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Trends and climate

Trends
How would you describe the current merger control climate, including any trends in particular industry sectors?

In the last three years the Competition Protection Agency conducted approximately 25 merger control proceedings per year, in various sectors. Some of the most common industries concerned include energy, food/retail and communications.

The agency's reasoning depends on the specifics of the particular case, as it lacks specific policy papers or guidelines on assessment methods. According to publicly available information, only one merger was prohibited in the last three years, in the energy sector. 

Reform
Are there are any proposals to reform or amend the existing merger control regime?

There are currently no proposals for amendments to the merger control regime. However, according to a recent interview with the minister of justice, the ministry is preparing an overhaul of the legislation regarding judicial protection against fines imposed by the Competition Protection Agency.

Legislation, triggers and thresholds

Legislation and authority
What legislation applies to the control of mergers?

Merger-specific provisions are set out in Part III of the Prevention of the Restriction of Competition Act 2008, which also regulates antitrust issues. In instances not specifically regulated by the act, the Competition Protection Agency is obliged to abide by the General Administrative Procedure Act. The agency has so far not issued any further guidelines on merger control and in practice seeks guidance in European Commission documents and recent practice.

What is the relevant authority?

The Competition Protection Agency enforces the merger control rules. The agency is an independent body, which commenced operations in January 2013 and replaced the Competition Protection Office, an administrative body under the supervision of the Ministry of Economy. The agency’s actions may be reviewed by the Administrative Court in an administrative dispute, in accordance with the Administrative Dispute Act. However, the Slovenian merger control system is overridden if EU Merger Regulation thresholds are met and the transaction is assessed by the European Commission.

Transactions caught and thresholds
Under what circumstances is a transaction caught by the legislation?

The Prevention of the Restriction of Competition Act 2008 covers all transactions that result in the acquisition of control, including:

  • mergers;
  • acquisitions;
  • share capital increases; and
  • full-function joint ventures.

This means that a transaction will be caught by the Slovenian merger regime when:

  • two or more previously independent undertakings merge;
  • one or more persons already controlling at least one undertaking, or one or more undertakings, acquire – whether by purchase of shares, securities or assets by contract or by any other means – direct or indirect control of the whole or parts of one or more undertakings; or
  • two or more undertakings create a joint venture that performs the functions of an autonomous economic entity on a lasting basis.

Control is considered to be constituted by way of acquisition of rights, contracts or any other means which (separately or in combination, and having regard to the details of the facts or law involved) enable the possibility of exercising decisive influence over an undertaking.

Control often derives from an acquisition of the majority of voting rights (50% plus one share), but can also be established on a de jure basis (eg, a minority shareholding with special rights) or a de facto basis (ie, a majority at the shareholders’ meeting).

Do thresholds apply to determine when a transaction is caught by the legislation?

In order to identify whether a merger notification obligation exists, all transactions should be assessed with regard to the annual turnovers achieved by the companies involved in Slovenia. Further, special attention is required when the companies involved have a Slovenian market share that exceeds 60%, as the Competition Protection Agency may require notification even if the turnover thresholds are not met.

A concentration must be notified to the agency when the parties meet the following thresholds:

  • The combined aggregate annual turnover of all undertakings concerned (including undertakings belonging to the same group) exceeded €35 million in the Slovenian market in the last business year;
  • The annual turnover of the target (including undertakings belonging to the same group) exceeded €1 million in the Slovenian market in the last business year; or
  • In the event of the creation of a joint venture, the annual turnover of at least two participating undertakings (including undertakings belonging to the same groups) exceeded €1 million in the Slovenian market in the last business year.

Informed guidance
Is it possible to seek informal guidance from the authority on a possible merger from either a jurisdictional or a substantive perspective?

The Prevention of the Restriction of Competition Act 2008 does not regulate any informal or pre-notification contact with the Competition Protection Agency, but the agency is usually willing to meet with the parties prior to the submission of a formal notification and discuss their views. However, so far the agency has not been willing to issue a decisive standpoint on any perspectives prior to notification being submitted. 

Foreign-to-foreign
Are foreign-to-foreign mergers caught by the regime? Is a ‘local impact’ test applicable under the legislation?

Foreign companies need not have an established legal entity or subsidiary in Slovenia to be subject to the Slovenian merger control regime. Foreign-to-foreign transactions should be notified to the Competition Protection Agency as soon as the jurisdictional thresholds are met. 

The only exemption is when the subject concentration is to be appraised by the European Commission, in accordance with the EU Merger Regulation (139/2004). In such cases, foreign-to-foreign transactions (as all others) need not be notified to the agency.

