Peru: Indecopi approves Guidelines for the Calculation of Notification Thresholds under the Merger Law

In the case of transactions carried out between the same economic agents within a period of two (2) years, the calculation of thresholds will not only include operations carried out between those two (2) companies, but also those carried out between other companies of their respective economic group. Thus, the scope established in article 5.3 of Law 31112 has been extended by the Guidelines, since the aforementioned article only considered as a single transaction those interrelated transactions carried out by the same economic agents[1].

One of the factors to take into account when calculating thresholds is the value of the sales or gross income of the companies involved.  As per the Guidelines, only take into consideration the sales or gross income pertaining from the ordinary course of business. The ordinary course of business is understood as the usual transactions and activities carried out by an economic agent to generate income, excluding infrequent sources of revenue. To determine what the ordinary course of business of a company is, it can refer to the corporate purpose established in the company’s bylaws or the activities included in the CIIU (code that identifies the economic activity of an economic agent included in its Tax ID[2] file).

The aim of the calculation of thresholds based on sales or gross income is to identify in the most accurate and realistic basis, the economic power of each company involved in the transaction. Therefore, the following concepts are excluded from the thresholds calculation: returns, offers or discounts applied to sales, the Value Added Tax (IGV), the Excise Taxes (ISC) and sales or services between companies of the same economic group.

The Guidelines exclude revenue derived from the sale or provision of services through the "official distribution network" of an economic agent as an example in which the earned income derived from these third parties should be considered as part of the sales or gross income of the economic agent.

Additionally, in the specific case of financial entities such as banks, the Guidelines stipulate that they should consider interest and derived from financial services as their sales or income.

When determining if an asset meets or surpasses the value established under the thresholds, companies should look at the book value of the asset. The Guidelines clarify that if there is no accounting expression of an asset in the balance sheet or in the notes to the financial statements, the notifying party may use alternative documentation provided that it has been prepared in accordance with International Accounting Standards (IAS).

Regarding the origin of the data taken into account when determining thresholds or filed in a request for approval, note that it should have originated from the financial statements of the parties prepared in accordance with the accounting standards approved in Peru. In addition, the Guidelines clarify that the financial statements do not have to be audited financial statements, except in those cases where companies have a legal obligation to audit their financial statements.

Parties may use supporting documentation to value certain sales, income or assets if they are not otherwise mentioned in the financial statements. This is particularly important, for example, when identifying sales to customers located in the country, to the extent that these are the ones that must be considered for the calculation of thresholds.

The AC has noted that the diverse nature of investment funds may or may not allow them to take control over different companies located in the national territory. Thus, the Guidelines recommend consulting the Technical Secretariat on a case-by-case basis.

1. the Ordinary Notification Form: here; and,
2. the Simplified Notification Form: here.