From the desk of: Rizwan Manai

Merger Control Regulations, 2007

{S.R.O. 1188(I)/2007 dated 20
th
o!e"#er 2007$
%&&li'a#ilit( (R)1)
All undertakings which are party to merger or intended merger, whether incorporated in
Pakistan or not and all or any of such undertakings doing business in Pakistan.
Mergers (R)*)
Merger shall be deemed to have occurred, if;
(1 ! or more undertakings, previously independent of
one another, merge to form a new undertaking
and cease to e"ist as separate legal entities; or
(! #ne undertaking is absorbed by another with the
latter retaining its legal entity and former ceasing
to e"ist; or
($ #ne or more persons or other undertakings;
%ho or which control one or more
undertakings, #&
Ac'uire direct or indirect control ((y reason of securities, contracts or any other
means ).. *ecisive influence over activities of the whole or part of one or more
undertakings; #&
(+ ,irst undertaking ac'uires the assets or shares (including goodwill or a substantial
part of the assets or shares of the second undertaking with the intent to have a
position to replace or substantially replace the second undertaking in the business in
which that undertaking was engaged immediately before the ac'uisition; #&
(- A collaborative arrangement by which two or more undertakings devote their
resources to pursue a common ob.ective; provided that such arrangement must be/
(i 0ub.ect to .oint control;
(ii Perform the functions of an autonomous entity; and
(iii #n a lasting basis.
+hresholds {R),$
(1 Any one or two or more of the concerned
undertakings shall, as soon as they agree in
principle or sign a non binding letter of intent to
proceed with the intended merger, but in any case,
before consummation of the merger, shall give
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Definition of Merger u/s 2(1) (h)
Means
Merger
Acquisition
Amalgamation
Combination or
Joining of 2 or more undertakings or
part thereof into an existing
undertaking or to form a new
undertaking
Dominant Position 2(1) (c)
!f one undertaking or se"eral
undertakings in a rele"ant market
#hall be deemed to exist if such
undertaking or undertakings ha"e the
abilit$
%o beha"e to an appreciable extent
independentl$ of competitors&
customers& consumers and suppliers
A'(
%he position of an undertaking shall be
presumed to be dominant if its share of
the rele"ant market exceeds 4)*
From the desk of: Rizwan Manai
notice of its1their intention to do so, to the
2ommission.
(! Application u1s 11(!, only when
(i 3he value of gross assets (e"cluding goodwill of the undertaking is
not less than &s. $44 m and 1 or combined value of the merged undertakings is not
less than &s. 1 billion. #&
(ii Annual turnover of the undertaking in the proceeding year is not
less than &s. -44 m and 1 or combined turnover of merged undertakings is not less
than &s. 1 billion.
(iii 3he transaction relates to ac'uisition of shares or assets of the value of &s.144m
or more.
(iv 5n case of ac'uisition of shares by an undertaking, if an ac'uirer ac'uires voting
shares, which taken together with voting shares, if any, held by the ac'uirer shall
entitle the ac'uirer to more than 146 voting shares.
(v 5n case of an Asset Management 2ompany (AM2, its collective e"posure for itself
and in all of its 2ollective 5nvestment 0chemes in a single entity is more than !-6
of total voting rights; #&
(vi 3otal assets under management of an AM2 is &s.1 billion or more.
($ 2ommission may change above thresholds through 7#8.
+ransa'tions -.e"&ted /ro" 0re)Merger oti/i'ation {R),%$
(1 A transaction in which a holding company (whether incorporated in or outside
Pakistan ac'uire or increase its stake in its subsidiary or the subsidiaries
thereof (whether incorporated in or outside Pakistan increase their e'uity
investment in each other;
(1A A 3ransaction in which a holding company (whether incorporated in or outsides
Pakistan merges, amalgamates, combines or ventures .ointly with its
subsidiary or the subsidiaries thereof (whether incorporated in or outside
Pakistan merge, amalgamation, combine or venture .ointly with each other;
(! 0hares ac'uired by succession or inheritance;
($ Allotment of voting shares pursuant to a right issue; provided that the voting
securities ac'uired do not increase, directly or indirectly, the ac'uiring person9s
per centum share of outstanding voting securities of the issue.
Page 2 of 4
From the desk of: Rizwan Manai
%hile the above transactions may be e"empt from pre:merger notification, they
may still be sub.ect to substantive review under the #rdinance, if so deemed
appropriate by the commission.
(+ %here an undertaking, the normal market activities of which include the carrying
out of transactions and dealings in securities for its own account or for the
account of others, ac'uires securities of another undertaking and sells back the
ac'uired securities on a pre:determined price within a period of ; months from
the date of such ac'uisition.
0re)Merger %&&li'ation {R)1$
(1 As re'uired u1s 11($ < Prescribed (,orm and ,ee ($ copies or as re'uired by
2ommission.
(! 2ommission may, by giving notice to the applicant, dispense with the obligation to
submit any particular information 1 document.
2a'tors /or 3eter"ination o/ Su#stantial 4essening o/ Co"&etition {R)5$
(1 0trength of competition in the relevant market.
(! Probability that the merger parties in the market after the merger will behave
competitively or cooperatively.
,or the purpose of above, following factors shall be taken into consideration;
i. Actual and potential level of import competition.
ii. =ase of entry into the market.
iii. >evels and trends of concentration and history of collusion in the market.
iv. *egree of countervailing power in the market.
v. *ynamic characteristics of the market i.e. growth etc.
vi. 7ature and e"tent of vertical integration in the market.
vii. %hether merger has failed or is likely to fail.
viii. %hether the merger situation will result in the removal of an effective competition.
-.e"&tions {R)1,$
5f after the phase ! review, the commission determines that the intended merger
substantially lessens competition by creating or strengthening a dominant position, it may
nonetheless approve the intended merger, if it is shown by the applicant that/
(i 0ubstantial contribution ? 3o the efficiency of
Page + of 4
From the desk of: Rizwan Manai
3he production or distribution of goods.
3he provision of services.
(ii 0uch efficiency could not reasonably have been achieved by a less restrictive
means of competition.
(iii (enefits of such efficiency outweigh the adverse effect of the absence or lessening
of competition; #&
(iv 5t is the least anti:competitive option.
Co"&laints a#out Merger Situations {R)2*$
2an be made to the 2ommission.
Application be accompanied with re'uired information.
%&&eals {R)25$
3he person aggrieved by an order of 2ommission in respect of merger situation may file
an appeal before the Appellate (ench of the 2ommission.
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