Further, no specific legislation applies to foreign transactions as such. However, particular sector-specific legislation (eg, energy, investment funds, banking, insurance and media) can impose certain restrictions – additional regulatory approval requirements or grounds for refusal – on companies from non-EU member states.

Joint ventures
What types of joint venture are caught by the legislation?

Creation of a joint venture by two or more undertakings that performs all the functions of an autonomous economic entity on a lasting basis (a full-function joint venture) constitutes a concentration within the meaning of the Prevention of the Restriction of Competition Act 2008.

Notification

Process and timing
Is the notification process voluntary or mandatory?

As soon as the jurisdictional thresholds are met, notification is mandatory. It is disputed whether the notification process is also mandatory if the parties do not reach the turnover thresholds, but have a market share of more than 60% in the relevant Slovenian market.

With regard to takeovers, the Competition Protection Agency will be notified of a compulsory tender offer (takeover bid) in accordance with the Takeovers Act – even if the planned concentration does not constitute a concentration within the meaning of the Prevention of the Restriction of Competition Act 2008. The takeover process is primarily monitored by the Securities Market Agency. The obligation to inform the Competition Protection Agency pursuant to the Takeovers Act is fulfilled by way of a simple letter sent to the agency. There is no requirement to submit a formal merger notification form.

What timing requirements apply when filing a notification?

The notification should be filed no later than 30 days after:

  • the conclusion of the underlying agreement;
  • the announcement of the public bid; or
  • the acquisition of a controlling interest.

The clock starts to run when the first of these events occurs.

What form should the notification take? What content is required?

The notification must be submitted on a standardised merger notification form – a questionnaire prescribed by the Decree Defining the Contents and Elements Required for the Notification Form for the Concentration of Undertakings.

The scope of information requested by the form is exhaustive (it closely mirrors the EU Merger Regulation’s Form CO) and includes:

  • certified copies of the documents or draft documents relating to the planned concentration;
  • a list of management board members, major shareholders or interest holders in the undertakings which have participated or are planning to participate in the concentration;
  • audited accounting statements from the participants in the concentration for at least the preceding three tax years – in the event that a participant is not obliged to audit accounting statements, regular accounting statements are to be submitted;
  • a report on any form of participation in a concentration of undertakings in Slovenia in the last three years;
  • a list of controlled undertakings and subsidiaries;
  • a list of controlling undertakings;
  • data on the market shares of the participants in the concentration;
  • data on all relevant product and service markets in which the participants in the concentration operate (including size, past and future development, structure of demand and supply and market access);
  • data on the main customers, suppliers and competitors; and
  • data on the expected economic consequences of the concentration.

There is no short version of the merger notification form and all information needs to be provided regardless of the size or market position of the undertakings concerned. However, in certain cases the Competition Protection Agency is willing to waive this obligation and accept a less detailed notification.

Is there a pre-notification process before formal notification, and if so, what does this involve?

A pre-notification phase is not regulated or anticipated under the Prevention of the Restriction of Competition Act 2008, but the Competition Protection Agency is willing to meet with parties prior to submission of a formal notification.

Pre-clearance implimentation
Can a merger be implemented before clearance is obtained?

The Prevention of the Restriction of Competition Act 2008 prohibits the exercise of rights that derive from a concentration prior to a final clearance decision. Upon the request of the undertakings concerned, the Competition Protection Agency may issue an order that permits the implementation of the concentration within a specified scope and/or under specified conditions prior to issuing clearance, provided that the undertakings can demonstrate that the implementation is essential to maintain the full value of the investment or to perform services of general interest. The agency is obliged to decide on such a request within 15 working days.

Guidance from authorities
What guidance is available from the authorities?

The Competition Protection Agency has so far issued no guidelines (or other documents) that provide further insight on its analytical methods, practices or enforcement policies in relation to mergers. The parties must therefore rely on the agency’s past decisions as well as recent European Commission guidelines and decisional practice, which the agency tends to follow.

The agency can send a questionnaire to the public authorities that regulate and supervise specific sectors. The public authorities can provide substantive guidance to the agency if the impact on a specific market is under question (eg, such cooperation is envisaged within the Energy Act and the Electronic Communications Act).

Fees
What fees are payable to the authority for filing a notification?

The filing fee currently amounts to €2,000. The fee is subject to adjustment by the government and should therefore be double checked at the time of filing.

Publicity and confidentiality
What provisions apply regarding publicity and confidentiality?

Publicity
Each notification must be accompanied by a publication form, based on which the agency will publish a notice at the start of the respective merger proceeding on its website. The published information includes:

  • the names of the participating companies;
  • the date of receipt of notification by the agency; and
  • the case number and industry sector.

