Pre-Merger Notification Survey JORDAN Ali Sharif Zu bi Advocates & Legal Consultants CONTACT INFORMATION Lubna Hawamdeh Ali Sharif Zu bi Advocates & Legal Consultants Jordan Telephone: Email: Lubna.hawamdeh@zubilaw.com 1. Is there a regulatory regime applicable to mergers and similar transactions? Yes. Jordan has enacted the Competition Law No. 33 of 2004 (the Competition Law ) which has provisions that regulate economic concentration transactions including mergers and similar transactions. In addition, there are general merger provisions in the Jordanian Companies Law of 1997 which sets out the steps that two merging companies need to go through to complete a merger, and also industry specific merger provisions for industries such as banking, insurance and securities where the licensing authority s consent would be required. 2. Identify Applicable National Regulatory Agency/Agencies. The relevant authority is the Competition Directorate at the Ministry of Industry and Trade. 3. Is there a supranational regulatory agency (e. g., the European Commission) that has, or may have exclusive competence? If so, indicate. No. There is no supranational regulatory agency that has, or may have exclusive competence. 4. Are there pre-merger filing requirements; if so, where are they published?
Yes. There are pre-merger filing requirements that are published in the Competition Law. However, such filing requirements can also be made post-merger, so long as no actions to effect the merger are taken before approval of the filing. 5. What kinds of transactions are "caught" by the national rules? (Identify any notable exceptions) Any transaction that falls under the definition of an Economic Concentration Transaction in the Competition Law shall be included. The Competition Law defines an Economic Concentration Transaction as follows: Any activity resulting in the full or partial transfer of ownership of or interest in property or rights or shares or obligations of an enterprise to another, and which may enable an enterprise or group of enterprises to control directly or indirectly, another enterprise or group of enterprises is considered an economic concentration transaction. Accordingly, Economic Concentration Transactions include mergers and acquisitions, whether of assets or shares. There are no notable exceptions under the above definition. 6. Is there a "size of transaction" threshold? Yes. Under the Competition Law, filing is only required if the total market share of the enterprise or enterprises concerned in the Economic Concentration Transaction exceeds 40%. 7. Is there a "size or turnover of the parties" test; if so, what is it and how are size and turnover to be calculated? No. There is no such test. The only relevant test is whether the market share of the parties involved (collectively or individually) exceeds 40%. The Competition Law defines 'Market' as follows: The product or service or all products or services which are, in view of their price, characteristics and uses, interchangeable and mutually replaceable to meet a particular need of the consumer in a particular geographical location wherein compatible competition conditions exist." Therefore, the definition of the 'Market' includes the following dimensions: 1) Market mechanisms (demand and supply): the inclusion of concerned parties in trade transactions and those subject to competition circumstances of equal proportions. 2) The relevant product market: listing commodities that could be classified as possible alternatives.
3) The relevant geographic market: covering all regions where the concerned commodity is produced and consumed in line with the above-mentioned principles of substitution. The explanatory notes on the Jordanian Ministry of Industry and Trade's (the "Ministry") website indicate that the Ministry also uses the SSNIP test for the purposes of defining the market. 8. Is geographic scope/national market effect of transaction an issue with respect to filing or approval requirements? If so, specify. No. Geographic scope and national market effect of the transaction are not considered with respect to filing or approval requirements. 9. Is the filing voluntary or mandatory? What are the penalties for noncompliance? There is no voluntary filing. Filing is mandatory if the total market share of the enterprise or enterprises concerned in the economic concentration transaction exceeds 40%. Non-compliance with the filing requirements is punishable by fines in amounts of not less than 1,000 Jordanian Dinars (EUR 1,066.77 / US$1,411.43) and not exceeding 50,000 Jordanian Dinars (EUR 53,335.85 / US$70,571.63). In determining the amount of fines to be imposed, the court will consider the size of the benefit received by the violator and the damages suffered by others as a result of the violation. 10. Time in which a filing must be made. Filing must be made within thirty (30) days of the execution of an Economic Concentration Transaction agreement or the execution of a preliminary Economic Concentration Transaction agreement. 11. Form and Content of Initial Filing. The only filing requirement under the Competition Law is the requirement to submit an application for approval of the Economic Concentration Transaction. There is a standard application form issued by the Competition Directorate at the Ministry of Industry and Trade for such an approval (the Application Form ). The Application Form requires, inter alia, the following information and documents: Details of the enterprises involved, including the nature of their business. Identification and definition of the relevant market(s). Details regarding the relevant market(s), including market size, the enterprises' market shares, competitors, significant customers and suppliers and distribution channels. Details on other affected markets.
