The Serbian Commission for Protection of Competition ("Commission") has published on 5 July 2016 the Instruction on Notification of Concentration Based on Intent ("Instruction").
According to the Competition Act, there is an obligation to notify a concentration to the Commission within 15 calendar days from the date of the contract signing, the announcement of a public bid, or the acquisition of controlling rights, whichever is earlier. The Competition Act also allows early notification, prior to any of the mentioned triggering events. Early filing can be made based on a "serious intent" of the parties to execute the transaction. The new Instruction clarifies the conditions for such a filing, given that in practice doubts have arisen as to what constitutes 'serous intent'.
The Instruction reassures the concentration participants that only a final, binding, agreement triggers the obligation to notify a concentration within the 15-day deadline, whereas no deadline applies when the concentration is notified based on serious intent. The Commission confirms in the Instruction that if an early filing is made based on an adequately expressed 'serious intent', parties cannot be fined for late filing. We would add that the authority of the Commission to impose fine for late filing is highly questionable whenever there was no prior order of the Commission to make the filing. Article 70 of the Competition Act authorizes the Commission to impose a procedural fine ranging from EUR 500 to EUR 5,000 for each day of non-compliance with the Commission's order, including in case of a failure to notify a concentration. The law does not expressly authorize the Commission to issue a procedural fine for a late filing that was not previously detected by the authority. This is something the authority will certainly want to rectify in a next round of amendments to the Competition Act.
The Instruction clarifies that the document serving as the basis for an early filing must evidence serious intent of all parties to enter into the transaction. Consequently, the document must be signed by all of the parties involved. A unilateral expression of intent or even an offer will not suffice for the early filing unless it is matched by a corresponding document issued and signed by the other party. This is in line with the Commission's previous practice.
If the final and binding agreement on the acquisition of control departs from the document that served as the basis for the early filing, the parties should assess whether the departure is relevant to the assessment of the concentration. If it is, the acquirer (or both parties, in case of JV) should supplement the notification, if the decision is not yet rendered, or apply for a new concentration approval, if the clearance decision has already been made. The Commission warns in the Instruction that it will not be possible to request amendment to the merger clearance decision made on the basis of an early filing if, following such filing, the circumstances of the transaction change. A new filing obligation may arise ifthe definite agreements or their timing affect, inter alia, any of the following elements: the parties to the concentration, the type of the concentration (i.e., merger, acquisition, or a joint venture), the manner of the acquisition of control (e.g., share or asset deal), the relevant market, the market shares assessment etc. For parties, a new filing means de novo investigation by the Commission, new filing fees (which in most cases amount to EUR 25,000) and restart of the deadlines for the decision.
If the parties who have made a concentration notification based on serious intent assess, while the Commission's decision on early notification is still pending, that the definite agreements may bring in any new elements relevant for the assessment of the concentration, they should ask the Commission to delay its clearance decision until the parties conclude a final agreement and supplement the filing.