The competition authorities in Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia have evolved significantly over the past few years, particularly in the field of merger control. This evolution has also been accompanied by an increase in the number of mergers reviewed in 2015 compared to previous years, which poses a new challenge for authorities in terms of resource allocation and the quality of the decisions rendered. This also has important ramifications for the parties structuring their transactions.
Number of decisions
The competition authorities in Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia review an increasing number of mergers year on year. In 2015, the competition authority in Serbia issued 101 decisions, while 41 decisions were issued in Macedonia, 33 in Montenegro, 23 in Bosnia and Herzegovina, and 11 in Albania, which is on average some 28 % higher compared to the previous year (with the exception of Bosnia and Herzegovina for which comprehensive data is not publicly available). However, the vast majority of these decisions relate to “straightforward” mergers that have no (or no significant) effect on the national markets. Indeed, only a handful of mergers were reviewed in depth, ie resulted in decisions rendered in “Phase II” proceedings. In particular, Phase II conditional clearances were rendered only in Macedonia and Montenegro (one in each jurisdiction), while no conditional clearances were issued in Albania, Bosnia and Herzegovina and Serbia in 2015.
Number of foreign-to-foreign transactions
The merger control filing thresholds in the above countries can be met relatively easily, even by one party to a transaction alone. This means that a substantial number of mergers are subject to merger control in these countries, irrespective of their likely effect on the national markets. This is clearly reflected in the caseload of the competition authorities, which review a very large number of foreign-to-foreign transactions. In Serbia, foreign-to-foreign transactions make up some 70 % of all mergers reviewed (70 cases), in Montenegro and Macedonia some 75 % (31 cases in Macedonia and 24 in Montenegro), while in Albania this number stands at about 55 % (six cases) (no reliable 2015 data is available for Bosnia and Herzegovina at the time of writing). Consequently, parties to a transaction have to bear in mind that their transactions might trigger merger control in the Balkans, even if only one of the parties is present in the region, and that the authorities will assert jurisdiction to review the transaction irrespective of its effect on the national markets.
Length of review periods
In light of the above, the increase in the caseload also results in a strain on the capacities of the authorities and affects the length of the review periods. For instance, the authority in Montenegro employed seven case handlers in 2015, dealing with both merger control and antitrust cases, while in Serbia nine employees dealt with over a hundred merger control cases. As a result, even “straightforward” mergers can in practice take a significant amount of time before they are reviewed. Notably, the review periods in Albania and Montenegro can last some three months, and in Serbia and Macedonia some six weeks. However, with the aim of tackling this issue, some of the authorities have announced an increase in the number of case handlers, as well as additional training for current staff, a move that has also been supported by the European Commission in its individual country progress reports. Parties to a transaction also need to carefully time their notifications in order to have their transaction timetable on track.
What can be concluded?
While negotiating a transaction, the parties should in particular bear in mind the following:
- The merger control filing thresholds in the Balkan region can be met relatively easily, even by one party to the transaction alone. A transaction does not need to have an effect on the local market in order to trigger a filing obligation.
- The increased caseload and limited capacities of the authorities can lead to review periods lasting several months, even in “straightforward” transactions. As the parties have a duty to suspend the implementation of the transactions until clearance by the authorities, the parties need to account for these review periods in order to safeguard the envisaged transaction timetable.
- Particular attention needs to be given to transactions which can have significant effects on competition (such as mergers between competitors), as these can lead to review periods which last significantly longer than those typical for “straightforward” transactions. Hence, it is crucial that transaction timetables be carefully planned with respect to their actual effects.
Consequently, parties to a transaction have to bear in mind that their transactions might trigger merger control in the Balkans, even if only one of the parties is present in the region, and that the authorities will assert jurisdiction to review the transaction.