Whether the Authority Consumer & Market (ACM) will affect your business depends on both parties' revenues in the transaction. Many businesses will not reach the minimum revenue, yet there are plenty of family-owned businesses that may have to deal with the ACM during a deal.
The Consumer & Market Authority (ACM) was recently in the news for not granting a license for PostNL' s acquisition of Sandd. The parties had long been working to merge the two postal companies, which would result in a deal worth more than €190 million. After signing the preliminary contract and awaiting the green light from the ACM, the parties will no doubt have opened some bubbles. But the proverbial hangover came when, after quantitative and qualitative economic research, the ACM decided not to grant a license.
Anticlimax
Acquisition processes usually involve a great deal of discretion. The fact that the ACM lists every merger notification on its website is an exception to this. Therefore, parties ensure that the intended transaction is in principle already completed before the application is made to the ACM. Thus, the contracts are already ready to be signed, subject to the ACM's approval of the deal. The 4-week waiting period puts a gap between signing the contract and the actual transfer of the business. So additional reasons also for this anticlimax.
Terms
Whether the ACM affects your business depends on both parties' revenues in the transaction. Many businesses will not reach the minimum revenue, yet there are plenty of family-owned businesses that could face the ACM during a deal. A merger, acquisition or joint venture must be reported if two conditions are met:
- the merging businesses have a combined annual turnover of 150 million euros or more, and
- At least 2 of the merging businesses each have an annual turnover of 30 million euros or more in the Netherlands.
The ACM procedure
The procedure is started by sending in documents with information about the businesses, market surveys, annual figures and details of the agreement. After the notification, a response is given from the ACM within 4 weeks. The ACM then assesses whether to grant a license or ask additional questions. So should an acquisition still not get the green light, an additional application for a license will often have to be made, which actually means that you have to send more data to the ACM. If the permit is ultimately not granted, as in the case of PostNL and Sandd, the takeover cannot proceed.
Preparation and guidance
The thrust from the case of PostNL and Sandd is twofold. As in any business process, preparation is the key to success. It is usually difficult to estimate how long a sales process will take. You often ideally start preparing to sell your company about one to two years before the actual process is initiated. The waiting period for the ACM process is a typical example of a potentially delaying factor in your sales process that is usually little thought about beforehand.
Moreover, in addition to the "normal" challenges of an acquisition process, the ACM process requires adequate guidance. Therefore, a good adviser is an investment guaranteed to pay off.
*After this article came out, the secretary of state allowed the merger after all. This is the first time a cabinet has overturned an ACM ruling. As a result, the acquisition of Sandd by PostNL can still go ahead under a number of conditions. A first condition is that the profitability of the business does not exceed 9% and a second condition is that PostNL does not refuse access to its network to other postal businesses.
