The new rules for the approval of mergers and acquisitions came into force.
Law No. 9736 “Law on the Strengthening of Competition Authorities of Costa Rica” was published today. As reported in an earlier newsflash, this is the most ambitious reform of the competition protection system in the country since the enactment of the Competition Law almost 25 years ago.
One of the main changes introduced by this reform is the establishment of a new procedure for the filing and approval of mergers and acquisitions. It is expected that the new rules will expedite the approval of transactions, and that the authority’s efforts will focus on the cases that pose risks of having anticompetitive effects.
Pursuant to the new Law, the Competition Commission (COPROCOM) set the new filing thresholds. From now on, concentrations that comply with the following should be reported:
a. At least two of the parties to the transaction have carried out activities with incidence in Costa Rica in the two previous tax years.
b. Combined gross sales or party assets of all parties to the transaction exceed 13,386,000,000.00 colones (approx. US$22,800,000.00).
c. At least two of the parties to the transaction, considered individually, have gross sales or assets exceeding 669,300,000.00 colones (approx. US$ 1,445,000.00).
The economic thresholds will not apply in the telecommunications market, where all transactions must be notified.
It is also important to recall that this new Law eliminated the possibility to notify transactions after closing, and it establishes a standstill obligation until authority approval is obtained (prohibiting the so-called “gun jumping”).