The acquirer, as the notifying party, may object to publication on the basis of justifiable reasons (eg, trade secret protection). This matter will be assessed by the agency, which can choose not to publish the notice and the accompanying data. This procedure was introduced in April 2013, when the agency adopted guidelines on the publication of data and information on its website in merger notification procedures. There has been little practice so far in this respect and it is not yet known in which cases the agency will agree not to publish relevant information.

Confidentiality
Information and data provided to the Competition Protection Agency during the notification process is treated as confidential, provided that the submitting party:

  • requests the protection of business secrets; and
  • demonstrates that the information for which protection is sought constitutes a business secret. 

Recent developments show that the Competition Protection Agency will grant such protection only if the interested party has:

  • explicitly requested the protection of business secrets; and
  • provided the agency with a clean version of the respective documents (ie, documents that contain only information that does not constitute a business secret).

Access to files
Access to files is regulated by the Prevention of the Restriction of Competition Act 2008 and the General Administrative Procedure Act. The parties are granted access to files, but the agency may deny a party access to:

  • internal agency documents relating to the case;
  • documents deemed to constitute a business secret of another undertaking; and
  • data pertaining to the identity of a source of information which has requested confidentiality.

Penalties
Are there any penalties for failing to notify a merger?

Exercising rights that arise from a notifiable concentration prior to receiving clearance from the Competition Protection Agency may trigger the following penalties:

Fines – failure to notify and/or late filing may incur a penalty of up to 10% of the respective undertaking’s group turnover from the preceding business year. Further, a fine between €5,000 and €10,000 may be levied on the responsible person of the undertaking. If the nature of the offence is deemed to be particularly serious, given the amount of resulting damages or the amount of unlawfully acquired pecuniary benefits, the responsible person of the undertaking may be fined up to €30,000.

Suspension of rights and nullity – the agency is authorised to file suit to declare any such act null and void. The acquirer of shares in the target that is in breach of the filing obligation may lose its voting rights from the shares acquired and consequently, the remaining shareholders can judicially challenge any resolution that the target’s general assembly has passed on this basis.

Other measures – the agency may order:

  • the division of the undertaking;
  • the disposal of all shares acquired; 
  • the sale of interests;
  • the sale of securities; or
  • other measures appropriate to restore the prevailing conditions before implementation of the concentration. 

However, the agency may do so only if the merger strengthens the power of one or more undertaking – individually or jointly – as a result of which effective competition on the relevant market is significantly impeded or excluded.

Procedure and test

Procedure and timetable
What procedures are followed by the authority? What is the timetable for the merger investigation?

The Competition Protection Agency procedure is divided into Phase I and potentially Phase II procedures. The latter is expected only in cases where the agency has serious doubts about the compatibility of the relevant concentration with competition rules. In general, the agency issues decisions in merger proceedings without an oral hearing.

Phase I
All Phase I decisions are legally required to be taken within 25 working days of filing of the merger notification. However, the clock starts to run only once the filing has been deemed complete by the agency. Given the exhaustive nature of the merger notification form, requests by the agency to extend the filing (thus postponing the start of the deadline) are common and, in practice, can significantly affect the transaction timetable. Further, as this time limit is only instructive for the agency, no Phase I decision may be taken within the time limit. 

Phase II
Should the agency decide to initiate Phase II proceedings, it is bound to issue a final decision within 60 days. The 60-day period is only instructive and if the agency does not issue a Phase II decision on time, the parties may file suit before the Administrative Court to demand that the agency issue a decision.

What obligations are imposed on the parties during the process?

The Competition Protection Agency may request further information from the parties should it deem that the information provided with the notification does not cover everything requested in the official notification form. If the parties refuse to produce this additional information or fail to provide the requested information on time, the transaction will be deemed not to have been notified.

What role can third parties play in the process?

The Competition Protection Agency publishes a list of all notified transactions as well as all decisions on the initiation of Phase II proceedings on its website. Based on this publicly available information, third parties may identify relevant transactions and decide to what extent they want to participate in the proceedings.

Participation as a party to the proceedings
Third parties may request to formally participate in the proceedings in cases where they can establish that they should participate to safeguard their legal entitlements. Authorisation for such participation is at the discretion of the agency, but its decision on the matter can be challenged before the Administrative Court.

In cases where third parties are allowed to join the procedure, they are:

  • able to participate in the entire procedure;
  • granted access to the file;
  • entitled to propose evidence and present their opinions on all relevant issues; and
  • entitled to file suit before the Administrative Court challenging the final decision issued by the agency.

The agency is not inclined to acknowledge the existence of a legally recognised interest to third parties.

In some industries, the involvement of the respective regulator is anticipated in sector-specific legislation. For example, the Media Act anticipates the mandatory involvement of the Agency for Communication Networks and Service and the Ministry of Culture in merger control proceedings in the media sector.

