1) Is a merger control regulation in force?

Yes. In El Salvador, the Competition Law contains provisions on the control of economic concentrations in the country. This legislation aims to prevent anti-competitive practices and ensure a balanced market.

2) Which authorities enforce the merger control regulation?

The authority responsible for enforcing merger control regulation in El Salvador is the Superintendency of Competition. This institution is in charge of reviewing, approving, or prohibiting economic concentrations that could affect market competition in El Salvador.

3) Relevant regulations and guidelines with links:

4) Does general competition regulation apply to mergers or ancillary restrictions?

Yes, general competition regulation in El Salvador applies to both mergers and related ancillary restrictions, such as exclusivity or non-compete agreements. The Superintendence of Competition evaluates both the merger and any ancillary restrictions to ensure they do not negatively impact market competition.

5) May an authority order a split-up of a business irrespective of a merger?

No, in El Salvador, the Superintendency of Competition could only order the dissolution in a concentration process that harms competition and cannot be remedied with other measures.

6) Other authorities that also require merger filing or may prohibit transaction
(Note that this may not be an exhaustive list and that industry-specific legislation should always be considered. Furthermore, a merger will often require change of registrations with – but not approval from – the companies register, land register and authorities that have issued permits for the activities of the merging parties.)

In addition to the Superintendence of Competition, other authorities that may require filing or could prohibit an merger include:

1. Commercial Registry: If there are changes in the company's structure, such as the transfer of shares, it must be updated in this registry.
2. Property Registry: If the concentration involves the transfer of real estate, the corresponding registry must be updated.
3. Ministry of Economy: If the concentration affects certain regulated sectors, such as energy (electricity and hydrocarbons), Free Trade Zones and Exports, the involvement of the Ministry of Economy may be required.
4. Other sectoral authorities: Depending on the industry, entities such as the Superintendency of the Financial System or the Superintendency of Electricity and Telecommunications may also be involved.

Foreign investment control

The Investment Law of El Salvador aims to promote both domestic and foreign investment by providing a legal framework that ensures equal rights, protection of property, and simplified procedures. The law seeks to attract investors by offering tax incentives, non-discriminatory treatment, and the ability to repatriate profits. It also establishes clear judicial mechanisms for conflict resolution. Additionally, the law promotes job creation, infrastructure development, and key productive sectors. In summary, it aims to create a safe and attractive environment for investment, driving economic growth and creating opportunities in the country.

In El Salvador, transactions with foreign buyers are subject to additional requirements depending on the industry. Relevant regulated sectors include:

• Financial Sector: The Superintendence of the Financial System (SSF) must authorize transactions affecting banks or insurance companies.
• Telecommunications: SIGET authorization is required for mergers or acquisitions in telecommunications.
• Energy: MINEC and the General Superintendence of Electricity intervene if the transaction affects companies in the energy sector.
• Mining: Transactions in this sector require approval from MINEC.

Procedures include prior notification to the relevant authorities, a competition impact analysis, and a review of legal requirements such as employment and investment protection.

7) Are any parts of the territory exempted or covered by particular regulation?

No.

8) Is merger filing mandatory or voluntary?

Under Salvadoran law, merger filing is mandatory when it meets the thresholds established by the Competition Law. Failure to comply with this obligation could render the merger or acquisition illegal. 

The Superintendence of Competition has the power to request a merger notification (“call in”) or even oppose a transaction, even if the thresholds established for the mandatory review of concentrations are not met. Therefore, the parties may also consider a voluntary merger filing.

9) Is there a general definition of transactions subject to merger control?

Yes. For purposes of the Competition Law, a concentration is deemed to exist:

1. When economic agents that have been independent perform acts or enter into contracts, agreements or other arrangements, which have as their purpose the merger, acquisition, consolidation, integration or combination of their businesses in whole or in parts; and
2. When one or more economic agents that already control at least one other economic agent acquire by any means direct or indirect control of all or part of more economic agents.

10) Is "change of control" of a business required?

Yes, in general, any transaction involving the concentration of companies, whether through the acquisition of shares, a merger, or another agreement that alters the effective control of a company, are subject to review, if the economic thresholds are met and the transaction could affect competition in the market.

11) How is “control” defined?

