CO (annexe I); or short form (annexe II). Generally, the short form may be used, when a notification is submitted that is unlikely to raise completion concerns. The exact conditions are stipulated in paragraph 1.1, subparagraph 3 of annexe II of the EC Merger Regulation. In all other cases form CO must be used. The Ordinance of 11 February 2001 on the Commercial Register, in its presently valid version (Legal Gazette 2003, No. 66, LR ) determines in articles 69 and 70 the required level of details for the filing. 17 What is the timetable for clearance and can it be speeded up? Pursuant to article 10 of the EC Merger Regulation, the European Commission or the ESA must decide within 25 working days and provide clearance in cases that do not raise serious doubts as to its compatibility with the common market. The period begins on the working day following the receipt of the notification. Under certain conditions the period may be extended by 10 days. In all other cases, an in-depth investigation will follow, which takes 90 days and may even be extended. The concentration is deemed compatible with the common market if the Commission or the ESA have not taken a decision within the given time limits. The time frame for clearance cannot be speeded up. 18 What are the typical steps and different phases of the investigation? Before the notification the European Commission may be consulted to informally and confidentially confirm the jurisdiction of the European Commission, identify key issues and possible competition concerns and ascertain deadlines. In Phase I the European Commission issues a formal clearance decision upon the notification of a concentration, if the merger does not raise serious doubts as to its compatibility with the common market. If the concentration raises serious doubts the European Commission issues a decision to initiate proceedings (ie, to proceed with an in-depth Phase II investigation. The Phase II decision clears or blocks the merger. Article 7(2) of the EC Merger Regulation determines that a public bid or a series of transactions in securities, by which control is acquired from various sellers, may be implemented on the following conditions: 3

4 sele Frommelt & Partners Attorneys at Law Ltd Substantive assessment 19 What is the substantive test for clearance? There is no particular substantive test for clearance with respect to. However, the European Commission or the ESA will apply the considerations stated in article 2 of the EC Merger Regulations. A concentration may not significantly impede effective competition in the common market or in a substantial part of it. The structure of all the markets concerned and the actual or potential competition from undertakings located either within or outside the Community or EFTA must be taken into consideration. In addition, the market position of the undertakings concerned and their economic and financial power, the alternatives available to suppliers and users, their access to supplies or markets, any legal or other barriers to entry, supply and demand trends for the relevant goods and services, the interests of the intermediate and ultimate consumers and the development of technical and economic progress provided that it is to consumers advantage and does not form an obstacle to competition, must be assessed when deciding whether a concentration is compatible or incompatible with common market. 20 Is there a special substantive test for joint ventures? There is also no particular substantive test for joint ventures with respect to. The European Commission or the ESA assesses whether the joint venture significantly impedes effective competition. A joint venture may not result in a appreciable restriction of competition between undertakings that remain independent (recital 27 of the EC Merger Regulation). 21 What are the theories of harm that the authorities will investigate? The Office of Economic Affairs does not assess and investigate itself whether a concentration is compatible or incompatible with the common market. It reports potential cases to the ESA. 22 To what extent are non-competition issues (such as industrial policy or public interest issues) relevant in the review process? See question To what extent does the authority take into account economic efficiencies in the review process? See question 21. Remedies and ancillary restraints 24 What powers do the authorities have to prohibit or otherwise interfere with a transaction? At the request of the European Commission, the Office of Economic Affairs may according to article 3 of the Law on the Execution of the Competition Rules in the EEA and article 12 of the EC Merger Regulation require information from the involved undertakings of a concentration, inspect business files or may have the files inspected and verified by an expert. Apart from that, the Office of Economic Affairs may ask the European Commission and the ESA to control a merger. The European Commission may conduct all necessary inspections of undertakings and associations of undertakings. It may impose fines, require the undertakings concerned to dissolve the concentration or if a restoration is not possible, any other measure appropriate to achieve such restoration as far as possible, take interim measures appropriate to restore or maintain conditions of effective competition (article 8 of the EC Merger Regulation). The merger only becomes effective after it has been entered in the Commercial Register in case of national or cross-border mergers of companies limited by shares under the PGR. Hence, the Office of Justice may refuse to enter the merger in the Commercial Register if the legal requirements have not been fulfilled. 25 Is it possible to remedy competition issues, for example by giving divestment undertakings or behavioural remedies? It is possible to remedy competition issues. However, the European Commission usually applies behavioural remedies rather than structural remedies. Please see question 24 for national or cross-border mergers of companies limited by shares under the PGR. 26 What are the basic conditions and timing issues applicable to a divestment or other remedy? The conditions are that a concentration has already been implemented and that a concentration has been declared incompatible with the common market, or that a concentration has been implemented in contravention of a condition attached to a decision, or in cases where a joint venture constituting a concentration would not fulfil the criteria laid down in article 81(3) of the Treaty on the Functioning of the European Union. The Office of Justice controls the legality of the cross-border merger with respect to the execution and formation of a new company limited by shares under law as a result of a merger. Furthermore, it verifies the compliance with the Law on the employee participation in a cross-border merger of limited liability companies. It does not assess the effects of a merger on the market. If the legal requirements of articles k PGR for the merger with respect to the execution and formation of a new company limited by shares are not met, the registration of the merger may be postponed or refused. 27 What is the track record of the authority in requiring remedies in foreign-to-foreign mergers? The European Commission may impose remedies in foreign-toforeign mergers if they fall within the application of the EC Merger Regulation as in merger involving undertakings from EC member states or EFTA states. 28 In what circumstances will the clearance decision cover related arrangements (ancillary restrictions)? A decision declaring a concentration compatible is deemed to cover restrictions directly related and necessary to the implementation of the concentration (article 8(2) of the EC Merger Regulation). 4 Getting the Deal Through Merger Control 2014

