Abstract
This paper analyses both the duration and the expenses resulting from notification fees in relation to international merger control proceedings in Brazil. For this purpose, the research relies on a dataset of 192 cases reviewed by the Brazilian Competition Authority between 2013 and 2022. The dataset indicates that an international merger requires in average 103 days for time review in Brazil, eight notifications to competition authorities around the globe and €175,794.00 in expenses with notification fees. In addition, the 192 cases revealed a total of 1,562 merger notifications worldwide involving 73 jurisdictions. The research provides a descriptive overview of the statistics and a correlation analysis between the duration of the international merger reviews and key factors (i.e. geographic scope of transaction, number of jurisdictions notified, existence of international cooperation, number of relevant markets, type of decisions, number of staff, and expenses with notification fees). The paper concludes with a summary of the key findings and suggestions for future work.
I. INTRODUCTION
Merger control is a key area of competition law enforcement, and it has been widely adopted by jurisdictions across the globe as a legal mechanism to prevent competition problems related to high concentrations resulting from mergers (OECD, 2024).1 Indeed, it is widely perceived that companies are welcome to gain market-shares organically when this result from their own merits, but expanding market-shares through mergers and acquisitions deserves a careful attention given that it eliminates a competitor from the market.
According to the OECD, 135 jurisdictions have merger control legislations around the world (OECD, 2021). This implies that multiple notifications may be required to a single international merger, which would then be subject to several national or regional reviews around the globe. It has been indeed the case with a number of recent international transactions including Dow/Dupont (2017), Bayer/Monsanto (2018) and Disney/Fox (2019), each notified to more than a dozen of jurisdictions worldwide.
This paper explores the duration and co-related merger filing fees of international merger reviews (meaning those transactions notified to two or more jurisdictions), including the factors that may affect the length of the merger proceedings. For this purpose, it explores a dataset of 192 international mergers notified to the Brazilian Competition Authority (CADE) between 2013 and 2022 under the so-called “ordinary merger control proceedings”2.
In addition to assessing the overall duration and filing fees of international mergers, this paper examines the correlation between key factors that may affect the length of merger review. These factors are related either to the complexity of cases (e.g. number of jurisdictions notified around the world) or the resources of competition authorities (e.g. size of staff). The general hypothesis is that reviews are longer when complexity is higher, while faster when more resources are available.
For this purpose, the paper will first present an overview of the literature related to the topic of international merger review. It will then provide a methodology note including the context of the Brazilian merger control regime and the justification for the choice of key variables used in this study. Subsequently, the paper will examine the dataset, statistics and possible correlations between the duration of international merger review and the key selected factors. Finally, the paper will conclude with a summary of the key findings and a suggestion for future research.
II. LITERATURE REVIEW
Although several policy papers have explored issues related to the proliferation of merger control regimes including the notification of transactions that trigger merger reviews and their corresponding filing fees, none has properly focused on the duration of the merger control related to international transactions.
Some short informative publications address the topic from other angles and provide additional practical inputs. While some may view merger fees as a burden to merging companies since most notifiable transactions do not raise competition concerns (Bushell, 2020), others acknowledge that they are able to boost the enforcement capacity of competition authorities including in the fight against hard core cartels and other anticompetitive practices (Kades, 2021).
Academic papers have also addressed issues related to the notification of mergers. Certain researches focus on matters connected to institutional setup and the theory on the optimal design of merger control procedures including pre-notification fees (Cosnita-Langlais, 2016). Other papers contribute to the literature by providing comparisons between different jurisdictions, also shedding light in the debate related to an optimal merger enforcement (Sokol and Blumenthal, 2012; and Burnier da Silveira and Sittenfeld, 2020). Further work have explored the advantages and disadvantages of pre vs. post-merger review (Johnson and Parkman, 1991), as well as compulsory vs. voluntary merger notifications (Choe and Shekhar, 2010; and Shekhar and Williams, 2004).
In addition, researches have also explored issues related to incentives and strategies of merging parties to negotiate a settlement with competition authorities, or rather decide to litigate the transaction review before courts. This may be illustrated by an empirical analysis of the European merger control regime (Ormosi, 2012) and further economic analysis associated to tactical delays to avoid in-depth investigations and reach settlements more easily (Ormosi, 2012b).
