Answer ... Transactions considered to be economic concentrations are subject to the merger control regime. An economic concentration is deemed to arise where there is a stable change in the control of the whole or parts of one or more undertakings as a result of:

• the merger of two or more previously independent undertakings;
• the acquisition by one or more undertakings of control of the whole or parts of one or more other undertakings; or
• the creation of a joint venture and, in general, the acquisition of joint control over one or a number of undertakings, when any of them carries out the functions of an independent autonomous entity on a permanent basis.

The Competition Act envisages some specific circumstances in which a transaction that falls within one of the previous cases is not considered an economic concentration, as follows:

• the simple redistribution of equities or assets among undertakings from the same group;
• the holding on a temporary basis of securities acquired in an undertaking for their resale by a credit or another financial institution or an insurance company which usually negotiates or resales shares on third parties’ or its own account, provided that it does not exercise the voting rights of those securities to determine the competitive behaviour of the undertaking acquired or provided that it exercises such voting rights only to prepare for the disposal of the securities or all or part of that undertaking or its assets, within one year of the date of the acquisition (this deadline may be exceptionally extended by the CNMC in certain cases);
• the acquisition by financial holding companies (as defined in Article 5.3 of the Fourth Directive 78/660/CEE of the Council) of securities of other undertakings on a temporary basis, provided that the voting rights attached to the securities are exercised only to maintain the full value of the investments and not to determine the competitive conduct of the undertaking acquired; or
• the acquisition of control by a person on the basis of a mandate granted by a public authority in accordance with insolvency regulations.

If, within a period of two years, there are two or more economic concentrations between the same sellers and purchasers which result from the change of control over one part of one or more undertakings (including a branch, business unit or establishment), such transactions should be considered as one economic concentration taking place on the date of the last transaction.

Answer ... Control can derive from agreements, rights or any other means that, under the specific factual and legal circumstances of the case, allow a decisive influence to be exercised over an undertaking or part thereof, and, in particular, from:

• the ownership of, or right to use, all or part of the assets of an undertaking; or
• agreements, rights or any other means that confer decisive influence on the composition, voting or decisions of the governing body of the undertaking.

Answer ... Minority shareholders may acquire sole or joint control of an undertaking if they have the possibility to determine the undertaking’s strategic commercial behaviour. In that sense, the acquisition of minority shareholding can confer control in any of the following circumstances:

• Specific rights are attached to the shareholding (ie, preferential shares granting the right to appoint a majority of the governing body of the undertaking or conferring a majority of votes of the board).
• Minority shareholders have, in practice, a majority at shareholders’ meetings or n the board of directors.
• Several minority shareholders agree to act in the same way (linked either by strong common interests or by binding agreements).
• Certain veto rights are granted so that a minority shareholder can block strategic decisions such as approval of the budget or the business plan, the appointment or dismissal of senior management, or approval of certain investments.
• A supermajority (where the vote of the minority shareholder is needed) is required for strategic decisions.

Conversely, veto rights that are granted to minority shareholders in order to protect their financial interests as investors do not confer control. In any event, whether particular veto rights can confer control should be assessed on a case-by-case basis.

Answer ... The creation of a joint venture and, in general, the acquisition of joint control over an undertaking are considered to be economic concentrations only where there is a full-function joint venture – that is, a joint venture that performs the functions of an autonomous economic entity on a lasting basis. The creation of such full-function joint venture will be subject to the merger control provisions if it meets the relevant thresholds.

If the joint venture is not fully functional, the parent companies’ agreement must be assessed under Article 1 of the Competition Act and/or Article 101 of the Treaty on the Functioning of the European Union.

Answer ... Like other economic concentrations, foreign-to-foreign mergers are subject to the Spanish merger control regime if any of the Spanish thresholds are met (which are based on sales in Spain). Therefore, there are no specific rule for foreign-to-foreign transactions; and for the purposes of determining whether a transaction is subject to Spanish merger control proceedings, it is irrelevant if one or both parties to the transaction do not have a subsidiary, a branch or any assets in Spain.

