Serbia - Karanovic & Nikolic

The MergerControlReviewFourth EditionEditorIlene Knable GottsLaw Business Research Ltd

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PublisherGideon Robertonbusiness development managerSAdam Sargent, Nick Barettemarketing managerSKatherine Jablonowska, Thomas Lee, James Spearingpublishing assistantLucy BrewerPRODUCTION COORDINATORLydia GergesHEAD OF EDITORIAL PRODUCTIONAdam MyersPRODUCTION editorAnne BorthwicksubeditorTim Beavereditor-in-chiefCallum Campbellmanaging directorRichard DaveyPublished in the United Kingdomby Law Business Research Ltd, London87 Lancaster Road, London, W11 1QQ, UK© 2013 Law Business Research Ltdwww.TheLawReviews.co.ukNo photocopying: copyright licences do not apply.The information provided in this publication is general and may not apply in a specificsituation, nor does it necessarily represent the views of authors’ firms or their clients.Legal advice should always be sought before taking any legal action based on theinformation provided. The publishers accept no responsibility for any acts or omissionscontained herein. Although the information provided is accurate as of July 2013, beadvised that this is a developing area.Enquiries concerning reproduction should be sent to Law Business Research, at theaddress above. Enquiries concerning editorial content should be directedto the Publisher – gideon.roberton@lbresearch.comISBN 978-1-907606-73-1Printed in Great Britain byEncompass Print Solutions, DerbyshireTel: 0844 2480 112

acknowledgementsThe publisher acknowledges and thanks the following law firms for their learnedassistance throughout the preparation of this book:ACCURA ADVOKATPARTNERSELSKABADVOKATFIRMAN CEDERQUIST KBALI BUDIARDJO, NUGROHO, REKSODIPUTROALTIUSANDERSON MŌRI & TOMOTSUNEANDREAS NEOCLEOUS & CO LLCANTITRUST ADVISORY LLCARAQUEREYNAARNTZEN DE BESCHE ADVOKATFIRMA ASASHURST AUSTRALIABENTSI-ENCHILL, LETSA & ANKOMAHBREDIN PRATCAIAZZO DONNINI PAPPALARDO & ASSOCIATI – CDP STUDIO LEGALECOCALIS & PSARRASDLA PIPERELIG, ATTORNEYS-AT-LAWENS (EDWARD NATHAN SONNENBERGS)GIANNI, ORIGONI, GRIPPO, CAPPELLI & PARTNERSHOUTHOFF BURUMAi

AcknowledgementsJEFF LEONG, POON & WONGKARANOVIĆ & NIKOLIĆKING & WOOD MALLESONSLCS & PARTNERSLUTHRA & LUTHRA LAW OFFICESMATHESONMATTOS FILHO, VEIGA FILHO, MARREY JR E QUIROGA ADVOGADOSMJLA LEGALMOTIEKA & AUDZEVIČIUSPACHECO, ODIO & ALFAROPELIFILIP SCAPÉREZ BUSTAMANTE & PONCEROSCHIER ATTORNEYS LTDSAYENKO KHARENKOSLAUGHTER AND MAYSRS – SOCIEDADE REBELO DE SOUSA & ADVOGADOS ASSOCIADOS, RLSTRACHAN PARTNERSTAVERNIER TSCHANZTORYS LLPWACHTELL, LIPTON, ROSEN & KATZWIESNER & ASOCIADOS ABOGADOSWILMER CUTLER PICKERING HALE AND DORR LLPWILSON SONSINI GOODRICH & ROSATI, LLPWONGPARTNERSHIP LLPYULCHON LLCii

contentsEditor’s Preface...................................................................................................ixIlene Knable GottsChapter 1 AUSTRALIA .............................................................................. 1Peter Armitage, Amanda Tesvic and Ross ZaurriniChapter 2 BELGIUM ............................................................................... 17Carmen Verdonck and Jenna AuwerxChapter 3 BOSNIA AND HERZEGOVINA ........................................... 31Rastko PetakovićChapter 4 BRAZIL.................................................................................... 40Lauro Celidonio Neto, Amadeu Ribeiro and Marcio Dias SoaresChapter 5 CANADA ................................................................................. 51Dany H Assaf and Arezou FarivarChapter 6 CHINA .................................................................................... 66Susan NingChapter 7 COLOMBIA ............................................................................ 75Dario Cadena Lleras and Eduardo A WiesnerChapter 8 COSTA RICA .......................................................................... 83Edgar OdioChapter 9 CYPRUS .................................................................................. 93Elias Neocleous and Ramona Liveraiii

