At the beginning of July 2013, the Republic of Croatia acceded to the European Union and thereby completed its two-decade long endeavours to attain EU Membership. From the very onset of these endeavours, competition law has undergone constant transformation and alignment with EU rules. Nevertheless, certain provisions of the Croatian competition law regime that deviated from EU rules or would have hindered their full implementation remained in place until shortly before EU accession. Amendments to the Competition Act ("Act") in July did away with these pecu-liarities.

The amendments essentially refer to three categories of legal rules: one category refers to further harmonizing Croatian rules with the EU Merger Control Regulation Council Regulation (EC) No. 139/2004. A second set of amendments aim at harmonizing Croatian provisions with Council Regulation (EC) No. 1/2003. The third category refers to modifications of the existing procedural solutions. In this Legal Insight, we want to focus on amendments to the merger control regime.

Changes to merger control rules

Fines for early implementation of a merger

Croatian law always contained a suspension clause, meaning that transactions that met the jurisdictional thresholds could only be implemented once cleared by the Croatia Competition Agency ("Agency"). However, according to the fining provisions, a fine of up to 10% of the worldwide turnover of the parties to the transaction could be imposed for gun-jumping only if the transaction subsequently was not cleared or cleared differently than implemented.

This loophole has been closed: Now, if a notifiable transaction is consummated without prior approval by the Agency but subsequently cleared as implemented by the parties, a fine not exceeding 1 % of the total turnover in the preceding business year can be imposed pursuant to Article 62 of the Act (as previously, a fine of up to 10% can be imposed if the implemented transaction is subsequently prohibited by the Agency or cleared differently than implemented).

Co-operative joint ventures

In a further step of aligning EU and Croatian rules, Article 6 of the Act now clarifies that merger control approval is required for the establishment of co-operative joint ventures, i.e. a joint venture on a more permanent basis with the aim or effect of coordinating the activities of the joint venture partners of undertakings. The aspects of coordination between the joint venture partners shall be assessed against the compatibility with the cartel prohibition. In addition, it shall be assessed whether the joint venture leads to a significant lessening of competition in the markets it will operate in.

Croatian vs EU merger control rules

For the sake of completeness, the Act enshrines the EU one-stop shop principle, pursuant to which the EU Commission is solely responsible for assessing transac-tions that have an EU dimension. The EU Commission’s competence generally de-prives national authorities of their competence. The Act therefore makes clear that a merger needs no filing with the Agency if the merger has an EU dimension.

The EU Merger Control Regulation allows for cases with an EU dimension to be re-ferred to national competition authorities. To make provision for such referral from the EU Commission to the Agency, the Act stipulates that in such scenario parties to the concentration are obliged to notify the concentration to the Agency within 30 days of the day of the receipt of such a referral decision by the European Commis-sion.

Explicit merger control approval and amendments of conditional approvals

Until July, parties could only receive a clearance certificate after submitting a special request. The Act changed this system and now sets out that the Agency shall, with-out delay, issue the declaratory clearance certificate (notice) pro-actively.

A further administrative change relates to conditional approvals: So far, if a condi-tion imposed on the merging parties together with the approval decision could not be met at all or within the time frame set by the Agency, the decision had to be al-tered completely. With the new act, it is possible to partially withdraw the decision, impose different remedies, or prolong the time limit for the implementation of the undertakings.