November 2011 – On 19 October 2011, the Slovak Parliament passed an amendment to the Competition Act[1] (the “Amendment”). It was signed by the President of Slovakia on 4 November 2011 and following its publication in the Collection of Laws, it will become effective on 1 January 2012 and will apply to concentrations notified after the same date. The Amendment introduces a number of changes to the procedure for assessment and notification of concentrations, including changes to notification thresholds (enacting, in all types of concentration, a local effects test), a shift from the ‘test of dominance’ to an ‘effective competition test’ and splitting the notification procedure into a Phase I and Phase II review process. Parallel to the Amendment, an amendment to the Merger Control Decree[2] was passed (the “Amendment Decree”), complementing the changes introduced by the Amendment.
Thresholds
The Amendment has redefined the thresholds for notification of concentrations. The Competition Act as now in effect provides that a concentration is subject to notification if (a) the total worldwide turnover of the undertakings concerned in the financial year preceding the concentration is at least EUR 46 million and, at the same time, each of at least two undertakings concerned had in the Slovak Republic a total turnover of at least EUR 14 million in the financial year preceding the concentration, OR (b) at least one undertaking concerned had in the Slovak Republic in the financial year preceding the concentration a total turnover of at least EUR 19 million and, at the same time, at least one other undertaking concerned had a total worldwide turnover in the financial year preceding the concentration of at least EUR 46 million.
The Amendment redefines the thresholds so as to require ‘local effects’ in each case. Under the new rules, the concentration will be subject to notification
(a) if the total turnover of the undertakings concerned in the financial year preceding the concentration in the Slovak Republic is at least EUR 46 million and, at the same time, each of at least two undertakings concerned had in the Slovak Republic in the financial year preceding the concentration a total turnover of at least EUR 14 million, OR
(b) as regards the total turnover in the Slovak Republic in the financial year preceding the concentration
1. if the concentration is a merger or amalgamation of two or more independent undertakings, at least one undertaking concerned had a turnover of at least EUR 14 million and, at the same time, another undertaking concerned had a worldwide turnover of at least EUR 46 million; or
2. if the concentration is an acquisition of sole or joint control, the undertaking concerned over which control is being acquired, had a turnover of at least EUR 14 million and, at the same time, the total worldwide turnover of another undertaking concerned was at least EUR 46 million; or
3. if the concentration is the creation of a joint venture, at least one undertaking concerned had a turnover of at least EUR 14 million and, at the same time, another undertaking concerned had a worldwide turnover of at least EUR 46 million.
Abandonment of the ‘dominance test’
Since its enactment in 2001, the Competition Act has applied the ‘dominance test’ as a criterion for the Antimonopoly Office to assess the concentration. In other words, the Antimonopoly Office cleared the concentration provided that it did not create or strengthen dominance, which would significantly impede effective competition on the relevant market. The Amendment now switches the test to an ‘effective competition test’, in line with Article 2(2) of the Merger Regulation[3], i.e. under the new rules, the Antimonopoly Office will clear a concentration provided that it does not significantly impede effective competition on the relevant market, in particular as a result of the creation or strengthening of a dominant position.
Multiple phase review
Pursuant to the Competition Act now in effect, the Antimonopoly Office reviews the notified concentration in a single review and decides on the concentration within 60 business days and, if the case is complicated, the deadline can be extended at the discretion of the president of Antimonopoly Office, by a further 90 business days.
The Amendment introduces a Phase I and Phase II review process. In Phase I, the Antimonopoly Office will decide on the concentration in 25 business days and will typically deliver a simplified reasoning for its decision. To accelerate the proceedings, the Antimonopoly Office will no longer, prior to delivery of the decision, ask the parties to submit their observations before the final decision, as it is required to do under the Competition Act now in effect.
However, if a review of the notification requires a more detailed analysis of affected markets and competition concerns, the Antimonopoly Office will launch a Phase II review, and the deadline for deciding on the concentration can be extended by up to 90 business days. Also, on a reasoned request by a party or with such party’s consent, the Antimonopoly Office may further extend the deadline by up to 30 business days.
Certain additional amendments
In addition to the above conceptual changes, the Amendment introduces a number of ‘technical amendments’, arguably aiming at simplifying the notification procedure and moderating the sanctions. These changes include abandoning the requirement to notarize (and, if applicable, apostille or legalize) signatures on the power of attorney if an undertaking concerned is represented by an agent. (Under the Competition Act now in effect, the signatures of both the principal and the agent must be notarized). Also, the statutory default interest of 0.1% per day on unpaid fines imposed by the Antimonopoly Office has been repealed. The default interest covers fines imposed for both abuse of dominant position and agreements restricting competition and, according to the legislator, represents an unjustifiably severe punishment which is in addition to the fine already imposed.
Amendment Decree
Parallel to the Amendment, the Amendment Decree has been passed on 24 October 2011, published in the Collection of Laws on 17 November 2011 under No. 402/2011 Coll. and will become effective on 1 January 2012. If certain information and documents are not necessary for the assessment of the concentration, the Amendment Decree will make it possible for the notifying undertaking concerned to request the Antimonopoly Office in a reasoned written submission to waive the requirement for such information and documents. This change goes hand in hand with the differentiation between the Phase I and Phase II review processes introduced by the Amendment. In addition, the Amendment Decree redefines the information on affected markets that is required and introduces thresholds for the market shares of the undertakings concerned.
For further information please contact Zuzana Hodonova, Counsel, at .
Published in e-Competitions, N° 40186, www.concurrences.com.
[1] Act No. 136/2001 Coll. on competition, as amended
[2] Decree No. 204/2009 Coll. laying down the details of notification of concentrations, as amended
[3] Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings