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Fees for UK merger notifications will double from October 1 following an amendment to the Enterprise Act 2002.
The increase had originally been scheduled to come into force on 6 April 2009, but the then Department for Business Enterprise and Regulatory Reform (now the Department for Business Innovation and Skills (BIS)) postponed the increase arguing that the reduction in the number of mergers had meant the proposed increase would not cover the costs of merger control.
Merger fees are payable to the Office of Fair Trading (OFT) when the OFT examines a proposed or completed merger and makes a decision whether or not to refer the merger to the Competition Commission. The level of fee payable is determined by the turnover of the target company.
From 1 October 2009 the fees payable will be as follows:
- £30,000 where the turnover in the UK of the company being acquired is £20 million or less;
- £60,000 where the turnover in the UK of the company being acquired is between £20 million and £70 million; and
- £90,000 where the turnover in the UK of the company being acquired is more than £70 million.
The old fee structure will continue to apply to mergers where the merging parties ceased to be distinct before 1 October 2009. Merging parties will "cease to be distinct" on completion of the transaction, or at a date when parties become contractually bound to acquire certain control rights in the target company. This means that any transaction which is subject to conditions which will not be satisfied until after 1 October 2009 will be caught by the new merger fees.
BIS has not released any statement explaining the decision to implement the increase and nor have they devised a revised fee structure. It may be that BIS believes that the already significant increase in fees originally due in April is now appropriate and sufficient at a time when the economic landscape is beginning to look more encouraging for an increase in merger activity.
To find out more about how we can help you, please contact Carvill & Johnson in Northfield, Birmingham.
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