Informal involvement
Third parties may also submit statements and evidence to the Competition Protection Agency without formally joining the proceedings. Although the agency is not required to take such submissions into account (and may not base its decision on such evidence without giving the parties a chance to comment on it beforehand), these submissions may nonetheless have an impact on the assessment of the merger.

The agency may also, on its own initiative, contact third parties (usually competitors, suppliers and customers of the notifying parties) and send them requests for information.

Substantive test
What is the substantive test applied by the authority?

The Competition Protection Agency primarily assesses concentrations with a view to establishing whether a threat of creating or strengthening a dominant position exists, as a result of which effective competition could be distorted or significantly impeded. The market test applied by the agency broadly corresponds to the European Commission’s substantial impediment of effective competition test.

The effects of the concentration on the relevant product and geographic markets are analysed. However, a high market share does not always give rise to competition concerns, as the agency will appraise market share together with other parameters (eg, the choice available to suppliers and users and the existence of barriers to entry). The agency will take the following factors – among others – into account:

  • the choice available to suppliers and users;
  • the market positions of the undertakings concerned;
  • access to sources of supply and to the market itself;
  • the structure of the relevant markets;
  • barriers to entry for competing undertakings;
  • the financial capability of affected undertakings;
  • the level of international competitiveness of the undertakings; and
  • supply and demand trends in the relevant markets.

Carve-outs
Does the legislation allow carve-out agreements in order to avoid delaying the global closing?

Carve-out agreements are not anticipated in the Prevention of the Restriction of Competition Act 2008. It could be argued (albeit without any guarantee of success) that the act covers only the effects that a merger has on the Slovenian market. Consequently, it may be possible to carve out that part of the transaction that affects only the Slovenian market and proceed with implementation outside Slovenia, or vice versa. As far as is known, this possibility has not yet been tested before or approved by the agency.

Test for joint ventures
Is a special substantive test applied for joint ventures?

Where the object or effect of a joint venture lies in the coordination of competitive behaviour between undertakings that remain independent, the establishment of a joint venture will also be assessed in light of the cartel prohibition. If the Competition Protection Agency finds that the conditions for exemption of restrictive agreements from prohibition are not met, it will not approve the concentration.

Remedies

Potential outcomes
What are the potential outcomes of the merger investigation? Please include reference to potential remedies, conditions and undertakings.

In Phase I proceedings the Competition Protection Agency may adopt one of the following decisions:

  • If the agency finds that the concentration notified does not fall within the scope of the Prevention of the Restriction of Competition Act 2008, it will issue a decision to this effect.
  • If the agency finds that the notified concentration, despite falling within the scope of the act, does not raise serious doubts regarding its compatibility with competition rules, it will issue a decision not to oppose the concentration and declare the concentration compatible with competition rules.
  • If the agency finds that the concentration falls within the scope of the act and raises serious doubts regarding its compatibility with the competition rules, it will issue a decision on the initiation of Phase II proceedings.

Should the agency open Phase II proceedings, it may (within 60 days) close them in the following ways:

Unconditional clearance – if the agency finds that a concentration is compatible with the act, it will issue a decision to this effect.
Conditional clearance – the agency may impose additional obligations and conditions to ensure that the concentration complies with the requirements laid down in the act.
Prohibition of merger – if the agency finds that the concentration is incompatible with the act, it will issue a decision to this effect.

Remedies and conditions
The Competition Protection Agency will generally encourage the parties to propose remedies to address any competition concerns. The remedies (structural or behavioural) which the agency will accept will depend on the nature of the competition concern identified. In general, remedies:

  • must be suitable to ensure a permanent solution for the identified concerns;
  • should not require additional supervision after their implementation; and
  • should not raise any new competition concerns.

Appeals

Right of appeal
Is there a right of appeal?

Final substantive decisions of the Competition Protection Agency (as well as some procedural decisions) may be appealed in the Administrative Court. However, decisions on fines must be challenged separately, before a regular court. Under certain conditions, and with substantial limitations, final decisions of the Administrative Court may be appealed before the High Court.

Do third parties have a right of appeal?

Third parties can appeal final decisions of the Competition Protection Agency before the Administrative Court only when they have been granted the status of a party to the proceedings due to a legal interest. The agency is usually not inclined to acknowledge the existence of legally recognised interest to third parties.

Time limit
What is the time limit for any appeal?

Parties may appeal Competition Protection Agency decisions before the Administrative Court within 30 days of service of notice.

Law stated date

Correct as of
Please state the date as of which the law stated here is accurate.

The provided information is accurate as of May 15 2015