The COVID-19 pandemic poses special challenges to companies in transactional projects in carrying out required merger control procedures. At the same time, the relevance of foreign trade approval procedures and restrictive government measures is increasing for investments by foreign companies. We present below the most important steps to bring your transaction to a successful conclusion even during this time.
Antitrust support for a deal can take many months and tie up considerable resources (especially staff). Even one COVID-19 case in your company can slow down required merger control proceedings before antitrust authorities tremendously if a key person becomes ill or is quarantined. Face-to-face meetings are no longer possible, schedules get mixed up and deadlines threaten to slip by. Without preparation, you run the risk of not being able to counteract in time.
Delays may also occur with the relevant antitrust authorities. After initial conversion difficulties, many antitrust authorities have adapted to the new situation for the time being and are conducting merger control proceedings within the statutory decision deadlines, including the German Federal Cartel Office and the European Commission. Internationally, there is an increasing move to electronic transmission of required documents. In some countries, however, procedures or deadlines are temporarily suspended.
What can you do now?
In the case of investments by foreign companies, the relevance of foreign trade law audits and approval procedures is increasing. In a communication dated March 25, 2020, the European Commission called on member states to apply national foreign trade law investment control mechanisms more strictly. The Commission is responding to the economic developments triggered by COVID-19 and the risk that companies in strategically important areas will come under the control of non-European
Member States are encouraged to make full use of all the tools at their disposal to screen and prevent investments from non-EU countries that could threaten Europe’s security or public order. Currently, 14 member states have corresponding national rules and procedures. The remaining member states were called upon to create such in the short term and in the meantime to fall back on legal options already in force.
Of particular relevance here is EU Regulation 2019/452 establishing a framework for the verification of foreign direct investment. While it does not enter into force until October 11, 2020, member states are encouraged to apply their existing review regimes in light of the regulation. Where such review regimes do not (yet) exist, a transaction may be reviewed by the Commission and member states within 15 months of its consummation.
For example, a transaction completed in March 2020 may be reviewed retrospectively in the period between October 11, 2020 to June 2021. The result may be subsequent restrictive government orders and actions.
What can you do now?
KPMG Law advises on M&A transactions on all issues of antitrust and merger control law as well as foreign economic review of foreign investments. We represent you in the necessary proceedings before authorities and courts. Through our global network, we provide you with our services “from a single source” even for international transactions and procedures.
© 2024 KPMG Law Rechtsanwaltsgesellschaft mbH, associated with KPMG AG Wirtschaftsprüfungsgesellschaft, a public limited company under German law and a member of the global KPMG organisation of independent member firms affiliated with KPMG International Limited, a Private English Company Limited by Guarantee. All rights reserved. For more details on the structure of KPMG’s global organisation, please visit https://home.kpmg/governance.
KPMG International does not provide services to clients. No member firm is authorised to bind or contract KPMG International or any other member firm to any third party, just as KPMG International is not authorised to bind or contract any other member firm.