Under the Competition Law, control is understood as the ability of an economic agent to influence another through the exercise of property rights or the right to use all or part of the assets of the economic agent, or through agreements that grant substantial influence over the composition, voting, or decisions of the governing, administrative bodies, or legal representatives of the economic agent. 

12) Acquisition of a minority interest

Acquisition of a minority interest that does not result in acquisitions or control (either positive or negative) is not subject to merger control.

13) Joint ventures/joint control – which transactions constitute mergers?

Under Salvadoran Competition Law, joint ventures or joint control agreements may constitute a merger if they meet certain criteria established by the law.

A joint venture can be considered a merger when it creates a new entity that takes on significant business functions, and in doing so, alters the market structure in a way that may affect competition.

For a joint venture to be considered a merger and subject to merger control, it must meet the economic thresholds set by the law. This includes situations where joint control or substantial collaboration between the involved parties results in a significant change in market dynamics, potentially reinforcing or creating a dominant market position.

The assessment of the transaction will focus on whether the joint venture significantly affects competition, either by reducing it or creating barriers to entry for other companies. In these cases, the Competition Superintendency will evaluate whether the transaction requires authorization to prevent anti-competitive effects.

14) Which thresholds decide whether a merger notification must be filed?
(Unless explicitly stated otherwise, the thresholds described under one threshold category are not cumulative with those described under another category. Thus for instance if there is a market share threshold and a turnover threshold, it is sufficient to meet one of these, unless stated otherwise.)

a) Turnover thresholds

Mergers that involve the combination of total assets exceeding 50,000 urban annual minimum wages in the industry, or where the total revenue of the entities exceeds 60,000 urban annual minimum wages in the industry, must request prior authorization from the Superintendence. 

NB: the Superintendence of Competition has the power to request a merger notification (“call in”) or even oppose a transaction, even if the thresholds established for the mandatory review of concentrations are not met (see topic 25).

b) Market share thresholds

N/A

c) Value of transaction thresholds

N/A

d) Assets requirements

N/A

e) Other

N/A

15) Special thresholds for particular businesses

All transactions involving at least two parties authorized to provide telecommunications services in El Salvador must comply with the merger control process applicable for SIGET, regardless of their turnover. 

16) Rules on calculation and geographical allocation of turnover

As general rule, the thresholds are calculated based on the gross sales generated in El Salvador (the entire national territory) by the parties to the transaction. 

Is the seller/seller's group turnover relevant in a standard acquisition of sole control?: 

Yes.

17) Special rules on calculation of turnover for particular businesses

There are no special rules to calculate turnover for particular businesses. 

18) Series of transactions that must be treated as one transaction

The Competition Superintendence can treat several transactions as if they were one if they are connected and have a common purpose.

Under El Salvador's Competition Law, if several transactions are linked in some way, they can be considered as one to assess their impact on competition.

19) Temporary change of control

A temporary change of control could be subject to control and review under the competition laws of El Salvador, depending on the competitive effects of such a transaction, even though this issue is not specifically mentioned in the legislation.

20) Special industries, owners or types of transactions

Merger control is exempted for acquisitions of goods and services within the ordinary course of business of the involved parties, as long as the acquisition does not combine independent businesses.

21) Transactions involving only foreign businesses (foreign-to-foreign)

Foreign-to-foreign transactions are not excepted from the merger control process per se.

22) No overlap of activities of the parties

There are no exemptions for transactions with no overlap of activities. The overlap is only relevant for the analysis during the merger control process. 

23) Other exemptions from notification duty even if thresholds ARE met?

No.

24) May a merging party file voluntarily even if the thresholds are not exceeded?

Yes, according to El Salvador's Competition Law, a merging party may voluntarily file a request for authorization with the Superintendency of Competition, even if the thresholds established for mandatory merger review are not exceeded. This may be considered where the parties find that there is a risk that the Superintendency will “call in” the transaction (see topic 25).  

25) May the competition authority request a merger notification or oppose a transaction even if thresholds are not met?

Yes, according to the Competition Law of El Salvador, the Superintendence of Competition has the power to request a merger notification (“call in”) or even oppose a transaction, even if the thresholds established for the mandatory review of concentrations are not met. The intervention must take place within 30 days following the notification of the concentration. However, in some cases, this period may be extended for an additional 60 days if further analysis is required.