ContentsChapter 10 DENMARK ........................................................................... 103Christina Heiberg-Grevy and Malene Gry-JensenChapter 11 ECUADOR ............................................................................ 111Diego Pérez-Ordóñez and José UrízarChapter 12 EUROPEAN UNION ........................................................... 120Mario Todino, Piero Fattori and Alberto PeraChapter 13 FINLAND.............................................................................. 136Niko Hukkinen and Sari RasinkangasChapter 14 FRANCE ................................................................................ 146Hugues Calvet and Olivier BillardChapter 15 GERMANY ............................................................................ 165Götz Drauz and Michael RosenthalChapter 16 GHANA ................................................................................. 175Rosa Kudoadzi and Esaa Elorm Adzo AcolatseChapter 17 GREECE ................................................................................ 185Alkiviades C A PsarrasChapter 18 HONG KONG ...................................................................... 195Sharon Henrick, Joshua Cole and Tina ZhuoChapter 19 INDIA .................................................................................... 207Rajiv K Luthra and G R BhatiaChapter 20 INDONESIA ......................................................................... 220Theodoor Bakker and Luky I WalalangiChapter 21 IRELAND .............................................................................. 232Helen Kellyiv

ContentsChapter 34 SERBIA .................................................................................. 369Rastko PetakovićChapter 35 SINGAPORE ......................................................................... 380Ameera AshrafChapter 36 SOUTH AFRICA .................................................................. 389Lee Mendelsohn and Amy van BuurenChapter 37 SPAIN .................................................................................... 401Juan Jiménez-Laiglesia, Alfonso Ois, Jorge Masía,Samuel Rivero, Joaquín Hervada and Rafael MaldonadoChapter 38 SWEDEN .............................................................................. 412Fredrik Lindblom and Amir MohseniChapter 39 SWITZERLAND ................................................................... 419Pascal G Favre and Silvio VenturiChapter 40 TAIWAN ................................................................................ 428Victor I Chang, Margaret Huang and Jamie C YangChapter 41 TURKEY ................................................................................ 439Gönenç Gürkaynak and K Korhan YıldırımChapter 42 UKRAINE .............................................................................. 450Dmitry Taranyk and Predrag KrupezChapter 43 UNITED KINGDOM .......................................................... 457Michael Rowe and Paul WalterChapter 44 UNITED STATES ................................................................. 469Ilene Knable GottsChapter 45 VENEZUELA ........................................................................ 478Pedro Ignacio Sosa, Ana Karina Gomes, Nizar El Fakih andVanessa D’Ameliovi

ContentsChapter 46 INTERNATIONAL MERGER REMEDIES ......................... 489John Ratliff and Frédéric LouisAppendix 1 about the authors .................................................... 505Appendix 2 Contributing Law Firms’ Contact Details ... 539vii

Editor’s PrefacePre-merger competition review has advanced significantly since its creation in 1976 inthe United States. As this book evidences, today almost all competition authorities have anotification process in place – with most requiring pre-merger notification for transactionsthat meet certain prescribed minimum thresholds. This book provides an overview of theprocess in 45 jurisdictions as well as a discussion of recent decisions, strategic considerationsand likely upcoming developments. The intended readership of this book comprises bothin-house and outside counsel who may be involved in the competition review of crossbordertransactions.As shown in further detail in the chapters, some common threads in institutionaldesign underlie most of the merger review mandates, although there are some outliers aswell as nuances that necessitate careful consideration when advising clients on a particulartransaction. Almost all jurisdictions either already vest exclusive authority to transactionsin one agency or are moving in that direction (e.g., Brazil, France and the UK). The USand China may end up being the exceptions in this regard. Most jurisdictions providefor objective monetary size thresholds (e.g., the turnover of the parties, the size of thetransaction) to determine whether a filing is required. Germany provides for a de minimisexception for transactions occurring in markets with sales of less than €15 million.There are a few jurisdictions, however, that still use ‘market share’ indicia (e.g., Bosniaand Herzegovina, Colombia, Lithuania, Portugal, Spain, Ukraine and the UK). Mostjurisdictions require that both parties have some turnover or nexus to their jurisdiction.However, there are some jurisdictions that take a more expansive view. For instance, Turkeyrecently issued a decision finding that a joint venture (‘JV’) that produced no effect inTurkish markets was reportable because the JV’s products ‘could be’ imported into Turkey.Germany also takes an expansive view, by adopting as one of its thresholds a transactionof ‘competitively significant influence’. Although a few merger notification jurisdictionsremain ‘voluntary’ (e.g., Australia, Singapore, the UK and Venezuela), the vast majorityimpose mandatory notification requirements.Almost all jurisdictions require that the notification process be concluded prior tocompletion (e.g., pre-merger, suspensory regimes), rather than permitting the transactionix

