EU & Competition

New Merger Control Rules in Montenegro and Macedonia

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. 1452010) 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.

1
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.