COSTA RICA Law and Practice Contributed by: Claudio Donato and Carolina Retana Herrera, Zurcher, Odio & Raven
effects. If no risks are identified (which is the nor - mal case when the acquisition does not involve market overlap between the parties), the trans - action is authorised in that first phase. If any risks are identified, the transaction will move on to the second phase, in which those risks are analysed in depth and the Commission will aim to review whether such risks are offset by efficiencies or pro-competitive effects. The second phase will conclude with one of the fol - lowing three actions: • rejection of the transaction; • clearance of the transaction; or • clearance of the transaction subject to the acceptance and implementation of certain remedies to mitigate the identified anti-com - petitive effects. 2.5 Labour Law Regulations In local transactions, the buyer may want the target to keep the same personnel or dismiss the employees and liquidate them (often with the intention of rehiring such personnel after the acquisition). The first scenario is more sensible for the buyer, but both scenarios require the execution of proper due diligence over labour matters. The most relevant labour issues that are assessed as part of the due diligence process are as follows: • overtime hours and commissions or bonuses – most large labour contingencies in Costa Rica are related to discrepancies on overtime payments and commissions or bonuses that should have been received; • payment and proper reporting of social secu - rity obligations – it is especially relevant to assess whether there may be certain employ -
ee benefits that should have been classified as salary but were not treated that way; and • employee benefits (stock compensation plans, retirement plans, company vehicle, etc). Even if the buyer prefers to terminate the labour agreements with personnel, they must take into account that this will only operate with the employer’s liability and there are special circum - stances in which the local regulation still forbids such dismissal (pregnancy, labour harassment). The termination of labour relations implies the payment of notice, severance indemnities, pending vacation days and Christmas bonuses, and requires a case-by-case analysis. 2.6 National Security Review There is no national security review or control in Costa Rica. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments Mergers and acquisitions are not usually subject to scrutiny in judicial cases or court decisions. Nevertheless, certain changes have made merg - er control stricter over the past few years. With the entry into force of Law No 9736, gun-jump - ing is more severely penalised. Furthermore, a regulation to Law No 9736 and merger control guidelines have been issued by the local compe - tition authorities, aiding companies in navigating through these proceedings. Whenever a transaction meets the criteria to be subject to merger control, the obligation is deemed to be fulfilled even if only one of the
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