Editor’s Prefaceto close as long as notification is made prior to closing. Many jurisdictions can imposea significant fine for failure to notify before closing even where the transaction raises nocompetition concerns (e.g., Austria, the Netherlands, Romania, Spain and Turkey). Somejurisdictions impose strict time frames within which the parties must file their notification.For instance, Cyprus requires filing within one week of signing of the relevant documentsand agreements; and Hungary, Ireland and Romania have a 30-calendar-day time limitfrom entering into the agreement for filing the notification. Some jurisdictions thatmandate filings within specified periods after execution of the agreement also have theauthority to impose fines for ‘late’ notifications (e.g., Bosnia and Herzegovina, Serbia) formandatory pre-merger review by federal antitrust authorities. Most jurisdictions have theability to impose significant fines for failure to notify or for closing before the end of thewaiting period, or both (e.g., United States, Ukraine, Greece, and Portugal).Most jurisdictions more closely resemble the European Union model than theUS model. In these jurisdictions, pre-filing consultations are more common (and evenencouraged), parties can offer undertakings during the initial stage to resolve competitiveconcerns, and there is a set period during the second phase for providing additionalinformation and for the agency to reach a decision. In Japan, however, the Japanese FederalTrade Commission (‘the JFTC’) announced in June 2011 that it would abolish the priorconsultation procedure option. When combined with the inability to ‘stop the clock’ onthe review periods, counsel may find it more challenging in transactions involving multiplefilings to avoid the potential for the entry of conflicting remedies or even a prohibitiondecision at the end of a JFTC review. Some jurisdictions, such as Croatia, are still aligningtheir threshold criteria and process with the EU model. There remain some jurisdictionseven within the EU that differ procedurally from the EU model. For instance, in Austriathe obligation to file can be triggered if only one of the involved undertakings has salesin Austria as long as both parties satisfy a minimum global turnover and have a sizeablecombined turnover in Austria.The role of third parties also varies across jurisdictions. In some jurisdictions (e.g.,Japan) there is no explicit right of intervention by third parties, but the authorities canchoose to allow it on a case-by-case basis. In contrast, in South Africa, registered tradeunions or representatives of employees are even to be provided with a redacted copy ofthe merger notification and have the right to participate in Tribunal merger hearings,and the Tribunal will typically permit other third parties to participate. Bulgaria hasannounced a process by which transaction parties even consent to disclosure of theirconfidential information to third parties. In some jurisdictions (e.g., Australia, the EUand Germany), third parties may file an objection against a clearance.In almost all jurisdictions, once the authority approves the transaction, it cannotlater challenge the transaction’s legality. The US is one significant outlier with no barfor subsequent challenge, even decades following the closing, if the transaction is laterbelieved to have substantially lessened competition. Canada, in contrast, provides a morelimited time period for challenging a notified transaction.As discussed below, it is becoming the norm in large cross-border transactionsraising competition concerns for the US, EU and Canadian authorities to work closelywith one another during the investigative stages, and even in determining remedies,minimising the potential of arriving at diverging outcomes. Regional cooperation amongsome of the newer agencies has also become more common; for example, the Argentinianx