This may occur if the authority considers that, despite not complying with the thresholds, the transaction could have negative effects on competition in the market, such as the creation or strengthening of a dominant position that may affect free competition.  

26) Referral within the jurisdiction

No, in El Salvador the Superintendency of Competition does not refer cases to other authorities, except in exceptional situations where it considers that a case under its jurisdiction should be resolved by another entity. 

27) Referral from another jurisdiction

In El Salvador, it is possible for authorities to make a referral from another jurisdiction in the context of the Competition Law. If a case is deemed relevant to the Salvadoran market or involves parties operating within the country, the Competition Superintendency has the authority to receive referrals from other jurisdictions. This allows for cooperation and the effective handling of competition issues that may cross national borders. 

28) Referral to another jurisdiction

In El Salvador, a case can be referred to another jurisdiction if it's determined that another country's authorities are better suited to handle it. This may happen if the case involves markets or parties that are more connected to that other jurisdiction.

29) May the merging parties request or oppose a referral decision?

The decision to refer a case to another authority or jurisdiction lies with the Superintendence of Competition or the authority responsible for evaluating the merger, based on competition and jurisdictional criteria. 

30) Stage of transaction when notification must be filed

The notification can be filed at any time prior to closing or material implementation of the transaction in El Salvador.  

31) Pre-notification consultations

The parties may consult Superintendence of Competence before the formal filing.  

32) Special rules on timing of notification in case of public takeover bids and acquisitions on stock exchanges

There are no special rules of exemptions to the merger control process for these transactions.

33) Forms available for completing a notification

There are no forms available. The merger notification must be submitted to Superintendence of Competence in writing and in Spanish, and must contain at least the following:

1. Name of the economic agents requesting authorization.
2. Name of the legal representative and documents accrediting their authority, as well as the location or technical means for receiving notifications.
3. Certified copy of the articles of incorporation of the companies and their amendments, duly registered in the Commercial Registry.
4. Financial statements for the most recent fiscal year.
5. Certification of the composition of the share capital of the participating economic agents prior to the concentration.
6. Description of the concentration, its objectives, type of operation, and draft of the legal act that will lead to it.
7. Information about the economic agents involved in the transaction who directly or indirectly hold a stake in the share capital, administration, or any activity of other economic agents.
8. Description of the main goods or services produced or offered by each economic agent involved.
9. Data on the market share of the economic agents involved.
10. Location of the establishments of the economic agents involved.

34) Languages that may be applied in notifications and communication

The notifications and communications with the Superintendence of Competence must be in Spanish.

35) Documents that must be supplied with notification

The following documents must always be supplied with a merger notification:

1. Certified copy of the articles of incorporation of the companies and their amendments, duly registered in the Commercial Registry.
2. Financial statements for the most recent fiscal year.
3. Certification of the composition of the share capital of the participating economic agents prior to the concentration. 
4. Any other documentation required to comply with the information indicated in topic 33.

36) Filing fees

Currently no filing fees apply. 

37) Is implementation of the merger before approval prohibited?

Yes. The merger may not be executed until it has been approved by the Superintendence of Competition. 

38) May the parties get permission to implement before approval?

No. The parties may not implement a concentration before obtaining the approval of the Superintendence of Competition.    

39) Due diligence and other preparatory steps

Due diligence and other preparatory steps may be carried out without any limitation other than the observance of principles of confidentiality and good faith. Implementing clean teams to conduct these processes are highly recommendable. 

40) Veto rights before closing and "Ordinary course of business" clauses

Under the Competition Law, these measures are valid as long as:

• They do not imply premature control.
• They do not affect the competitive independence of the parties before the concentration is approved.

The Superintendence of Competition may review such clauses during its evaluation to ensure they do not violate regulations on anticompetitive practices.

41) Implementation outside the jurisdiction before approval – "Carve out"

Yes, it is possible to carve out parts of the transaction and implement this, as long as the carve out does not impact or affect the local market.  

42) Consequences of implementing without approval/permission

Implementing a merger without the prior authorization of the Superintendence of Competition could result in a sanction.

