LEBANON Law and Practice Contributed by: Joseph Nasrallah, Jad Skaff and Yasmina Ballout, HNS Legal
were generally assessed only from a corporate and regulatory standpoint. The NCA reviews transactions constituting an “eco - nomic concentration”, including mergers, acquisitions of control and certain joint ventures. Notification is required where the parties’ combined market share in the relevant market exceeds 30% during the preced - ing three fiscal years. The NCA assesses whether a transaction is likely to significantly restrict competition, in particular through the creation or strengthening of a dominant position. Following its review, the authority may approve the transaction, approve it subject to commitments, or prohibit it. The statutory review period is 60 days from submission of a complete filing, subject to lim - ited extension. Failure to notify a notifiable transaction may result in financial penalties, and the authority may order suspension of the transaction or restoration of the situation existing prior to completion. In addition to merger review, the Competition Law prohibits anti-competitive agreements and abuse of a dominant position. Article 5 notably removed the enforceability of exclusive commercial representation rights against third parties, allowing parallel importa - tion of products previously subject to exclusive distri - bution. This change has increased the importance of competition due diligence for targets operating in the distribution and retail sectors. Because decisional practice remains limited and the authority is still operationally developing, merger control currently functions primarily as a procedural risk rather than a substantive prohibition risk. Parties therefore address it through conditions precedent and long-stop dates, rather than through structural rem - edies. 2.5 Labour Law Regulations In Lebanon, acquiring a company does not terminate employment relationships. Employees automatically remain employed after the transaction because the employer, the legal entity itself, continues to exist. The acquirer therefore effectively steps into the position of employer and inherits all related obligations, including salaries, benefits, seniority, accrued rights and any
past non-compliance. For this reason, labour due diligence is primarily directed at understanding the company’s existing employment practices and hid - den liabilities rather than renegotiating employment contracts. This continuity directly affects post-closing restruc - turing. Although dismissals for economic or technical reasons, such as reorganisation or downsizing, are permitted under the Labour Law of 23 September 1946 (“Labour Law”), they are subject to administra - tive supervision. The employer must notify and con - sult the Ministry of Labour in advance and submit a termination plan that takes into account employees’ seniority, age, specialisation and social circumstanc - es. Layoffs therefore cannot be implemented immedi - ately following closing, and may be challenged if they appear intended merely to replace the workforce after the takeover. The same logic applies to employee financial expo - sure. Lebanon operates a statutory end-of-service indemnity regime administered through the National Social Security Fund (NSSF) rather than a pension system, and the acquirer inherits the full accumulated indemnity liability, including service years preceding the acquisition. In addition, benefits granted in prac - tice such as bonuses, transportation allowances or other regular advantages, are often treated by the Labour Arbitration Council as acquired rights. As a result, they cannot easily be withdrawn, even where not expressly written in the employment contract. Recent developments in working arrangements add further considerations. Remote, part-time and flexible work practices have become common, while work - place accident and insurance rules were originally designed for employees working on the employer’s premises. Because the acquirer immediately becomes the employer, it may assume liability connected to remote employees under existing insurance or safety policies, even where internal procedures are unclear. For that reason, labour due diligence in Lebanon typically extends beyond headcount and payroll and includes verification of social security registration, payment of NSSF contributions, wage tax withholding and employee insurance coverage. Any deficiencies in
737 CHAMBERS.COM
Powered by FlippingBook