Editor’s Prefaceauthority has worked with Brazil’s CADE, which in turn has worked with Chile andwith Portugal. Competition authorities in Bosnia and Herzegovina, Bulgaria, Croatia,Macedonia, Montenegro, Serbia and Slovenia similarly maintain close ties and cooperateon transactions. Taiwan is part of the Asia-Pacific Economic Cooperation Forum, whichshares a database. In transactions not requiring filings in multiple EU jurisdictions,Member States often keep each other informed during the course of an investigation. Inaddition, transactions not meeting the EU threshold can nevertheless be referred to theCommission in appropriate circumstances. In 2009, the US signed a memorandum ofunderstanding with the Russian Competition Authority to facilitate cooperation; Chinahas ‘consulted’ with the US and EU on some mergers and entered into a cooperationagreement with the US authorities in 2011, and the US has also announced plans toenter into a cooperation agreement with India.Some jurisdictions (e.g., the EU and Ireland currently) have as their threshold testfor pre-merger notification whether there is an acquisition of control. Such jurisdictionswill often consider relevant joint control (e.g., the EU) or negative (e.g., veto) controlrights to the extent that they may give rise to de jure or de facto control (e.g., Turkey).Minority holdings and concern over ‘creeping acquisitions’, in which an industry mayconsolidate before the agencies become fully aware, seem to be gaining increased attentionin many jurisdictions, such as Australia. Some jurisdictions will consider as reviewableacquisitions in which only 10 per cent interest or less is being acquired (e.g., Serbia forcertain financial and insurance mergers), although most jurisdictions have somewhathigher thresholds (e.g., Korea sets the threshold at 15 per cent of a public companyand otherwise 20 per cent of a target; and Japan and Russia, at any amount exceeding20 per cent of the target). This past year, several agencies analysed partial ownershipacquisitions on a stand-alone basis as well as in connection with joint ventures (e.g.,Canada, China, Cyprus, Finland and Switzerland). Vertical mergers were also the subjectof review (and even resulted in some enforcement actions) in a number of jurisdictions(e.g., Canada, China, Sweden and Taiwan). Portugal even viewed as an ‘acquisition’subject to notification the non-binding transfer of a customer base.Given the ability of most competition agencies with pre-merger notification lawsto delay, and even block, a transaction, it is imperative to take each jurisdiction – smallor large, new or mature – seriously. China, for instance, in 2009 blocked the Coca-ColaCompany’s proposed acquisition of China Huiyuan Juice Group Limited and imposedconditions on four mergers involving non-Chinese domiciled firms. In Phonak/ReSound(a merger between a Swiss undertaking and a Danish undertaking, each with a Germansubsidiary), the German Federal Cartel Office blocked the merger worldwide even thoughless than 10 per cent of each of the undertakings was attributable to Germany. Thus, it iscritical from the outset for counsel to develop a comprehensive plan to determine how tonavigate the jurisdictions requiring notification, even if the companies operate primarilyoutside some of the jurisdictions.For transactions that raise competition issues, the need to plan and to coordinateamong counsel has become particularly acute. As discussed in the last chapter, it is nolonger prudent to focus merely on the larger mature authorities, with the expectationthat other jurisdictions will follow their lead or defer to their review. In the currentenvironment, obtaining the approval of jurisdictions such as Brazil and China can beas important as the approval of the EU or US. Moreover, the need to coordinate isxi

Serbiascrutiny applied to the kiosks market, the leading sugar producer and telecom prepaidservices. Transactions involving local assets need not, however, be the decisive factors inthe estimation of the necessity of an inquiry. Besides market shares, a merger is alwaysevaluated in the light of the effects that it can cause after its implementation, so highmarket shares do not automatically mean that a merger will be thoroughly investigatedor that conditions will be imposed.The end of 2012 and the beginning of 2013 are noteworthy in the developmentof the Serbian merger control system. 2012 marked the first year that the CompetitionCommission issued clearances with commitments (conditional clearances) under thenew competition law. One involved the kiosks markets (in seven Serbian cities), whilethe second referred to the acquisition of a major distributor of telecom prepaid services.In March 2013, the Commission issued another conditional clearance concerningthe sugar industry. In all three horizontal mergers concerned, the CompetitionCommission relied on the EC merger control guidelines, model texts and best practicesfor behavioural measures and divestiture commitments.The Competition Commission previously decided in two cases to blockconcentrations. The first decision (Primer C/C Market) was issued in 2006, soon after thefirst Serbian competition law came into force. The prohibition decision of the nascentcompetition authority was surprising not only to the applicant, but also to the wholeprofession. The case is now pending at the Administrative Court of Serbia, followingtwo competition authority decisions not to allow the merger. However, as the mergerhas already been implemented, and all the statutes of limitations for imposing potentialfines have expired, it is unlikely that a new potential competition authority’s prohibitiondecision will have much effect.The second prohibiting decision (Sunoko/Hellenic Sugar) was issued by theCompetition Commission at the beginning of 2012. The Administrative Courtannulled the authority’s decision on procedural grounds; the case was reinitiated, and theCompetition Commission finally decided to clear the transaction with commitments.The main reason for disallowing a merger is assumed creation or strengtheningof the acquirer’s dominant position in the relevant market. However, even though suchmergers can raise serious competition concerns, the authority may decide not to prohibitthe transaction, but rather to clear the merger with commitments imposed on theacquirer (conditional clearance) or without any commitment whatsoever.Normally, the prohibition of a merger would take place following an in-depthprocedure and after the dismissal of the applicant’s offered commitments (conditionsand obligations). The procedure is often very complex and burdensome for boththe Competition Commission and the applicant. As these are, by their nature, verycomplicated cases, case handlers will collect a significant amount of documents andinformation from the parties involved, public sources, parties’ competitors, suppliersand buyers. Economic, technical or other experts are sometimes also involved.i Notable casesStampa Sistem/Futura PlusThe first merger clearance with commitments after the enactment of the CompetitionLaw (2009) was issued on 22 November 2012. The transaction involved the acquisitionby Stampa Sistem Belgrade of its major competitor in the kiosks market, Futura Plus. The371