Answer ... In Spain, an economic concentration that does not have an ‘EU dimension’ under the EU Merger Regulation (139/2004) must be notified to the National Markets and Competition Commission (CNMC) in any of the following circumstances:

• As a result of the transaction, a share equal to or higher than 30% of a given product or service market in Spain (or in a geographic market within Spain) is acquired or increased (‘market share threshold). However, notification will not be required if the market share threshold is met, but:
• • the turnover achieved in Spain by the target or the value of the assets to be acquired is below €10 million; and
  • the individual or combined market share of the undertakings concerned does not reach 50% in any affected market in Spain (de minimis exemption).
• The combined turnover achieved in Spain in the last financial year by the undertakings concerned exceeded €240 million and the individual turnover achieved in Spain by at least two of the undertakings concerned exceeded €60 million (‘turnover threshold)’.

The market share threshold is calculated as follows:

• The appropriate product or service market should be defined, taking into account previous CNMC and/or European Commission decisions.
• The market shares should be calculated on the basis of both turnover and volume (units, weight or any other relevant measure).
• Sales in Spain should be considered, taking into account sales to undertakings and customers located in Spain (ie, sales by destination, not origin).
• The seller is not an undertaking concerned by the transaction; therefore, its market shares are not relevant for these purposes.
• If the economic concentration consists of the creation of a full-function joint venture, there will be an acquisition of market share where the parent companies contribute all or part of their business to the newly created full-function joint venture.

The turnover threshold is calculated as follows:

• Turnover must include amounts derived from products sold and services provided falling within the undertakings’ ordinary activities after deducting sales rebates, value-added tax (VAT) and other taxes directly related to the turnover.
• Turnover must refer to the previous financial year. If any acquisition or disposal of entities/assets was carried out after the end of the relevant financial year, turnover must be revised to reflect that.
• Turnover comprises products sold and services provided to undertakings or consumers located in Spain (ie, sales by destination, not origin).
• Intra-group transactions need not be taken into account.
• As regards the purchaser, the turnover must include sales to third parties by all companies belonging to the same group, which means that turnover will be calculated as the sum of the turnover of the following undertakings:
• • the purchaser;
  • companies directly or indirectly controlled by the purchaser;
  • companies that control the purchaser; and
  • all companies controlled by the companies controlling the purchaser.
• As regards the target, the turnover of the parts being acquired will be taken into account irrespective of whether those parts have their own legal personality.
• The seller is not an undertaking concerned by the transaction; therefore, its turnover is not relevant for these purposes.
• In order to avoid double counting, if the target was already controlled by one or more of the purchasers, the turnover considered for the target will be the target’s turnover.
• The turnover calculation for the following types of companies should be done on the basis of specific rules:
• • When one undertaking concerned is an investment fund, the turnover of such fund shall be the sum of the turnover of the companies managing the fund and the undertakings controlled by the investment funds which are also managed by the same managing company.
  • The turnover of credit institutions and other financial institutions shall be the sum of income for the concepts listed below (as defined in Directive 86/635/CEE of the Council of 8 December) obtained by branches or divisions located in Spain, net of VAT and any other tax directly related to such income:
  • • interests and similar products;
    • returns of securities (which may be shares, variable titles or shares in group companies);
    • fees charged;
    • net profits derived from financial transactions; and
    • other operating income.
  • The turnover of insurance companies shall be the amount of gross premiums charged, comprising all amounts paid and pending to be paid for insurance agreements set forth by such companies or on behalf thereof, including premiums assigned to reinsurers and net of taxes applied to the basis of the amount of the different premiums or their total volume, taking into account the gross premiums paid by Spanish residents.

Answer ... Pursuant to the one-stop shop principle, Spanish merger control does not apply to concentrations that met the thresholds set forth in the EU Merger Regulation.