In the fourth episode of the Ganado Meets Corporate podcast, Clement Mifsud-Bonnici, senior associate at Ganado Advocates, discusses merger control in Malta with Godwin Mangion, the director general of the Office of Competition
Malta uses a pre-notification merger control system where deals that need to be notified to Malta’s national competition authority, the Office for Competition (Malta NCA), must be notified to the same and cleared, prior to their implementation.
Statistical insight
The director general of the Malta NCA, Godwin Mangion, explains in the podcats that in the past couple of years, the number of transactions being reported to the Malta NCA has increased, with figures consistently being in double digits. 2023 is looking to be a record year in terms of merger filings, surpassing the current 18 record figure, he says.
In terms of timelines, Mangion provides a concise overview of the average screening times that the Malta NCA typically takes to review transactions. He explains that although the law provides a maximum of four weeks for short form notifications and six weeks for Phase 1 investigations, the Malta NCA is committed to try and issue its decision at least one week prior to the statutory deadlines.
The director general also provides insight as to the number of cleared transactions or otherwise, stating that the Malta NCA has thus far never blocked a transaction.
The rise of Phase II transactions
Mangion notes that transactions that prima facie exhibit symptoms of competition concerns are further scrutinised through a Phase II investigation. Reflecting on past experience, the director general explains that Phase II investigations can be quite cumbersome for the Malta NCA and parties alike.
He says that one of the stumbling blocks that the Malta NCA faces when dealing with Phase II investigations is lack of data on local markets. This in turn would mean that the Malta NCA would need to go through a painstaking process of collecting information from market participants, which can be quite time-consuming.
With respect to a question on the sectors involved in the Phase II investigations that the Malta NCA has initiated so far, the director general mentions the retail, telecom and maritime sectors. Ultimately, half of these Phase II transactions were cleared, another half were abandoned and one of them was cleared, subject to commitments.
Given the lengthy and cumbersome process involved in Phase II investigations, the director general is asked how the Malta NCA goes about in managing the parties’ expectations who would anxiously be trying to get their deal cleared in anticipation of closing. Mangion confidently says that in the past, parties have been very cordial in providing information to the Malta NCA, while also pointing out that the Malta NCA keeps the parties in the loop throughout the entire process.
Malta NCA’s relationship with other regulatory authorities
Mangion explains that the Malta NCA does not carry out its merger assessment in a vacuum; rather, it consults with the appropriate regulator, where necessary and possible, to be in a better position to understand the markets concerned.
Besides the ‘traditional’ regulatory authorities, the director general remarks that in some instances, the Malta NCA has also sought information from the National Foreign Direct Investment Screening Office in Malta.
Looking ahead
The director general also shares insight on the upcoming legislative amendments in merger control. He says that given that the merger regulations have been largely untouched since their inception, the time for amendments is nigh.
He adds that the current turnover thresholds will be revised to reflect the increased rate in inflation so that transactions of small fry are no longer notifiable to the Malta NCA. This would not only help small companies avoid being burdened with filing expenses but also allow the Malta NCA to free some of its limited resources and shift them to more fruitful work.
A simplified notification form is also on the horizon, making the notification of small transactions a smoother and cheaper process. The director general also mentions that the Malta NCA wants to move towards a paperless system, only accepting concentration notification forms (and ancillary documents) electronically rather than requiring parties to provide hard copies.
Gun-jumping – a heavy price to pay
Parties to deals and their advisers should carefully heed the director general’s stern reminder on their mandatory obligation of notifying their transactions to the Malta NCA, in order to avoid facing hefty penalties for gun-jumping.
To this end, Mangion mentions that plans are in the pipeline to increase the penalties for gun-jumping to further deter parties from failing to follow their mandatory notification obligations.
Closing remarks
Mangion closes off the podcast by giving parties a simple but necessary reminder: contact your respective advisers at the onset of deal negotiations to be able to understand whether the transaction is notifiable and to get the ball rolling on the merger control process.
The director general also reminds parties that the Malta NCA adopts an open-door policy and welcomes pre-notification meetings that provide parties with the ample opportunity to discuss with the Malta NCA their deals and concerns, prior to notification.