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 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 in Bulgaria or before the EU Commission. Many times the available data about the target’s business and aggregate annual income realized in Bulgaria 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 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,
- any contractual restrictions (non-compete) satisfy the EU and domestic requirements on ancillary restraints and
- last but not least, that any sensitive commercial information re 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 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 generally penalties may be imposed for a failure to respond to an additional information request in due time.