SerbiaCommission initiated proceedings, during which it concluded that the parties’ combinedmarket share in seven Serbian municipalities would be above 40 per cent, which wouldlead to Stampa Sistem having a dominant position in the seven municipalities.The Commission imposed a behavioural measure on the acquirer, Stampa Sistem,which is not allowed to increase the number of its kiosks (either owned or rented) in threeBelgrade municipalities (Vracar, Savski venac and Zvezdara), and in the four remainingprovincial municipalities (Backa Topola, Apatin, Indjija and Becej). The acquirer isalso obliged to appoint a monitoring trustee, to be approved by the Commission. Thebehavioural measure applies for three years.The commitments can be amended in the event of significant changes in themarket; namely, if the acquirer’s combined market share in the seven municipalities dropsbelow 30 per cent, the acquirer can require the Commission to amend the clearancedecision accordingly. The clearance decision does not specifically provide for the mannerin which the decision should be amended, but one would expect that the conditionalclearance could be overturned and a decision without commitments could be issuedinstead, as the parties’ combined market share would no longer exceed 40 per cent.Centrosinergija/LanusA clearance with behavioural and divestiture commitments concerning the acquisitionof sole control by Centrosinergija d.o.o. Belgrade over Lanus d.o.o. Belgrade was issuedon 19 December 2012. The transaction concerned the acquisition by one of the majordistributors (Centrosinergija) of prepaid services of two of the three Serbian mobileoperators of its major competitor (Lanus). (Centrosinergija is an affiliated company ofthe above-mentioned Stampa Sistem.)In this case the Commission, for the first time since its establishment in 2006,imposed a divestiture commitment; Centrosinergija must divest between 3,500 and4,000 GPRS terminals that provide telecom prepaid services.The behavioural measure involves the acquirer’s commitment that it willimplement an ‘objective and balanced’ policy of rebates towards its sub-distributors. Theclearance decision includes specific percentages of rebates that should be implementedfor each particular group of Centrosinergija’s sub-distributors. The Commission alsoimposed on the acquirer a duty to appoint both monitoring and divestiture trustees(with the Commission’s subsequent approval).Sunoko/Hellenic Sugar IndustryIn March 2013, the Competition Commission cleared the acquisition by the leadingsugar producer Sunoko of its major competitor Hellenic Sugar Industry (i.e., the target’stwo Serbian sugar plants). The Commission imposed both structural and behaviouralmeasures.The acquirer committed to dispose of one of the target’s two sugar factories basedin Serbia. The acquirer agreed that it (i.e., its affiliated entities) will not, during the 10-year period from the divestiture, acquire control over the divested sugar plant.The Commission also imposed behavioural measures on the acquirer including:a every six months (until the liberalisation of the Serbian sugar trade), it mustinform the Commission about the company’s total volume and value of sale ofsugar in both domestic and foreign markets;372

Serbiabcdinform the Commission of the company’s average wholesale sugar price;provide a review on the investments made in the target company; andprovide information on the effectuated changes in the wholesale prices of sugarapplied towards specific categories of customers.The acquirer must also appoint both monitoring and divestiture trustees (with theCommission’s subsequent consent).IIITHE MERGER CONTROL REGIMEi Definition of concentrationThe Serbian Competition Law defines concentrations in the same way as the EUMR.Essentially, all forms of ‘amalgamations’ of previously independent undertakings qualifyas concentrations. In formal terms, a concentration can result from:a mergers and other status changes;b acquisition of direct or indirect control by one or more undertakings over anotherundertaking or part of an undertaking;c full functional joint ventures, where full functionality is interpreted similarlyto the EUMR’s interpretation (e.g., creation of a new undertaking by two ormore independent undertakings that will exercise joint control over the newundertaking, but which will be independent from its shareholders and have fullaccess to the market).The notion of control is practically identical to that used in the EUMR.The following are not concentrations:a temporary acquisitions of shares by banks and other financial institutions in thecourse of regular business activities, assuming they intend to dispose of the sharesand assuming there is no change of control on a lasting basis;b acquisitions of shares by investment funds, assuming the shares are used only formaintaining the value of the business;c cooperative joint ventures; andd acquisition of control by a bankruptcy administrator.ii Merger control thresholdsMerger filings are mandatory in Serbia if either of the following two thresholds are met:a the combined annual turnover of all the parties to the concentration realised onthe world market in the previous accounting year exceeds E100 million, whereat least one of the parties to the concentration had an annual turnover exceedingE10 million in the Serbian market; orb the combined annual turnover of at least two parties to the concentration onthe Serbian market exceeded E20 million in the previous accounting year, whereat least two of the parties to the concentration each had an annual turnoverexceeding E1 million in the Serbian market.373