A correlated area in the economic literature addresses the topic of patent fees, namely the impact of patent fees on the behaviour of applicants and the question of optimal fees (Rassenfosse and Potterie, 2013). It describes the strengths and the weaknesses of low and high patent fees, and it argues that fees must be low enough to not deter patenting but high enough to limit the sociaof patents. The findings indicate that the institutional context and the political objectives greatly influence the fee structure adopted by patent offices. Moreover, the paper concludes that a universally optimal fee does not exist, and no consensus emerged regarding the optimal level of application fees. The conclusions related to patent have some resonance to the state of play in the field of merger control, in which the majority of jurisdictions do not charge filing fees and perceive this as public service (ICN, 2005). Indeed, a pertinent debate concerns the idea of whether this public service should be self-financed by notification fees, or rather funded by public money—and this relates to both merger and patent fees.
Rassenfosse and Potterie (2013) also developed an empirical paper in the field of patent fees, which aimed to analyse the effect on quality patent derived from an increase in patenting fees in the US by using a series of difference-in-difference regressions. Their findings suggest that the increase in fees led to less low-quality patents. This research is interesting since it may shed light in the debate concerning merger notification fees, in particular if this could affect the quality of the filings and thus the duration of the reviews. In other words, the patent paper helps to frame the question whether filings fees may contribute to a lower duration of merger reviews. The quality of the information provided may indeed affect the duration of the review. The results are interesting but should be nuanced since patent fees differ from merger notification fees in a number of ways, for instance the fact that merger notification are mandatory (whenever merging companies meet the notification thresholds) whereas patent fees are an option for those who choose to protect their innovation through a patent request. Moreover, patent fees are often subject to renewals since an additional fee may apply in the moment of a renewal request of a given patent.
Researches related to attorney fees may also provide valuable inputs to understand the impact of legal fees in the overall expenses of administrative proceedings. In patent litigation, certain studies address the relationship between lawyers and clients, including the incentives around contingent fees and hourly billing fees (Schwartz, 2012). In the area of merger review, studies indicate that hourly fees are best suited for repeated relationship between clients and lawyers since there is a desire from both sides to maintain a fruitful relationship and optimal level of effort in each case (Graham and Robles, 2019). This finding seems pertinent to our research since merger review cases are often concentrated in a few large law firms.3 Previous economic researches indeed suggest a preference of large law firms for a remuneration based on hourly fees (Garoupa and Gomez-Pomar, 2008).
Yang and Pickford (2016) provide an interesting study related to the duration of domestic mergers in New Zealand. Using a dataset of 130 merger decisions from the New Zealand Commerce Commission between 2001 and 2010, they decide that the following factors influence the duration of merger review: (i) the nature of the decision, (ii) the size of the transaction, (iii) the potential impact on competition measured by market concentration and barriers to entry, (iv) the complexity of the economic analysis, and (v) the Commission’s workload. The research explores a methodology that includes regression results for various models analysing both the correlation and the causality of these factors in the review of domestic transactions. More specifically, da Silveira and Maiolino applied the Kaplan–Meier Estimator to estimate the hazard functions non-parametrically, and then used multivariate regression method, namely the Cox proportional hazard model, to estimate the hazard functions and to look at what determines the duration of a merger review. For both types of estimations, they used both single-risk and competing-risks models.