The merger agreement (or other agreement for an Economic Concentration Transaction). The involved enterprises' constitutional documents, financial statements (for past two years), names of the board of directors and a list of shareholders. A report on the economical effects of the transaction, especially its positive effects on the market. Any other information deemed helpful by the applicant. 12. Are filing fees required? No. There are no filing fees. 13. Is There An Automatic Waiting Period? If so, specify. No. There is no automatic waiting period. 14. Are There Time Limits Within Which The Regulatory Agency Must Act? Can they be shortened by the parties or be extended by the regulatory agency? Yes. The decision on the application must be made by the Minister of Industry and Trade within one hundred (100) days from the date of the written notice issued by the Competition Directorate stating that the application is complete. This 100-day period cannot be shortened by the parties or extended by the Competition Directorate. However, please note that the time for issuing the above-mentioned notice is not specified under the Competition Law or its regulations. According to the Competition Law, instructions should be issued to govern all issues relating to such a notice. To date, these instructions have not been issued. Additional Comments: Under the Competition Law, the enterprises involved are prohibited from taking any actions within the above-mentioned 100-day period that may implement the merger (or the relevant Economic Concentration Transaction) or cause a change in market structure. 15. What is the substantive test for clearance? A transaction will be approved if: It does not negatively affect competition; or It has positive economic benefits that outweigh any negative effect on competition, such as leading to lower prices for services or products, providing employment opportunities, encouraging exports, attracting investment, or supporting the ability of national enterprises to compete internationally. 16. What are the common Post-Filing Procedures: Requests for further information, etc?
After filing, the Competition Directorate has the right to request further information in writing only once. After such request, the Competition Directorate must then issue a written notice that the application is complete. After the application is deemed complete, the Competition Directorate will publish an ad, at the cost of the applicant, in two daily newspapers containing a summary of the submitted application and an invitation to any interested party to submit comments thereon within fifteen (15) days of the date of the ad. 17. Describe the sanctions for not filing or filing and incorrect/incomplete notification. Non-compliance with the filing requirements is punishable by fines in amounts of not less than 1,000 Jordanian Dinars (EUR 1,066.77 / US$1,411.43) and not exceeding 50,000 Jordanian Dinars (EUR 53,335.85 / US$70,571.63). In determining the amount of fines to be imposed, the court will consider the size of the benefit received by the violator and the damages suffered by others as a result of the violation. 18. Describe the procedures if the agency wants to challenge the transaction? If the Competition Directorate does not approve of the transaction, then it will give its recommendation to the Minister of Industry and Trade to reject the application. However, If an application was not made, or if the applicant defied the decision of the Minister of Industry and Trade rejecting the transaction, then the Competition Directorate can initiate a criminal action in court alleging violation of the provisions of the Competition Law by the concerned enterprises. 19. Describe the penalties applicable to the implementation of a merger before clearance or of a prohibited merger? Non-compliance with the provisions relating to Economic Concentration Transactions under the Competition Law is punishable by fines in amounts of not less than 1,000 Jordanian Dinars (EUR 1,066.77 / US$1,411.43) and not exceeding 50,000 Jordanian Dinars (EUR 53,335.85 / US$70,571.63). In determining the amount of fines to be imposed, the court will consider the size of the benefit received by the violator and the damages suffered by others as a result of the violation. Also, all actions taken to implement a merger before clearance or a prohibited merger will be considered void. 20. Describe, briefly, your assessment of the regulatory agency's current attitudes/activities. The regulatory regime in Jordan is relatively recent (5 years old). Therefore, the Competition Directorate is still in its early stages in terms of experience, training and expertise. The Competition Directorate's activities include investigations, market studies, promoting competition awareness through seminars and conferences and training legal professionals such as judges in the field of competition.