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.

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.