SerbiaThe Competition Law also applies to foreign-to-foreign mergers, in which case the samejurisdictional thresholds apply. Therefore, there is no local effects doctrine prescribedunder the Competition Law. The Competition Commission has in many cases thus farexamined and issued clearances in foreign-to-foreign transactions. It has taken a verystrict and formalistic approach in this respect, and it requires mandatory filing whenevereither of the two thresholds is met. Normally, foreign-to-foreign mergers without anycompetition concerns in the local Serbian market will be processed through a Phase Iproceeding.Additional rules may apply for certain sectors (i.e., banking, insurance,telecommunications and media).iii ProcedureFiling deadlinesThe merger notification must be filed with the Competition Commission within 15calendar days of the date of entering into the agreement, the announcement of the publicoffer or the acquisition of controlling shares, whichever takes place first. If the parties donot file in a timely manner, the Competition Commission may impose fines ranging infrom E500 to E5,000 for each day of late filing. The filing can be made based on a letterof intent, or any similar document showing both parties’ serious intent to enter into thetransaction. The Commission has so far been reluctant to accept unilateral declarationsor commitments as valid proof of this.Pre-notification discussionsThe Competition Law does not provide for pre-notification discussions with theCompetition Commission. However, informal discussions with the authority arepossible, although still very rare. The duration of informal discussions would dependon the complexity of the case in question. Any representations made orally by theCommission are not legally binding on them.Length of reviewThe length of review depends on whether the Commission decides on implementingfast-track (Phase I) or inquiry proceedings (Phase II). For Phase I, the statutory deadlineis one calendar month after filing a complete merger notification. Phase II can onlybe initiated after the Phase I proceeding has expired; the Commission then has a timeframe of three calendar months to issue a decision in this case. If the Commission doesnot issue a decision either clearing (conditionally or unconditionally) or forbidding themerger within the above-cited deadlines, the merger is considered to be cleared.Standstill obligationThe law prescribes a standstill obligation, i.e., the parties must suspend the implementationof the transaction until the clearance is issued, or until the statutory deadlines haveexpired.Mandatory stay of the concentration does not prevent the implementation of atakeover notified to the relevant authority pursuant to the law regulating the takeover ofjoint stock companies, or the law regulating privatisations, under the condition that the374

Serbianotification of concentration is made in a timely manner, that the acquirer of controldoes not execute its managing rights based on the acquired rights, or that it does soonly for the purpose of maintaining the full value of investments and based on a specialapproval obtained from the Commission.Confidential informationInformation regarding the merger control proceedings may be classified as confidentialand shall not be published by the Commission if the party proves that it shall suffersubstantial damage due to publication of such information. The decisions of theCommission, apart from information classified as confidential, are regularly publishedon its website.Merger clearances with commitmentsSince its establishment in 2006 and up to the very end of 2009, most of the work ofthe Competition Commission encompassed merger filings. Restrictive agreements andabuses of dominant position were very rare. Furthermore, the merger clearance decisionswere very short, simple and without detailed elaborations. The procedure before thecompetition authority usually lasted no longer than one month.However, as the Competition Commission became more experienced (i.e.,regarding the market structures, the main players, and all the actual and potentialcompetition concerns that can arise from the concentrations between the two or moreundertakings), it began to use all of the legal tools that it possesses, including in-depthprocedures, conditional clearances and, finally, prohibitions of concentrations.The competition rules have still not been properly developed within themeaning of merger control rules. There are only very general provisions contained inSerbia’s competition law that enable the Competition Commission to issue conditionalclearances. To date, no guidelines, best practices or model texts have been adopted bythe Competition Commission for the purpose of issuing conditional clearances. For thatreason, merger clearances with conditions and obligations in Serbia are still rare.The first ‘conditional’ clearances in Serbia were issued more than four years ago.In their form, the Competition Commission’s conditional decisions were very similar toits regular (unconditional) clearances. All of the conditional clearances were issued byway of simplified procedures, even though one would expect that an in-depth procedurebe initiated once the competition authority reached the conclusion that conditionsand obligations must be imposed. In those cases, the Competition Commission wouldsimply conclude, at a certain stage of the review process, that the merger filing couldneither be cleared nor prohibited, but rather that certain conditions had to be imposedon the applicant. Such conditions were those that the competition authority found tobe most appropriate in the case in question, and unfortunately usually imposed withoutany consultations with the applicant itself. Among the numerous legal issues inherent insuch approach, the two were most significant:a there were no legal rules that the competition authority should have followedduring the process of the issuance of the conditional clearance; andb the applicants were not aware of the possibility that a conditional clearancedecision could be issued – they found out about such imposed conditions onlyafter receipt of the decision.375