By using the Kaplan–Meier Estimator, Yang and Pickford (2016) indicate that less than a quarter of the cases last more than 50 days. da Silveira and Maiolino developed a Kaplan–Meier survival estimator that arranges the 130 cases of the dataset in an ascending order of the number of days taken to reach a decision. The Kaplan–Meier line below shows how the survival rate falls as the review period expires.4 The line reaches zero when the case that took the longest time is determined. The estimator considers all merger cases of their database (130 cases), including those cleared at first phase (79 cases), cleared at second phase (37 cases), and declined (14 cases) by the competition authority of New Zealand. The so-called survival function presents significant changes when applied separately to these three types of decisions (clearance phase 1, clearance phase 2, declined/blocked) as indicated below:
Another technique used by Yang and Pickford (2016) is the Cox Proportional-Hazard Risk Model, which provides a means of semi-parametric estimation without specifying the functional form of the hazard function. The authors decide that a variant of this model has been widely used in the industrial organization literature, for instance to estimate the tenure of CEOs in large corporations (Gregory-Smith et al., 2009) and the duration of patent examination by the European Patent Office (Harhoff and Wagner, 2009). The authors then apply their dataset to this model using regressions to analyse the duration of the merger cases decided by the New Zealand’s competition authority. In its findings, the paper shows that the variables related to competition (i.e. concentration indexes and its variations known by ∆HHI) were highly statistically significant, with positive associations with duration, which matches the general intuition given that complex cases require more review time. However, the staff turnover, a non-competition related variable, has shown a counter-intuitive effect since it was not found to be statically significant, albeit several agency-level variables did indeed influence the duration of merger cases.
Despite a varied economic literature related to the notification of mergers, notification of patent fees, and duration of domestic merger control, only one study was identified in relation to the specific topic of the duration and the costs of merger control of international mergers. It concerns a report prepared by PricewaterhouseCoopers (PwC) jointly commissioned by the American Bar Association (ABA) and the International Bar Association (IBA) published in 2003. The report analyses 28 multijurisdictional mergers and suggest that external costs attributable to merger review (i.e. expenditures with legal and economic services) substantially outweigh filing fees (PriceWaterhouseCoopers [PwC], 2003). More precisely, it indicates that a typical transnational merger requires at least six full notifications, with external costs of €3.3 million in average. According to the PwC study, this average cost is divided in 65% related to legal services, 19% to notification fees and 14% to other consultants.
In this context, our research intends to fill this gap by providing an overview of the data and descriptive statistics, then an analysis and results of the variables related to international merger control in Brazil. The research will use data from the Brazilian case law from 2013 to 2022, building on a previous study with data until 2017 and focuses on international cooperation (Maiolino, 2020). The paper also intends to compare its findings with the results published by the PwC study (PwC, 2003), which addressed a similar research question.
III. METHODOLOGICAL NOTE
This section will provide a methodological note to the research. First, it will contextualize the Brazilian merger control regime including an explanation on why its unique dataset can be representative to other countries and useful to further research. Then, it will present the variables selected for this study and justify the relevance of each one of them.
A. Brazilian Context
The paper uses the Brazilian framework, which is based on an ex ante merger control system since 2012 (Law n° 12.529/2011), with a fixed filing fee for merging parties that notify a transaction to CADE. In the last decade, more than 5000 mergers have been reviewed by CADE under both fast-track and ordinary merger control proceedings. While the first proceeding benefits from a simplified procedure and a maximum delay of 30 days for review (subject to tacit approval otherwise), the second procedure enables a more complete competition analysis given the extensive amount of information submitted by merging parties. Before 2012, Brazil had an ex post merger control regime since 1994 (Law n° 8.884/1994), which resulted in large duration of merger reviews since companies were not required to refrain from implementing their transaction.
The choice of Brazil has key advantages for this and future research.
First, it concerns a major jurisdiction, which is often affected by global mergers that are equally notified in other major jurisdictions worldwide including the US and the European Union. Indeed, Brazil is the largest economy in Latin America and the ninth largest in the world by GDP. This relevant economic activity adds to a large population of more than 210 million people resulting in a wide consumer base and, consequently, a great interest for multinational companies. In this context, Brazil emerges a key country for research on global mergers, providing insights that are pertinent for the understanding of broader trends and impacts in the global market.
Secondly, the Brazilian legal framework is favourable for the proposed research since most information related to merger control is publicly available, allowing an open access to data and cross-checking by other researchers if needed. The availability and reliability of data is crucial for this research, and they include the name of the companies, the involved economic sectors, the jurisdictions that have been notified alongside Brazil, and the reasoning of the competition analysis.
Thirdly, CADE is a well-established and respected competition authority around the world. It has been ranked in the top list of competition authorities by the Global Competition Review (GCR) during the past years, providing a good proxy of a competition authority that has been working efficiently and effectively when compared to international standards. It has also been awarded twice by GCR as the best competition agency of the year in the Americas in the past decade, which confirms a sound enforcement of competition laws by CADE in Brazil.
