{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 Page 1 of 4 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. Page 4 of 4