On May 11, 2020, under Decreto Legislativo N° 1510 (the «DL 1510”) the Peruvian Government partially amended the Decreto de Urgencia N° 013-2019, which enacted the ex-ante merger control procedure (the «Peruvian Merger Control Act«).
The Peruvian Merger Control Act states that all transactions involving (i) transfer of shares and assets; (ii) joint venture; and (iii) mergers or consolidations (jointly, the “Transactions”) which produce a change of control in the target company or asset will have to commence an ex-ante merger control procedure before INDECOPI.
Additionally, for the ex-ante merger control procedure to begin, such Transactionsare required to reach the following thresholds:
- The value of all gross sales from the last fiscal year (January to December of each year) of all involved parties in the Transaction is, jointly, equal, or higher than, approximately, US$ 147.6 Million.
- The value of all gross sales from the last fiscal year (January to December of each year)from at least two of the parties involved is, individually, equal, or higher than, approximately, US$ 17.82 Million.
Please note that the threshold figures may vary annually.
Main amendments to the Peruvian Merger Control Act by DL 1510:
- The Peruvian Merger Control Act will come into effect on March 1, 2021 and will remain in force for a period of five (5) years, subject to revision by the Peruvian Congress.
- The Regulation of the Peruvian Merger Control Act (the “Regulation”) must be issued within one (1) year from the publication of the Peruvian Merger Control Act, that is, on November 18, 2020, at latest.
- The amendments to the Regulations of the Law on Organization and Functions of INDECOPI (the Peruvian competition agency); and, other resolutions from INDECOPI to adapt to the Peruvian Merger Control Act, must be issued within a period of one (1) year from the publication of the Peruvian Merger Control Act; that is, on November 18, 2020, at latest.
- The definition of «Relevant Market» established in the Peruvian Merger Control Acthas been eliminated. A new definition should be introduced in the Regulation.
- Originally, the Peruvian Merger Control Act established a “newcomers” o “first landing” exception. However, this exception has been removed under DL 1510.Thus, if Transactions involving newcomers comply with the requirements set in the Peruvian Merger Control Act, they mandatorily will have to follow an ex-ante merger control procedure.
- It would be considered as a single business transaction for the purposes of the Merger Control Actif the same parties carry out a series of Transactions established under such act, within a2-year period.
- It has been included as an item of analysisby INDECOPI that the Transaction may be approved if it has been performed due to adverse economic or financial conditions of one of the involved parties. Parties must file before INDECOPI detailed evidence on this matter.
- It is included as a «Highly Severe» administrative infringement that the parties unjustifiably refuse to provide the competent governmental body with the required information or provide it with incomplete, incorrect, adulterated, misleading or false information
- Peruvian public notariesandPeruvian registrars may only carry out their respective acts when they obtain express authorization from INDECOPI or when the Transaction has been approved through tacit administrative approval (silencio administrative positivo).
- The parties may prove the fulfillment of these obligations before INDECOPI by means of a sworn statement, without it being necessary for INDECOPI to request notices from the public notaries or public registrars for such purpose.
- The Regulation of the Peruvian Merger Control Act will set a simplified notification procedure (fast track) for those Transactions that have a low probability of affecting competition.
- Any Transactionclosedbefore March 1, 2020 will not have to be notified to INDECOPI under the provisions of the Peruvian Merger Control Act.
Should you have any questions about the Peruvian Merger Control Act, please contact Andrés Kuan-Veng (firstname.lastname@example.org), Carlos Arata (email@example.com), Wilfredo Cáceres (firstname.lastname@example.org), Luis Miguel Garrido (email@example.com) or Germán Gómez (firstname.lastname@example.org).