Economically, minority shareholdings — ranging from minimal passive investments to strategic control — are a significant phenomenon. Globally, however there is a wide variety of approaches to antitrust regulation of these types of transactions: While antitrust agencies in Germany, Austria and a number of other countries require prior notification for acquisitions of minority shareholdings of 25 percent and above, others look at additional factors such as the rights gained through the minority shareholding (for example, the U.K.’s “material influence” test examines a combination of factors in ascertaining whether or not a particular minority acquisition is covered). In the U.S., Section 7 of the Clayton Act affords partial equity investors a safe harbor in the form of the “investment only” exception.
It is surprising that there is not a greater degree of uniformity in different antitrust agencies’ treatment of minority shareholdings. It is well established that minority shareholdings that do not appear capable of conferring “decisive influence” over a firm may, under certain circumstances, still give rise to unilateral and coordinated effects. Economic research has shown that these concerns can sometimes arise even if a competitor holds an entirely passive minority interest in a competitor and is not represented in the competing company’s board, nor has access to sensitive information.
Originally published in Law360 on August 13, 2014.
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Topics: Equity Investors, EU, Mergers, Private Equity, Shareholder Litigation, Shareholders
Published In: Antitrust & Trade Regulation Updates, General Business Updates, International Trade Updates, Mergers & Acquisitions Updates, Securities Updates
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