In the context of intended divestments in Bulgaria, we’ve been asked by clients: In a merger control case in Bulgaria what would vendor’s counsel role be, if any at all?
In short, normally vendor’s counsel role would be very limited or minor.
An efficient and proactive counsel may, however, save costs and reduce the risks associated with the merger control aspects of a transaction (an exit/divestment). We have seen the benefits of such a role well defined in advance in the scope of work (set out in the engagement letter) and properly planned and executed. We have also seen the negative effects in cases where such involvement has been lacking or has been poorly executed.
From the outset, the vendor’s counsel can help with the preliminary assessment, if a mandatory merger filing would be required either in Bulgaria or before the EU Commission (the latter would have an exclusive jurisdiction to review the case if the transaction is found to have an EU dimension).
Often the available data about the target’s business and aggregate annual income realized in Bulgaria (as set out in the latest available financial accounts) will suffice for the purposes of a national merger filing’s analysis. Occasionally such information about the acquirer and its group might be needed for the purposes of the preliminary analysis. This is important since a merger filing may have a considerable impact on the timing of the closing and thus delay the exit. In a competitive sale process with multiple bidders, in otherwise equal conditions, a bidder who would not be required to make a merger filing would have a strong competitive advantage.
Like in a merger control case before the EU Commission (DG Comp), the party acquiring sole control or the parties acquiring joint control will be responsible for the merger filing, and would typically bear the cost of the filing and clearance fees (that may reach up to 31,000 euro in total).
Further to or in parallel to his input to the draft transaction documents from a Bulgarian law perspective, the seller’s counsel would review the draft merger notification prepared by the acquirer’s counsel and ensure, among others, that:
– the transaction has been correctly and adequately presented to the competition authority and in sufficient detail;
– any potential competition concerns (which may delay the merger clearance or result in imposing of certain undesired conditions for the clearance) are properly dealt with;
– (self-)assessment if any contractual restrictions (non-compete clauses) set out in the transaction documents satisfy the EU and domestic requirements on ancillary restraints; and
– last but not least, that any sensitive commercial information regarding the vendor(s) disclosed in the notification and additional submissions does not exceed the absolutely required minimum.
Further assistance will be necessary in case the Bulgarian competition authority has requests for additional information and documents. In such cases good faith cooperation between the parties’ counsels may be critical for the timely collection, processing and submission of the required information. This has rarely happened in practice, but potentially substantial fines may be imposed for a failure to respond to an information request in due time.
The information contained in this post is not intended to and does not constitute a legal advice under Bulgarian law or under the laws of any other jurisdiction. It is provided for informational purposes only. No actions should be taken or not taken based on any contents of this post.