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This section describes Belgian competition law, which is designed to maintain fair and competitive markets.
The topics covered include the control of mergers and acquisitions and the prohibition of restrictive practices.
Overview
What is the legal basis of competition law in Flanders and who is responsible for enforcing it?
Competition policy is within the jurisdiction of the Belgian Federal Government. The Competition Act of 10 June 2006, coordinated by Royal Decree of 15 September 2006, governs the protection of competition.
It applies throughout Belgium. With regard to both procedure and substance, the legal provisions are modeled on EU competition law. There are two main bodies responsible for enforcing competition law: (i) the Competition Council ("Council"), which is an administrative court, to which an Auditoraat has recently been attached and (ii) the Competition Service ("Service"), a department within the Ministry of Economic Affairs, which is responsible for the investigation of market conduct and for mergers under the supervision of the Auditoraat. The Auditoraat is in charge inter alia of receiving complaints, applications for interim measures relating to competition restrictive practices and merger notifications. The Auditoraat is also responsible for organizing investigations. Upon completion of a particular investigation, the Auditoraat must submit a report to the Council, which has the decision-making power in competition matters.
Mergers and Acquistions
When must a merger or acquisition be submitted to control in Belgium?
If the combined turnover of the businesses involved in a merger or acquisition (not necessarily restricted to the parties) exceeds 100 million EUR in Belgium and the turnover of each of at least two of the participating businesses exceeds 40 million EUR in Belgium, the transaction is subject to mandatory pre-merger filing.
However, the transaction is not subject to control in Belgium if the merger or acquisition has an EU dimension and is therefore subject to EU jurisdiction (unless the merger or acquisition is referred back to the Belgian authorities by the EU Commission pursuant to Regulation (EC) 139/2004). As a rule, mergers or acquisitions have an EU dimension if the combined aggregate worldwide turnover of all entities involved is more than five billion EUR and the aggregate EU turnover of at least two of those entities is more than 250 million EUR, unless each of the entities involved derives more than two-thirds of its aggregate EU turnover within one member state. However, in some specific circumstances a transaction that does not meet these criteria will nonetheless be considered as having an EU dimension.
What is the test for approval of a merger or acquisition?
Mergers or acquisitions will be declared inadmissible if, as a consequence, they hinder significantly effective competition in the Belgian market or a substantial part of it, for instance by creating or strengthening a dominant position. Any merger or acquisition where the undertakings involved have a combined Belgian market share of less than 25% must automatically be approved by the Council. The companies carry the burden of proof. The notification form imposes on the parties the obligation to provide the data that enables the Council to determine the relevant product and geographical markets. The form defines the relevant product market as the market comprising all products and/or services that are considered by the consumer to be exchangeable or substitutable having regard to their characteristics, prices and purpose.
The relevant geographical market is that part of the Belgian territory where the goods or services in question are offered and requested, where the competition conditions are sufficiently homogeneous and which may be distinguished from other areas. In a number of cases, the Council distinguished between the relevant geographical market (restricted to Belgium) and the effective geographical market that goes beyond Belgium.
The authorities will focus on the impact of a transaction on the relevant geographical market (i.e. usually the entire Belgian territory). In a few cases where the product market appeared more local (such as advertising, retail trade for daily consumption goods, real estate renting etc) the authorities have restricted the relevant geographical market to the specific relevant local area. As stated above, the effective geographical market may also be broader. If the Council has prohibited a merger or acquisition, the federal Council of Ministers may, at its own initiative or at the request of the parties involved, override the decision and approve the transaction on the grounds of general interest (e.g. where national security interests or employment considerations justify this action). The Council of Ministers must act within 30 working days of the Council's negative decision.
1. First phase
Filing of notification with the Auditoraat
The first-phase investigation period starts running from the next business day after filing the notification with the Auditoraat and expires 25 working days later provided the application contains all the information required.
Submission of a report by the Auditoraat to the Competition Council
The report is made available to the notifying parties by the Auditor. The parties have access to the file's non-confidential documents (including Competition Service correspondence with clients, competitors and third parties). The parties may also submit comments. When the Auditor considers that the admissibility of a transaction is questionable, he shall inform the parties at least 5 days prior to filing his report. The undertakings then have a 5 day working day period during which they may underwrite commitments with a view to the transaction being declared admissible.