5 Sele Frommelt & Partners Attorneys at Law Ltd Involvement of other parties or authorities 29 Are customers and competitors involved in the review process and what rights do complainants have? The European Commission may hear other natural or legal persons showing sufficient interest (article 18(4) of the EC Merger Regulation. Furthermore, the European Commission may interview any natural or legal person who consents to be interviewed for the purpose of collecting information relating to the subject matter of an investigation (article 11(7) of the EC Merger Regulation). The Commission must base its decision only on objections on which the parties have been able to submit their observations. The rights of defence must be fully respected in the proceedings (article 18(3) of the EC Merger Regulation. 30 What publicity is given to the process and how do you protect commercial information, including business secrets, from disclosure? Only general information or surveys that do not contain information relating to particular undertakings or associations of undertakings may be published. Information acquired through the application of the EC Merger Regulation and covered by the obligation of professional secrecy may not be disclosed. All information acquired as a result of the application of the EC Merger Regulation may only be used for the purpose of the relevant request, investigation or hearing (article 17 of the EC Merger Regulation and article 4b of the Law on the Execution of the Competition Rules in the EEA). Decisions of the European Commission are published, but shall have regard to the legitimate interest of undertakings in the protection of their business secrets (article 20(2) of the EC Merger Regulation). The documents provided to the Commercial Register for the registration of the merger may be inspected by parties having a justified interest (article 953 PGR and article 18 of the Ordinance of 11 February 2001 on the Commercial Register). 31 Do the authorities cooperate with antitrust authorities in other jurisdictions? The Office of Economic Affairs and the EEA Coordination Unit cooperate with the European Commission and the ESA. As has not had a case under the EC Merger Regulations so far, there exists no practice with respect to the cooperation between antitrust authorities. In case of a cross-border merger of a company limited by shares under the PGR, the Office of Justice informs the involved foreign authorities (article 352h PGR). Judicial review 32 What are the opportunities for appeal or judicial review? Decisions of the European Commission and the ESA may be reviewed by the European Court of Justice or the EFTA Court (article 16 of the EC Merger Regulation). 33 What is the usual time frame for appeal or judicial review? No general comments can be made as there has been an insufficient number of cases to calculate an average time frame. Enforcement practice and future developments 34 What is the recent enforcement record of the authorities, particularly for foreign-to-foreign mergers? The European Commission pursues foreign-to-foreign mergers, if they have a community or EFTA dimension and the aggregate turnover of the concerned undertakings exceeds the thresholds given by the EC Merger Regulation. 35 What are the current enforcement concerns of the authorities? No current enforcement concerns of the authorities are known with respect to. 36 Are there current proposals to change the legislation? No, there are no current proposals to change the legislation. SF Sele Frommelt & Partner Rechtsanwälte Heinz Frommelt heinz.frommelt@sfpartner.li Meierhofstrasse 5 Tel: PO Box 1617 Fax: Vaduz 5

6 sele Frommelt & Partners Attorneys at Law Ltd Voluntary or mandatory system In general, there is no specific national legislation regarding merger control in. The Authority (ie, the Office of Economic Affairs) is authorised to apply merger control. For merger control on a supra-national level in Europe the basic provisions are contained in the European Economic Area Agreement (EEA), and annex XIV to the EEA (Merger Regulation or ECMR). Additionally, the provisions of Protocol 4 on the functions and powers of the EFTA Surveillance Authority in the field of competition do apply (Protocol 4 to the Agreement between the EFTA states on the establishment of a Surveillance Authority and a Court of Justice). Notification trigger/filing deadline There is no special merger control legislation in ; however, the ECMR is directly applicable. According to the provisions of the ECMR a transaction can be notified prior to the conclusion of a binding agreement. Once an agreement has been entered into, or a bid launched, there is no deadline or recommended period in which the parties must file a notification. Clearance deadlines (Stage 1/Stage 2) Within 25 working days from when the notification is made, the ESA or Commission must reach a decision where the parties submit commitments (remedies) to resolve competition issues. In case of serious doubts the competent authority will commence investigations; the period of this investigation is 90 working days. Substantive test for clearance The principle is that the activities of the Community and the member states should be conducted in accordance with the principle of an open market economy with free competition. Concentrations significantly impeding effective competition in the common market or a substantial part of it are prohibited in accordance with the provisions of the ECMR. Penalties Companies failing to suspend implementation of a merger pending examination or that put into effect a merger that is prohibited by the ESA or the Commission are exposed to fines. Remarks There is no specific national merger control, antitrust or cartel legislation in. It is unlikely that a national merger control legislation will be implemented in the near future in. 6 Getting the Deal Through Merger Control 2014