For the imposition of a sanction, the severity of the proven infringement and the principle of proportionality must be taken into account. Severity will be determined by criteria such as: the damage caused, the infringer's participation in the markets, the effect on third parties, the duration of the practice, market size, and recidivism.

The fine may have a maximum of up to 5,000 minimum wages or when the practice incurred is particularly serious, the Superintendency may impose, instead, a fine of up to 6% of the annual sales obtained by the offender in El Salvador.

43) Phases and deadlines

44) Tests or criteria applied when a merger is assessed

The risks that the merger generates to the competition process are analyzed. Criteria related to determining the relevant market and the existence of dominant position in it are taken into consideration.

For the determination of the relevant market, the following criteria should be considered:

1. The possibilities of substituting the good or service in question with others, both of national and foreign origin, considering technological means, the extent to which consumers have substitutes available, and the time required for such substitution;
2. The distribution costs of the good itself; its relevant inputs; its complements and substitutes within the national territory or from abroad, taking into account freight, insurance, tariffs, and non-tariff restrictions, restrictions imposed by economic agents or their associations, as well as the time required to supply the relevant market;
3. The costs and the likelihood that users or consumers have of turning to other markets; and
4.  The regulatory restrictions that limit consumers' access to alternative sources of supply or suppliers' access to alternative customers.

To determine if an economic agent holds a dominant position in the relevant market, the following should be considered:

1. Its share in the market and the possibility of unilaterally setting prices or restricting supply in the relevant market without competitors being able to effectively or potentially counterbalance this power;
2. The existence of entry barriers and the elements that may foreseeably alter both these barriers and the supply of other competitors;
3. The existence and power of its competitors; and
4. The possibilities of access for the economic agent and its competitors to sources of inputs.

45) May any non-competition issues be considered?

No. Superintendence of Competition may only consider effects to the local markets/competition and end consumers. 

46) Special tests or criteria applicable for joint ventures

There are no special criteria applicable for joint ventures. 

47) Decisions and remedies/commitments available

The Competition Law of El Salvador provides several options regarding decisions, appeals, and commitments available to economic agents involved in merger processes or anticompetitive practices. Here's a summary of the main options:

Decisions by the Superintendence of Competition

The Superintendence of Competition (can make several decisions regarding concentrations and anticompetitive practices, such as:

• Approval without conditions: The Superintendence may approve a concentration without imposing any conditions if it does not significantly affect market competition.
• Approval with conditions: If the Superintendence determines that the concentration could have anticompetitive effects, it may approve it but with conditions or remedial measures (such as asset sales or commitments to avoid anticompetitive practices).
• Prohibition: The Superintendence may prohibit a concentration if it is found to harm competition in the relevant market, either by creating or strengthening a dominant position.

Available Commitments

If a concentration is being investigated and the Superintendence identifies potential risks to competition, the parties can offer commitments or remedies to mitigate those effects, such as:

• Divestiture: Selling assets or shares in certain companies.
• Restructuring: Modifying the business or operational structure to restore competition.
• Market conditions: Ensuring that practices such as price agreements, exclusivity, or entry barriers do not harm competition.

If the Superintendence considers the commitments offered to be sufficient to address the risks, it may approve the concentration under those conditions.

48) How and when will details about the merger be published?

The resolutions will be issued in writing and will include the reasoning, the place and date of issuance, the signature of the authority issuing them, and the clear and precise decision on the matters raised. Resolutions of a general scope that create obligations will take effect starting the day after their publication in the Official Gazette.

49) Access to the file for the merging parties and third parties

The merging parties:

The merging parties can access the file, with the exception of the information declared confidential by other parties.  

Third parties:

Final decisions from Superintendence of Competence are available to third parties immediately after issuance. COPROCOM/SUTEL redacts all information declared confidential by the parties.  

50) Who can appeal and what may be appealed?

Parties involved in a decision by the Superintendence of Competition have legal recourses available to challenge the decision:

• Appeal for reconsideration: A party may file an appeal before the Superintendence, requesting the reconsideration of an administrative decision within 5 days from the notification of the resolution.
• Appeal to the court: If the appeal for reconsideration is denied or does not resolve the dispute, an appeal can be made to the Administrative Court, which will review the case at a higher level. This appeal must be filed within 15 days of the decision being notified.