Decision of the Competition Council
The Council can decide either:
(i) that the transaction does not fall within the scope of the law, or else
(ii) that the transaction falls within the scope of the law and in that case conclude
(a) that the transaction is admissible subject to compliance with the commitments underwritten, or
(b) if it considers that there are serious doubts as regards the admissibility of the proposed transaction that a second-phase investigation must be initiated. In that case, the Auditor will be required to provide a second report no later than 30 working days following the decision of the Council, or even
(iii) not to take a decision (in which case the transaction will be deemed to be approved once the 40-day period has expired).
2. Second Phase
Decision of the Competition Council to open a second-phase investigation
The second-phase investigation period expires 60 working days after the Competition Council opens the investigation.
Decision of the Competition Council
The 60-day period may be extended at the request of the parties. In the absence of a decision by expiry of the 60-day period, the decision is considered favorable.
3. Decision by the Council of Ministers
The Council of Ministers can clear a transaction that was blocked by the Competition Council on general interest grounds. In the absence of a decision within the 30-day deadline, the Council of Ministers is deemed to have confirmed the prohibition decision. In the absence of a decision within that period of time, the decision is deemed negative.
4. Simplified procedure
The parties may apply for a simplified procedure. (For such transactions, a simplified notification form requiring less detailed information can be completed). The Auditor will confirm no later than 20 working days after a full application has been filed, whether or not he considers that the conditions for the application of the simplified procedure are met.
5. Appeal
Notifying parties and third parties who appeared before the Competition Council may appeal the decision of the Council before the Court of Appeal of Brussels within 30 days of notice of the decision.
An action for annulment can be introduced against the decision of the Council of Ministers before the Raad van State, the highest administrative court, within 30 days of notice of the decision.
What are the time limits for filing?
A merger or acquisition must be notified to the Auditoraat with a view to the transaction being submitted for the prior approval of the Competition Council. The notification must take place before implementation of the transaction and after execution of the transaction, execution of the merger, publication of the takeover or exchange bid or acquisition of a controlling interest. It is also possible to notify on the basis of a draft agreement provided that the parties intend to conclude an agreement that does not differ from the draft that was notified. Notification is mandatory. The transaction may not be implemented before a decision has been made by the Council.
How long does it take to obtain a final decision on the approval of the merger or acquisition and what is the test for acceptance?
Once a concentration is notified, the Council has 40 working days (known as the "First Phase") either to clear the transaction or to initiate an in-depth investigation. Once the Council has decided to initiate an indepth investigation (known as the "Second Phase"), the Council must reach a decision within 60 working days of the opening of the Second Phase, unless the parties have asked for the deadline to be extended.
There is a standstill obligation during the review period (i.e. the parties are not allowed to implement the transaction). If the Council does not take a decision within the deadline, the transaction is deemed admissible. The test is whether the merger or acquisition creates a market position that has a significantly adverse effect on effective competition in the Belgian market or on a substantial part of it.
Restrictive Practices
What types of business practices are prohibited?
All agreements, decisions and concerted business practices that have as their objective or effect the distortion, prevention or restriction of competition to an appreciable extent, as well as abuse of a dominant position, are prohibited and may result in fines. Following the modernization of EU competition law, Belgium has now abolished the prior notification system that was previously in place. Companies will now need to make a self-assessment and national courts (if called upon in the course of litigation) will be competent to rule whether an agreement merits exemption. The Council and the Auditoraat may publish guidelines to define the policy conducted as regards the definition of the various concepts included in the legal definitions.
What are the obligations imposed on a company enjoying a dominant position in the relevant market?
Companies in a dominant position must not abuse this position. Dominant position is legally defined as the position that enables a company to hinder actual competition, thereby allowing it to behave independently of its competitors, suppliers and customers. There is no market-share threshold to determine this dominance of the market. Examples of abuses include refusal to supply as well as discriminatory, predatory or tying practices. Tying practices are practices in which the dominant seller refuses to sell its products unless the buyer also purchases another product. No exemption from the ban on abusing a dominant position may be obtained from the Council. Upon the request of the company, the Council may issue a negative clearance confirming that the practices concerned do not fall within the scope of the law and will not be fined.
What are the penalties for companies that violate competition laws?
Fines of up to 10% of Belgian turnover can be imposed on companies that engage in restrictive practices (including abuse of a dominant position) or that have implemented a merger or acquisition without prior approval. A fine of up to 1% of the same turnover can be imposed in the event that a company willfully, or by negligence, provides incorrect or incomplete information in reply to a request for information from the authorities or if it proceeds with a merger or acquisition without prior notification.
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