Last, the Brazilian dataset also allows an economic analysis of law enforcement in the reality of a developing country, which is rare in the economic literature (as seen by the related literature review below). In this perspective, this paper may add value for both an audience interested in global trends, but also those focusing on developing countries and possible improvements in the review of international mergers and setup of corresponding filling fees.
B. Dataset and Key Variables
The research uses official data related to international merger control collected from the CADE during 2013 to 2022 (i.e. 192 international merger cases reviewed as ordinary merger proceedings, and excluded fast-track merger proceedings), namely those notified to at least another jurisdiction in addition to Brazil. This period corresponds to the first full 10 years of the current ex ante merger control regime, which was adopted in 2011 and took effect in May 2012 (Law n° 12.529/2011).
The data was collected from CADE’s merger filings, which then allowed identifying the other jurisdictions involved.5 The number of days used to review the merger and most of the potential determinants (i.e. number of staff, number of jurisdictions notified, existence of cooperation between CADE and other competition authorities, number of relevant markets involved in the transaction, the type of decision and the geographic scope) were gathered from the public version of the merger proceedings. The data related to filing fees around the world was collected by different public sources including with the concerned competition authorities.
The choice of variables was driven by their relevance to the research question and the practical limitations of data availability and consistency. The key variables selected relate either to the complexity of cases (i.e. number of jurisdictions notified, existence of cooperation between CADE and other competition authorities, number of relevant markets involved in the transaction, the type of decision and the geographic scope) or the resources of competition authorities (e.g. size of staff and notification fees).
In relation to the variables related to the complexity of cases, the rationale is that higher complexity leads to longer review periods. This applies to the number of jurisdictions notified that requires parallel reviews across different regulatory frameworks, the existence of international co-operation between CADE and other competition authorities for similar reasons including the coordination of meetings, the number of relevant markets which suggests more time needed for the analysis, and the type of final decision rendered by CADE since interventions (i.e. approval with conditions or prohibitions) often require an in-depth analysis and a negotiation period to discuss potential remedies. The geographic scope of the transaction also relates to complexity since broader scope is likely to entail greater analytical challenges, for instance to request information from market players and other stakeholders.
As for the variables related to resources, staff and budget can potentially impact the duration of the analysis. Indeed, when greater resources are allocated to competition authorities, they can accelerate the analysis allowing a faster case handling. A potential challenge is to properly identify when resources are being used specifically for merger analysis considering other enforcement and non-enforcement tasks of competition authorities.
Overall, the complexity and resource-related factors are critical in understanding the merger control duration, and despite data limitations, they offer a practical starting point for analysis and a balanced approach to analysing the factors influencing the duration of international merger control.
The choice of these variables are also consistent with the related literature including Yang and Pickford (2016) who used the type of decision, the complexity of the economic analysis, and the workload of the competition authority amongst the variables for a similar empirical exercise.
IV. DURATION OF REVIEW
This section will analyse the data concerning the duration of international merger review propose possible explanations when applicable. It will focus on the key determinants selected for this research: geographic scope of transactions, number of staff, number of jurisdictions notified, existence of international cooperation, expenses with notification fees, number of relevant markets, and type of decisions.
A. Geographic Scope
The comparison between the duration of domestic and international merger reviews is a possible angle of analysis. It helps to shed light in the actual duration of international mergers, to assess if this special feature of the international dimension of transactions would lead to higher, lower or similar duration of merger reviews when compared to domestic mergers. The Figure below indicates the review days of international mergers compared to all mergers reviewed by CADE (limited to the so-called “ordinary proceedings” which excludes fast-track cases):
Review days of international mergers compared to all mergers in Brazil (2013–2022). Source: created by author based on information available on CADE’s public database.
The data concerns all mergers, including both domestic and international mergers, instead of domestic mergers only. This is due to data limitation. However, the numbers for domestic mergers are similar to “all mergers” since they correspond to most merger cases. The numbers indicate an increasing duration trend for all mergers while a more stable trend in relation to international mergers. A possible reason may refer to the process of solidification of the ex ante merger control regime in Brazil, with greater participation of third parties in the merger proceedings (i.e. other market players and sector regulators). Also, the so-called ordinary cases at national level are also complex and often require in-depth analysis and negotiation period of remedies, which can also explain that both—national and international mergers—have similar review periods.
