EU & Competition
New Merger Control Rules in Montenegro and Macedonia
→ Srđana Petronijević
→ Danijel Stevanović
Recent legislative changes in Montenegro and Macedonia introduced new rules governing merger control. Both continue to have low notification thresholds easily met by undertakings active in the CEE/SEE region.
Absent reliable rules or practice that would exclude filing obligations for mergers that do not have domestic effects, failure to notify may bring fines of up to 10% of annual turnover. The new rules also have many features that highlight the growing differences in the development of competition law regimes and the need to have an ever more sophisticated and customised approach to competition law issues in each CEE/SEE jurisdiction to achieve full compliance and manage risks.
New competition acts
Montenegro and Macedonia recently adopted new acts governing competition law. The Law on the Protection of Competition (Official Gazette of the Republic of Montenegro, no. 44⁄2012) came into force on 9 October 2012. The Law on the Protection of Competition (Official Gazette of the Republic of Macedonia, no. 145⁄2010) is in force as of 13 November 2010.
Mergers subject to control
A feature common to both acts is low turnover thresholds, which can easily be met by undertakings active in the CEE/SEE region based on cross-border sales alone. Absent reliable rules or practice that would exclude filing obligations for mergers that do not have (significant) effects on competition in the respective local markets, the new rules will continue to catch mergers that in most cases do not warrant merger control review based on their actual effects on competition.
A merger must be notified to the Montenegrin competition authority if: (i) the aggregate local annual turnover of at least two parties to the merger exceeds EUR 5 mln; or (ii) the aggregate worldwide annual turnover of the parties to the merger exceeds EUR 20 mln, if at least one of the parties achieved a turnover of EUR 1 mln in Montenegro in the same year.1
In Macedonia, a merger must be notified if: (i) the joint worldwide aggregate annual turnover of all parties to the merger exceeds EUR 10 mln and at least one of the participants to the merger is registered in the Republic of Macedonia; (ii) the joint aggregate local annual turnover of all participants to the merger exceeds EUR 2.5 mln or (iii) the market share of one of the participants to the merger exceeds 40%, or the joint market share of all the participants to the merger exceeds 60%.
Merger review deadlines
In terms of review deadlines, the two merger control regimes stand in stark contrast. In Montenegro, the competition authority has at its disposal between 105 and 130 working days to render a decision depending on whether a merger is going to be (conditionally or unconditionally) cleared or prohibited. The solution adopted is an unpleasant surprise as the 105 working day deadline for mergers that are clearly unproblematic is highly unsuited to the requirements of modern business. Even considering that the authority has been efficient in its practice so far, this solution is not business friendly and contrasts with neighbouring jurisdictions, where competition authorities on average have one month to clear unproblematic mergers.
Furthermore, the recently adopted regulations and guidelines in Macedonia regulate in great detail the criteria under which the competition authority may review mergers and issue decisions in summary proceedings. As a result, unproblematic mergers must be cleared within 25 working days although substantially more documents, information and data must be provided than under the prior merger control regime.
The need for a customised approach to each CEE/SEE jurisdiction
The recent legislative developments highlight the growing differences in the development of competition law regimes, not just in Montenegro and Macedonia but across the whole CEE/SEE region. Although having a legislative bedrock and enforcement practice to build upon, the Montenegrin Competition Act has missed an opportunity to further develop Montenegrin merger control rules; the act contains a mixed bag of solutions that on balance fail to improve a merger control regime that was already in need of significant advancements.
At the other end, the recently adopted regulation and guidelines in Macedonia, taken together with the guidelines adopted in 2007 and 2008 that are still applicable, now form part of a well-rounded framework for assessing mergers that covers a wide range of substantive and procedural issues, and that provides a solid basis for future developments.
As a result, the recent legislative developments underline more than ever the need for undertakings active in these markets to have a sophisticated and customised approach to competition law issues in each CEE/SEE jurisdiction to achieve full compliance and manage risks.
In terms of review deadlines, the two merger control regimes stand in stark contrast.
- In addition, upon learning that a merger has been performed, the Agency can order the participants in the merger to notify the concentration if their joint market share in a relevant market in Montenegro is at least 60%. The burden of proof that the market share threshold is met is on the Agency.