SerbiaHowever, in the recent Stampa Sistem/Futura Plus case, the Competition Commissionfollowed the basic EU merger control rules that apply to clearances with conditionsand obligations. This was the first case that encompassed negotiations between thecompetition authority and the applicant, and the applicant’s proposal of both structuraland behavioural measures led to the issuance of a merger clearance acceptable to thecompetition authority.In-depth merger control procedure (Phase II)As a general rule, the Competition Commission may initiate an in-depth procedure (i.e.,Phase II or inquiry proceedings) when it finds that the concentration in question raisesserious competition concerns (e.g., if the concentration leads to a significant prevention,limitation or distortion of competition on the relevant market).In addition, the Competition Commission could formally commence an indepthprocedure:a if the parties have not submitted all the relevant data and documents that aremandatory under the respective merger control regulations; andb if the parties to the concentration have seriously opposed interests and, for thatreason, it can be expected that one of the parties (specifically the target) willnot provide all the relevant data and documents for the competition authority’sreview.When the Competition Council commences an in-depth (Phase II) procedure, theapplicant still cannot know what direction the Competition Council’s enquiries duringthe Phase II procedure will take. It is common for the authority to contact the parties’ maincompetitors, their largest suppliers and buyers in order to assess what their expectationsof the concentration in question are (i.e., whether the competitors, suppliers and buyersestimate that their position will be degraded or perhaps improved by the implementationof the concentration).Further, the competition authority may sometimes commence an in-depthprocedure if the target is a real or presumed dominant player. Even though this is stillrare in practice, one should be aware of such possibility even if the acquirer has no or avery limited presence on the local market where the target is presumed to be a dominantplayer (for example, this occurred when Delhaize Group acquired Delta Maxi during in2011).Fees and penaltiesThe applicant is obliged to pay a fee for the issuance of the clearance in summaryproceedings amounting to 0.03 per cent of the total worldwide annual income realisedby the merging parties (capped at E25,000). The fee for the issuance of a merger clearancein the inquiry proceedings is set at 0.07 per cent of the total annual income realised bythe merging parties (capped at E50,000). If the Commission rejects the notification onprocedural grounds, the fee is E500; should the Commission prohibit a transaction, thefee for issuance of such a decision is E1,200.Implementing a concentration that was not notified or not cleared can result ina fine of up to 10 per cent of the total worldwide annual turnover of a company realised376

Serbiain the year prior to the start of the proceedings. Late filings may be sanctioned with aprocedural penalty, which is also capped to the same amount.To date, we are not aware of any fine having been imposed in Serbia for notnotifying a merger. However, from the beginning of 2011, the Competition Commissionstarted to impose fines for abuses of dominant position and restrictive agreements (thefines amounted to approximately E40 million; so far, such fines have been imposed solelyagainst domestic companies), and it can be expected that fines for the implementationof mergers without clearance could be soon imposed in Serbia as well in quite significantamounts. In cases of acquisition of sole control, the buyer would be solely responsible forthe filing, and for payment of the fine. In cases of joint control, both acquirers of jointcontrol would be responsible for the filing and payment of the fines.Furthermore, the Commission may cancel an already implemented concentration(‘de-concentration’), which can be effected by way of a split-off, sale of shares, cancellationof the agreement or performance of any other action that would lead to the restitutionof the status prior to implementation of the concentration. The Commission has notimplemented any de-concentrations to date. The Commission may also impose bothbehavioural and structural measures on merging entities in order to alleviate antitrustconcerns. While the former have been used in a few cases in which the Commission issuedconditional clearances, structural measures have never been used in practice, althoughthey were suggested in one case. Furthermore, special sanctions, such as additional finesor non-registration, might be applicable in certain particular sectors (i.e., banking ortelecommunications).The Serbian Criminal Code contains a wide provision that could be used tointerpret a concentration resulting in the creation or strengthening of dominant positionas an ‘abuse of monopolistic position’. In this case, the person responsible for intentionalimplementation of a prohibited concentration could be criminally prosecuted. Themaximum sanction is three years’ imprisonment; however, this provision has never beenused in practice.Judicial reviewResolutions of the Competition Commission are final administrative proceedings. Theparty to the proceedings or a third party with a legal interest may challenge the decisionbefore the Administrative Court of Serbia by initiating an administrative disputethrough filing a claim within 30 days of receipt of the decision, or within 60 days if theappellant did not receive the decision. The appeal does not preclude the enforcementof the decision. However, the Competition Commission can in certain cases postponeenforcement until the Court ruling upon the request of the appellant.The Administrative Court may confirm the decision, annul the decision andreturn it to the Competition Commission for revision, or decide the case itself. TheAdministrative Court must decide the administrative dispute within two months ofreceiving the claim.The Supreme Court of Cassation decides on extraordinary legal remediesagainst the rulings of the Administrative Court. Such a request may only be filed if theAdministrative Court has violated the law or procedural rules where this could haveaffected the outcome of the proceedings.377

