Section 11: Approval of mergers

11. Approval of mergers.__ (1) No undertaking shall enter into a merger which substantially lessens competition by creating or strengthening a dominant position in the relevant market. (2) Notwithstanding the provisions contained in the Act where an undertaking, intends to acquire the shares or assets of another undertaking, or two or more undertakings intend to merge the whole or part of their businesses, and meet the pre-merger notification thresholds stipulated in regulations prescribed by the Commission, such undertaking or undertakings shall apply for clearance from the Commission of the intended merger. (3) The concerned undertakings shall submit a pre-merger application to the Commission as soon as they agree in principle or sign a non-binding letter of intent to proceed with the merger. (4) Application referred to in sub-section (3) shall be in the form and accompanied by a processing fee as may be prescribed by the Commission. The concerned undertakings shall not proceed with the intended merger until they have received clearance from the Commission. (5) The Commission shall by way of an order reffered to in section 31, decide on whether the intended merger meets the thresholds and the presumption of dominance as determined in sectio n 3. Such order shall be made within thirty days of receipt of the application. (6) If so determined, the Commission shall initiate a second phase review and for that purpose the Commission may require the concerned undertakings to provide such informatio n as it considers necessary to enable the Commission to make the necessary determination. (7) Failure to make a determination within the prescribed period of thirty days for the first phase review shall mean that the Commission has no objection to the intended merger. (8) On initiation of the second phase review the Commission shall, within ninety days of receipt of the requested information under sub-section (6), review the merger to assess whether it substantially lessens competition by creating or strengthening a dominant position in the relevant market, and shall give its decision on the proposed transaction. In case concerned undertakings fail to provide the information requested, the Commission may reject the application. (9) Failure to render a decision within ninety days shall be deemed to mean that the Commission has no objection to the intended merger. (10) If after the second phase review the Commission determines that the intended merger substantially lessens competition by creating or strengthening a dominant position, it may nonetheless approve the transaction, if it is shown that__ (a) it contributes substantially to the efficiency of the production or distribution of goods or to the provision of services; (b) such efficiency could not reasonably have been achieved by a less restrictive means of competition; (c) the benefits of such efficiency clearly outweigh the adverse effect of the absence or lessening of competition; or (d) it is the least anti-competitive option for the failing undertaking's assets, when one of the undertakings is faced with actual or imminent financial failure: Provided that the burden of proof shall lie with the undertaking seeking the approval. (11) In case the Commission determines that the transaction under review does not qualify the criteria specified in sub-section (10), the Commission may; (a) prohibit the consummation of the transaction; (b) approve such transaction subject to the conditions laid by the Commission in its order; (c) approve such transaction on the condition that the said undertakings enter into legally enforceable agreements specified by the Commission in its order. (12) Where an undertaking has consummated the merger without complying with the provisions of sub-section (1) to sub-section (4), the Commission shall, after giving the undertaking an opportunity of being heard, make appropriate orders under section 31. (13) Where the Commission has granted approval subject to conditions, the Commission may, within one year, review the order of approval of merger on its own or on the application of the undertakings concerned on the ground that it is satisfied that the circumstances of the relevant market or the undertakings have so changed as to warrant review of the conditions imposed. (14) If the Commission determines that the approval was based on false or misleading information submitted by the undertaking, or the conditions prescribed in the relevant order of the Commission have not been fully complied with, the Commission may after affording the undertakings concerned an opportunity of being heard___ (a) undo such merger or acquisition; or (b) prescribe modifications or additions in the original order. CHAPTER III COMPETITION COMMISSION OF PAKISTAN

Effective date: 2010-01-01

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