Merger notification assistance to competition authority

When must the competition authority be notified of a merger?

The primary objective of companies is to ensure profitability and long-term sustainability. One way to achieve this is by acquiring or merging with a competitor. However, such transactions may create or strengthen a dominant position on the affected market, potentially resulting in diminished competition or even its elimination.

To prevent this, a merger control framework has been established, enabling the Estonian Competition Authority to intervene in transactions that may significantly impede effective competition in the Estonian market or a substantial part of it, particularly where a dominant market position might emerge or strengthen.

Notification obligations depend on turnover thresholds

Intragroup reorganisations do not fall under the Competition Authority’s scrutiny. However, mergers between independent companies, acquisition of business units, or transactions that result in the acquisition of control (i.e., mergers within the meaning of competition law) may require prior approval if certain conditions are met.

The Competition Authority will review a merger if:

the combined turnover of the parties in Estonia in the previous financial year exceeds EUR 6,000,000, and
the turnover in Estonia of at least two of the merging parties exceeds EUR 2,000,000 each.

Companies exceeding these thresholds must proceed carefully when entering into transactions that involve acquiring companies or business units, or obtaining control in any other way. Implementing a merger without the required approval may result in fines for both natural and legal persons, and the merger will still have to undergo the full merger control procedure.

Obtaining a decision may take several months

Since the purpose of merger control is to safeguard competitive market structures, the Competition Authority may impose conditions to prevent harm to competition, such as requiring divestment of part of the business or commitments to undertake specific actions.

A merger must be notified:

after signing the agreement,
when performing an act that results in acquiring control,
upon announcing a public offer, or
as soon as the parties have demonstrated with sufficient certainty their intention to complete the merger.

We find the right solution

As noted, a merger that is subject to control may not be implemented before a clearance decision is issued. A simplified merger review takes 30 calendar days, whereas a more complex case may be extended by up to four additional months, meaning the total review period may last up to five months.

Grant Thornton Baltic OÜ assists in assessing whether a planned transaction requires notification to the Competition Authority and manages the entire process, from initial analysis to obtaining clearance. We help identify potential risks and provide solutions to ensure the smooth execution of the project.

If you are planning a merger or acquisition and are unsure whether an official approval is required, contact our advisors early. This ensures that all necessary steps are taken in time and the transaction proceeds as planned.

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