Another relevant perspective is to compare the review duration of global and regional mergers. Indeed, the profile of international mergers vary as there are certain transactions that have a regional dimension (i.e. notified to Brazil and the jurisdictions in the Americas, for instance Latin American countries) and others that are have a more global dimension (i.e. notified to jurisdictions in at least two continents). For this reason, a second step was taken to evaluate the duration of these transactions when considering these two dimensions: regional (limited to US, Canada and Latin American jurisdictions) and global (when notified to jurisdictions situated in at least two continents). In this case, the average of the review days differs: 105 days for the global transactions and 84 days for the regional transactions, as opposed to the 103 total average. The Figure 2 above indicates these results divided by year.
Review days of global mergers compared to regional mergers in Brazil (2013–2022). Source: created by author based on information available on CADE’s public database.
The average review days related to international mergers seem quite stable over the observed period, whereas the regional mergers have a more clear growth trend. The increase trend for regional mergers is prominent and may be related to the adoption of merger control regimes in Latin American in recent years, for instance in Paraguay and Uruguay.
B. Number of Notifications
The Figure below indicates the top 10 jurisdictions notified (in addition to CADE in Brazil) of an international merger. They count for 624 notifications, which corresponds to 39% of the total notifications (the dataset concerns a total of 1562 notifications involving 73 jurisdictions).6 As seen below, the European Union, the United States and China were the jurisdictions most frequently notified.
Top 10 jurisdictions notified of international mergers in addition to Brazil (2013–2022). Source: created by author based on information available on CADE’s public database.
It seems natural that the EU, the US and China are the most notified jurisdictions considering the economic importance that these countries have with and in Brazil. It is curious that both Turkey and Ukraine appear in this top 10 list, which may relate to the level of their notification thresholds or driven by certain sectors that may have high turnovers (i.e. energy sector). It is also curious that Argentina does not figure in this list despite having strong commercial ties with Brazil.
Indeed, the number of jurisdictions notified around the world is a factor that may indicate the complexity of international mergers. The Figure below indicates the dispersion of the merger cases from the dataset by number of jurisdictions notified and the average duration of review:
The data indicates an increasing average review days as the number of jurisdictions notified expands. Although it is unclear the causality nexus, namely if the longer duration is caused by the higher number of jurisdictions involved in the review of the transaction, the intuition points to this direction, at least as a partial explanation, since these cases often require coordination efforts by merging parties with legal counsels around the world, as well as competition authorities depending on the competition concerns resulting from the transaction.
Review days of international mergers in Brazil based on number of jurisdictions notified worldwide (2013–2022). Source: created by author based on information available on CADE’s public database.
C. International Cooperation
The existence of international cooperation between competition authorities can be useful for the analysis of international mergers but may affect the duration of international merger review. The Figure below indicates that international mergers that required international cooperation have longer review days than cases without international cooperation:
Review days of international mergers in Brazil based on number of cooperating competition authorities with CADE (2013–2022). Source: created by author based on information available on CADE’s public database.
Indeed, the hypothesis was that cases with international cooperation would likely have longer durations since this exercise requires time for competition authorities to arrange calls and coordinate their analysis, for instance on procedural timeline issues or substantive matters (e.g. common remedies). Furthermore, practice shows that merger cases that require international cooperation are often complex cases related to competition concerns and alternative scenarios to address them (e.g. Dow/Dupont; Bayer/Monsanto; Ball/Rexam; Disney/Fox).
This finding is reinforced by the regression exercise that indicate a positive association with statistical significance for this variable and the duration of review. More concretely, one of the regression models indicate that cases subject to international cooperation had an increase of 37.5 days when compared to cases without international cooperation, which provides a concrete number of this difference in terms of duration of reviews.7
D. Number of Relevant Markets
The number of relevant markets may also indicate the level of complexity of a given transaction. Indeed, a larger number of relevant markets usually requires more time for case handlers to review the transaction, which includes the definition itself of each relevant market as well as the competition analysis. The Figure below shows the review days of international mergers in Brazil based on the number of relevant markets of each transaction:
Review days of international mergers in Brazil based on number of relevant markets (2013–2022).