ivSubstantive assessmentSerbiaWhen deliberating on the permissibility of a concentration, the Competition Commissionparticularly considers the following:a the structure of the relevant market;b actual and potential competitors;c the market position of the parties and their economic and financial power;d the possibility to choose suppliers and customers;e legal and other barriers to entry in the relevant market;f the level of competitiveness of parties;g supply and demand trends for relevant goods or services;h technical and economic development trends; andi the interests of consumers.The Competition Council applies the SIEC test in combination with the dominance test,based on wording that has been transposed from the EUMR. Most often, the authoritywill analyse the level of concentration of the market by relying on the HHI index, andassess the parties’ market power based on the market share information.Despite the SIEC test being an integral part of the assessment toolkit, theCompetition Council in practice initiates Phase II proceedings, discusses remedies andblocks transactions almost exclusively by relying on the dominance test.IVOTHER STRATEGIC CONSIDERATIONSi Voluntary notificationExceptionally, the Competition Commission has the authority to institute an exofficio merger control procedure if an un-notified concentration results in the mergedundertakings having a market share above 40 per cent. The 40 per cent market sharethreshold is not a mandatory jurisdictional threshold (i.e., the parties are not obliged tofile a notification with the Competition Commission if their combined market share inany relevant market exceeds 40 per cent).However, to avoid a situation of an ex post analysis, it may be advisable to notifythe Competition Commission of the intended merger if the parties’ market shares doexceed this threshold (in Serbia). However, since the enactment of the Competition Law,to our knowledge the Competition Commission has not initiated any ex officio mergercontrol procedure where a concentration that has not been notified might have resultedin the parties’ market share exceeding 40 per cent.ii Acquisition of minority shareholdingsSimilarly to the EU regime, an acquisition of a minority shareholding may trigger thefiling requirement provided that the minority shareholder would be able to exercisecertain controlling rights that fall outside the scope of ordinary rights attributed to aminority shareholder. However, while the European Commission would normally relyon its own guidelines (the Consolidated Jurisdictional Notice), the Serbian CompetitionCommission has enacted no such guidelines. Parties normally refer to the ConsolidatedJurisdictional Notice, although it is evident that in certain cases the Competition378

SerbiaCommission will use a wider interpretation of control than that found in the EuropeanCommission’s Notice.iii Takeovers by public tender offerRegardless of whether the turnover thresholds have been met, all transactions occurring asa result of a public tender offer have to be notified to the Competition Commission. Theonly exception is where the public tender offer would result in an internal restructuringwithin a holding.VOUTLOOK AND CONCLUSIONSThe merger control regime in Serbia functions relatively well. The CompetitionCommission has increased its capacity, and handles cases in an efficient and fairlyconsistent manner. Some of its activities have to a certain extent been motivated bypublic pressure and consumer expectations, but its standard of review is transparent andpredictable.The regime is for the most part aligned with the EU regime and there are noimmediate areas of concern. We expect certain formal changes in the standard of reviewfollowing the announced changes in the definition of dominance, which will necessarilyreflect upon the dominance test that is used most often in substantive review.379

Appendix 1about the authorsRastko PetakovićKaranović & NikolićRastko Petaković is a partner at Karanović & Nikolić, and is the head of the regionalcompetition practice group. He focuses on competition, antitrust, trade and telecommatters, and is a highest-ranked competition lawyer by all the principal directories.With a background in economy, he focuses on the most complex antitrust, competitionlitigation and merger control matters. Mr Petaković is an editor and co-author of theonly regional annual publication on competition law (Focus on Competition) and a rangeof other publications (IFLR, Global Competition Review, Doing Business in Serbia, etc.).He teaches competition law at the Belgrade Law Faculty.505

About the AuthorsKaranović & NikolićGundulićeva 478 000 Banja LukaBosnia and HerzegovinaTel: +387 51 250 001Fax: +387 51 250 005Trg djece Sarajeva 171 000 SarajevoBosnia and HerzegovinaTel: +387 33 261 535Fax: +387 33 261 547Resavska 2311 000 BelgradeSerbiaTel: +381 11 3094 200Fax: +381 11 3094 223rastko.petakovic@karanovic-nikolic.comwww.karanovic-nikolic.com506