On March 11, 2015, the Superintendence of Industry and Commerce (hereinafter SIC) issued its new merger review procedural rules. The new rules are contained in Resolution 10930 of 2015, and replaced Resolution 12193 of 2013. The rules were adopted after a period of consultation in which Lloreda Camacho and others presented their comments before SIC. This legal update summarizes the key features of the new guidelines regarding the transactions which are subject to the reporting requirement. In subsequent chapters we will discuss the modifications to the clearance and notification proceedings, the new confidentiality rules and other issues of interest.
1. Transaction subject to the reporting requirement
In accordance to Law 1340 of 2009, any business integration in which the parties involved are active in the same economic activity, or part of the same value chain have to be reported to SIC, provided that:
a. The parties achieve jointly or separately a turnover for the fiscal year preceding the transaction greater than the sum established by SIC on yearly basis. Currently the threshold is set at 100.000 times the Colombian minimum monthly wage (64 billion pesos).
b. The parties assets for the fiscal year preceding the transaction were, jointly or separately, valued at a sum greater than the one established by SIC on yearly basis. Currently the threshold is set 100.000 times the Colombian minimum monthly wage (64 billion pesos).
To determine the turnover for purposes of determining whether a filing is required, the new guidelines establish the following:
a. Only the turnover obtained in the Colombia is considered. The turnover of the parties will be added to Colombian turnover of any other companies which (i) are controlled by the parties, and (ii) are involved in the same economic activities or part of the same value chain as the parties involved in the transaction.
b. Only assets located in Colombia are considered. The assets of the parties will be added to Colombian assets of any other companies which (i) are controlled by the parties, and (ii) are involved in the same economic activities or part of the same value chain as the parties involved in the transaction.
c. When the company involved in the transaction is located abroad and only participates in the Colombian market through exports, that is when the company has no direct turnover or assets in Colombia, the threshold calculation should include, the assets and/or turnover of the company abroad and the assets and turnover of any other companies which (i) are controlled by the party, and (ii) are involved in the same economic activities or part of the same value chain as the party involved in the transaction should also be counted.
d. When the company involved in the transaction has a permanent establishment in Colombia (as defined by the Colombian Tax Code), the Colombian assets and turnover of said establishment will be used to calculate the filing threshold, alongside the assets and turnover of any other companies located in Colombia which (i) are controlled by the party, and (ii) are involved in the same economic activities or part of the same value chain as the party involved in the transaction.
The new guidelines establish that control is defined as the possibility of influencing or determining corporate policy and the business activity.
1.1 Analysis of the new rules to determine the value of the turnover and assets, to be counted for purposes of establishing whether the reporting thresholds are met.
Previously, total turnover and assets were taken into account to determine if the thresholds were met. The new guidelines adopted the general principle that only local turnover and assets should be counted to determine whether a transaction has to be reported to SIC. However, the old rule still applies to companies which only participate in the Colombian market through imports into the country.
The new approach on how to determine if the thresholds are met was adopted by SIC following the suggestions made by several commentators, regarding the absurdity of taking into account turnover and assets unrelated to the Colombian market. In particular, Lloreda Camacho’s comments to the public draft regarding this issue were adopted in this final version.