The statistics indicate an increasing trend line on the review days suggesting indeed that the cases with more relevant markets have generally longer review periods. A caveat is that complex mergers do not have necessarily many relevant markets, but this is an element that may contribute to the set of determinants affecting the time review of mergers (not only international mergers).
This finding is also confirmed by the regression exercise, which points to a positive association with statistical significance for this variable and the duration of review. The regression exercise also showed that the duration increases by 1.14 days for each additional relevant market added into the merger review analysis, providing evidence for this correlation.8
E. Type of Decision
A last element related to complexity is the type of decision rendered by competition authorities. The statistics indicates that 89.6% of the international cases present in the dataset were approved without restrictions, while the rest were approved with restrictions (7.8%), prohibited (1.0%) or withdrawn by merging parties (1.6%—which is often equivalent to a prohibition resulting from a fear or a signal of likely prohibition by competition authorities). The Figure below indicates the average review days divided by decisions of without state intervention (approval without restrictions) and decisions with state intervention (approval with restrictions, prohibitions, or withdrawals).
Type of decision and average review days of international mergers in Brazil (2013–2022).
The statistics indicates that decisions that require state intervention (approval with restrictions, prohibitions, and withdrawals) have longer review duration as suggested by our initial hypothesis.
Similarly to the previous variable, the type of decision indicated a positive association with statistical significance. The regression analysis was also consistent across more than one regression model, which increases the robustness of the econometric exercise.9 More precisely, international mergers subject to a type of decision with state intervention (e.g. approval with remedies or prohibition) had review time increased by 75.1 days when compared to international mergers cleared without remedies.
F. Size of Staff
The number of staff members is a factor that can affect the performance of a competition authority: more staff means more and better deliverables. In this sense, one may expect that an increase of staff would lead to higher performance indicators, whereas a decrease of staff would have the opposite effect. The numbers below indicate the evolution of staff at CADE and the average review days of international mergers in this period:
CADE’s staff and average review days of international mergers in Brazil (2013–2022). Source: created by author based on information available on CADE’s public database.
The statistics do not confirm the initial intuition: while there is a clear increasing trend in relation to the number of CADE’s staff, the average review days of international mergers remained relatively stable. The numbers are similar when considered the total ordinary merger review cases (and not only the sub-group related to international mergers used as dataset of this paper).
In practice, the results may be explained by the quality of the data, which does not allow to know precisely if and how much of the staff increase was allocated to merger control tasks. Although it would seem reasonable to think that a part of the new staff was allocated to merger review units considering that merger control was a priority for CADE during this period, it is unknown if the staff increase was indeed allocated to the merger review tasks. Hence, other factors may explain that an increase in staff was not translated into a reduction in the average of merger reviews.
G. Notification Fees
One may wonder if the expenses in notification fees may have an impact on the duration of international merger reviews. In other words, if jurisdictions that require adopt notification fees review mergers faster than those that do not have a system that requires merging parties to pay a fee. This paper will be unable to properly analyse this issue since it would require data on the duration of reviews from several jurisdictions (and not only Brazil), but the dataset available may still provide some preliminary findings and note to further research.
Notification fees and average review days of international mergers in Brazil (2013–2022). Source: created by author based on information available on CADE’s public database and public information on merger notification fees.
The Figure 9 below indicates the dispersion points between the total expenses incurred by merging parties with notification fees around the world and the duration of the review in Brazil:
It is not possible to identify a clear trend line between the total expenses incurred by merging parties with notification fees around the world and the duration of the review in Brazil, in particular due to the wide dispersion of the observations.
One important caveat to mention is that Anglo-Saxon jurisdictions tend to have higher filling fees than other jurisdictions10, so this explain certain dots that are placed with high filing expenses and low review period (i.e. they may not be complex international mergers, but rather expensive ones when notified to Brazil and the U.S. for instance).
V. FILLING FEES
The research reveals that certain jurisdictions charge very high notification fees for merger review, while many other have none or much lower fees. For instance, the filing fee can reach USD 280,000 in the US (when the transaction value is above USD 843 million) and GBP 160,000 in the UK (when turnover exceeds GBP 120 million)., while it remains none in France and the European Union.
