There have been several developments recently, which affected how the Hungarian Competition Authority authorizes concentrations, as well as, how companies can shape transactions forming the base of concentrations and how they can act during and after the authorization process.
Market players may be aware that certain concentrations - mergers, acquisitions and joint ventures - are subject to the Hungarian Competition Authority's (HCA) authorization. Developments in the past few months can have an influence on how companies involved in a concentration shape the entire transaction.
A concentration subject to the HCA's authorization cannot be implemented (closed) without such authorization. Thus, an important aspect of the transaction is when exactly the HCA will grant authorization. In certain cases, this time period might be significantly reduced as of 1 January 2016.
As a part of a legislative package aimed at reducing bureaucracy in general, the legislator introduced the so-called summary procedure. The main feature of the procedure is to obtain a decision within 8 days after the receipt of the party's application in simple administrative cases. Due to the conditions of the summary procedure, this rule is applicable to merger procedures of the HCA if the transaction is subject to simplified (so-called phase one) merger control and the party's application clarifies all questions.. The former means that due to the market shares of companies, the transaction does not significantly lessen competition. The latter means that the companies completed the application form of the HCA. The HCA provides assistance in this as preliminary consultations are possible with the officials of the HCA in regards of unclear parts of the application. The HCA has already used the summary procedure successfully on several occasions.
Concerning transactions where the HCA carries out its decision within several months, it is vital to know what the buyers can prohibit to sellers during the HCA's procedure without it being considered as implementation (closing) of the transaction. In this regard the HCA recently published its relevant practice, according to which the buyer may apply restrictions to the seller in order to protect the ordinary course of business of the acquired company and the value of the buyer's investment. Thus, it can prohibit or make it subject to its authorization that the acquired company acquires shareholdings or establishes a new subsidiary, takes a new loan or credit, encumbers its assets, gives its employees special bonuses, concludes burdensome new contracts, amends or terminates significant old contracts until the transaction's closing. In certain cases the buyer may interfere with the internal structuring the acquired company.
The activity of the seller can be limited after the HCA's authorization and the transaction's closing, however, it must be emphasized that this is lawful only under certain circumstances and for a certain period of time. If these limitations exceed a certain level, the HCA may classify such agreement of the parties as a cartel.