Minority shareholdings are a widespread phenomenon in the economy and there are a variety of reasons why firms buy shares in other companies (e.g., diversification, joint R&D or access to new technologies). Most merger control regimes distinguish between controlling and non-controlling minority shareholdings and will only review transactions when an acquisition leads to a controlling influence over another firm. However, the approach to the concept of control differs by jurisdiction and some countries apply merger review rules to a wider range of transactions, including influence that is not equivalent to control. A small number of countries may even require merger filings in case of share acquisitions of 5-10% and may request detailed information on passive minority investments as part of their review (which in some instances will be challenging or even impossible for merging parties to provide). More recently, there has been a controversial debate as to whether common ownership of minority shareholdings held by institutional investors in competing firms needs to be factored into the substantive merger assessment of competition authorities.
This foreword identifies recent trends and summarises the different approaches across certain key jurisdictions to which minority shareholdings are particularly relevant.