Indeed, merger control regimes may have different institutional designs in relation to merger filling fees. A report from the International Competition Network (ICN) provides for instance a comprehensive description of different types of filing fee systems and their rationales. The study covered 73 jurisdictions with pre-merger notification regimes, in which 42 of them do not charge filling fees as most respondents view merger review as a public service that should be funded by general tax revenues (ICN, 2005). Another ICN policy study proposes a set of policy recommendations that aim at reducing or eliminating the costs and burdens of multijurisdictional merger review without compromising competition agencies’ effectiveness in enforcing their jurisdiction’s competition laws (ICN 2004).
More recently, the International Chamber of Commerce (ICC) published a policy statement that advocates for greater convergence between pre-merger notification regimes. It also stressed that multiple merger control regimes increase transaction costs for companies and may delay the closing of global transactions, which could affect negatively the global economy. For this reason, the ICC recommends that policymakers carefully take into account these costs and delays when considering future improvements of merger control regimes (ICC, 2015).
There is also a debate on whether merger fees should be charged to cover the costs of merger analysis. Whereas certain jurisdictions consider that notification fees should cover entirely or at least partially these costs, others think that merger review should be funded by general taxation since it is an instrument that protects market structures and consumers. The UK government has published an impact assessment report that discusses the policy options to address this specific issue (UK, 2012).
This is an important finding of this research: while there is no evidence of correlation between duration and merger notification fees, the later can potentially be used to increase the budget of competition authorities and thus allocated, at least partially, to merger control tasks. The OECD has explicitly recommended the adoption of merger notification fees in recent in-country studies, namely the Peer Review of Competition Law and Policy of Tunisia (OECD, 2022) and the Peer Review of Competition Law and Policy of the Dominican Republic (OECD, 2023).
VI. CONCLUSIONS
The paper analysed the duration of international merger reviews using a dataset of 192 cases decided by the CADE between 2013 and 2022. The analysis benefited from a description of the main statistics related to this dataset, as well as from econometric tests to measure the intensity of the correlation between key factors and the duration of reviews. It also revealed a review duration of 103 days in Brazil, eight notifications and associated expenses of €175,794.00 in notification fees—all in average. This dataset covers 1,562 merger notifications involving 73 jurisdictions worldwide.
The average days changed when considered different types of international transactions (i.e. global or regional) leading to 104 days and 94 days respectively. This indicates that global transactions (i.e. notified to jurisdictions situated in at least two continents) take more time than regional transactions (i.e. limited to the Americas, generally Latin American jurisdictions), which follows our initial hypothesis since global transactions may have additional complexity ingredients such as language barriers and time zone issues, in particular when coordination is necessary between legal counsels and/or competition authorities.
The statistics also confirm our initial hypotheses in relation to all the other determinants related to the complexity of the transaction: number of jurisdictions notified, existence of international cooperation, number of relevant markets, and type of decisions (i.e. with or without state intervention). In general, more complexity leads to longer duration review. This is indeed consistent with the need of more in-depth analysis and/or coordination efforts by merging parties with legal counsels around the world, as well as competition authorities depending on the competition concerns resulting from the transaction. The regression analysis confirmed a significant positive association between duration and three of these variables: international cooperation, the number of relevant markets, and the type of decisions, providing concrete numbers for the differences in the review duration (e.g. international mergers subject to approval with remedies or prohibition have a review time increased by 75 days when compared to international mergers cleared without remedies). The results were particularly robust for the latter two variables as they consistently showed significance across multiple regression models.
However, the determinants related to resources, namely the size of staff and notification fees, do not allow to draw any meaningful conclusion. For the size of staff, this might be due to the quality of the data that includes all CADE’s staff, so it is not limited to those working with merger control. Similarly, the notification fees, when applicable, do not necessary go to competition authorities, which makes it difficult to infer a possible link between resources and review duration.
Notification fees is an area that could be further explored by competition authorities and researchers, particularly in light of recent recommendations made by the OECD to adopt merger notification fees as a way to fund the work of competition authorities. Indeed, this study revealed that notification fees vary significantly across jurisdictions ranging from zero to USD 280,000 per transaction (i.e. in the US when transaction value is above USD 843 million). Nearly one third of the competition authorities examined do not charge any notification fee for merger filings (i.e. 25 out of 73 jurisdictions). This is a potential source of funding that could provide relevant support for competition authorities if allocated (entirely or partially) to competition enforcement work, for instance to increase or train staff, accelerating case handling and improving the quality of competition analysis.
The selection of variables used as determinants for the time review was guided by their relevance to the research question and the practical constraints of data availability and consistency. Indeed, complexity and resource-related factors are essential to understand the duration of merger control. Despite data limitations, these factors provide a practical foundation for analysis and offer a balanced perspective on the elements affecting the duration of international merger control.
In conclusion, the research provides useful insights to understand the duration of international merger reviews. While the results have may have certain limitations due to data limitation, it helps to fill a gap in the economic literature. As indicated in the literature review, there are only two researches that indirectly address this topic: a paper by Yang and Pickford (2016) limited to domestic mergers in New Zealand, and a study by PwC (2003) limited to 28 international mergers which is interesting but outdated (and may have issues related to selection bias of the dataset).
Further work on the determinants of merger control, either nationally or internationally, would be welcome as it may provide further elements to better understand the issues highlighted in this paper and contribute to the improvement of competition policy.
Footnotes
The word “merger” will be used in this paper as a synonym to any transaction considered as a concentration according to the European Regulation n° 139/2004 on the control of concentrations between undertakings (the EC Merger Regulation), which includes both mergers and acquisitions in its stricter legal definition.
The dataset excludes the “fast-track merger proceedings” that are cleared by CADE’s General Superintendence in around 20 days in average. The reason for this choice is twofold: first, the data is more limited in fast-track cases since the merger filing form is simplified as well as CADE’s analysis; second, the fast-track cases could improperly influence the analysis of the duration of international mergers, particularly the variables related to complexity, since they are simple by nature and reviewed in a maximum of 30 days.
In Brazil, five law firms counselled around 50% of all merger review cases in 2017. See: https://www.mattosfilho.com.br/noticia/mattos-filho-e-o-escritorio-com-mais-operacoes-notificadas-ao-cade-em-2017/2622. Last access on 22 December 2021.
New Zealand adopts a voluntary regime for merger notifications. However, if merging parties apply for clearance, they are unable to close the deal before a final decision by the competition authority. The decision deadline is 40 working days from notification, but complex cases may take up to 60 working days.
In a few merger filings, the field of the jurisdictions that were notified were marked as confidential, so this was not possible for these specific cases.
Albania, Angola, Argentina, Australia, Austria, Botswana, Brazil, Canada, Chile, China, Colombia, Costa Rica, Cyprus, Ecuador, Egypt, European Union, Finland, France, Germany, Honduras, Hungary, Italy, India, Indonesia, Ireland, Israel, Japan, Kazakhstan, Kenya, Macedonia, Malaysia, Morocco, Mauritius, Mexico, Montenegro, Morocco, Netherlands, New Zealand, Nicaragua, Nigeria, North Macedonia, Pakistan, Paraguay, Peru, Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Switzerland, Taiwan, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Ukraine, United Kingdom, United Arab Emirates, United States, Uruguay, Vietnam, as well as the Common Market for Eastern and Southern Africa and Economic and Monetary Community of Central Africa.
The Annex D contains further information on the regression analysis.
The Annex D contains further information on the regression analysis.
The Annex D contains further information on the regression analysis.
See Annex B of this paper for the list of jurisdictions and corresponding filling fees.
References
Author notes
Paulo Burnier da Silveira is a Senior Competition Expert at the OECD, a Professor at University of Brasilia and a Visiting-Professor at Sciences-Po Paris. E-mail: [email protected].
Isabela Maiolino is a lawyer in Brazil and a PhD in Law from University of Brasilia. E-mail: [email protected].
The authors are thankful for the precious comments sent by Professors Andreea Cosnita-Langlais and Camila Cabral Pires Alves, as well as the valuable support provided by Vivian Ianelli in building the database used in this paper. The opinions are personal and do not necessarily reflect the views of the OECD, its Member-States or any of the institutions affiliated to the authors.
