Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

There is no explicit filing deadline. However, the notification has to be submitted to the CCA prior to the intended implementation of the concentration and following the conclusion of the merger agreement on the basis of which control or decisive influence will be acquired or following the publication of the invitation to tender. The parties may submit the notification even before the conclusion of the merger agreement or the publication of the invitation to tender, if they are able to provide, in good faith, evidence of the proposed conclusion of the merger agreement or the announcement of the invitation to tender. In the case of a breach of the filing obligation, the CCA may impose a fine of up to 1 per cent of the undertaking’s total annual turnover realised in the preceding business year.

With regard to the sanctions for closing before clearance, see question 12.

Which parties are responsible for filing and are filing fees required?

There are two scenarios to consider.

In case of an acquisition of an entire undertaking or parts of one or more undertakings by another undertaking, the notification has to be submitted by the undertaking acquiring control.

In all other cases, the parties to the concentration have to submit a joint notification in relation to the concentration.

An initial filing fee of 7,000 kunas is payable prior to the submission of the notification, and proof of payment must be submitted to the CCA together with the notification. For notifications in the media sector where the general turnover thresholds as set out in question 5 are not met (see question 8), the initial filing fee amounts to 3,500 kunas.

A fee of 105,000 kunas is payable if the CCA adopts its decision after an in-depth investigation.

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

The intended concentration must not be implemented prior to clearance (suspension obligation).

As to the waiting periods, there are two periods to consider.

First, following the submission of the notification, the CCA first assesses the completeness of the merger notification. The law does not provide for a specific time frame; in practice, it is thus recommended to be in contact with the authority during this stage to ensure that this period is short.

Second, once the CCA has issued the confirmation of completeness, it then assesses the intended concentration in one or two phases, depending on whether the concentration raises competition concerns or not.

In Phase I, the CCA has 30 days to clear the concentration. If no decision has been adopted prior to the expiry of this waiting period, the concentration is presumed by law to be approved in Phase I.

If, however, the authority takes the view that the concentration gives rise to competition law concerns, it shall adopt a procedural order on the initiation of Phase II proceedings. Once the CCA has initiated Phase II proceedings, it must issue a decision within three months (which may be extended by an additional three months, if this is necessary to carry out additional market analysis). If no decision has been adopted prior to the expiry of the waiting period, the concentration is presumed by law to have obtained clearance in Phase II.

According to article 19(6) of the Competition Act, the CCA may, in particularly justified cases, upon the request of the parties, permit the implementation of particular actions relating to the implementation of the notified concentration before the expiry of the applicable waiting period. When deciding on such a request, the CCA takes into account all circumstances of the case, in particular the nature and gravity of the damages that might be posed to the parties to the concentration or third parties, and the effects of the concentration on competition. From publicly available information one can derive that such pre-clearance implementation is rarely granted.

Pre-clearance closing

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

There are two principal categories of sanctions for closing or integrating the activities of the merging businesses prior to clearance. The distinction between the two is made based on whether the notifiable concentration would have to be prohibited or not.

In case a prohibition decision would have to be adopted (ie, the requirements for clearance are not met, see question 19) and where the concentration has been closed prior to clearance (irrespective of whether a notification has been submitted to the CCA or not), the CCA may impose a fine of up to 10 per cent of the undertaking’s total annual turnover generated in the preceding business year. Where the concentration could in principle obtain clearance but has been closed prior to clearance (irrespective of whether a notification has been submitted to the CCA), the CCA may impose a fine of up to 1 per cent of the under­taking’s total annual turnover generated in the preceding business year. A similar fine will be adopted if the merger filing provides incorrect or false information about the parties and their businesses. Individuals are not subject to fines.

In addition, the CCA may order (by separate decision) any indispensable measures aimed at restoring effective competition in the relevant market, and set deadlines for their adoption. In particular, the CCA may:

  • order acquired shares or share capital to be transferred or divested; or
  • prohibit or restrict the exercise of voting rights attached to the shares or share capital, and order the joint venture or any other form of control by which the concentration has been put into effect to be removed.

There are no publicly available cases in which the CCA has recently imposed such sanctions to restore competition.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

The sanctions for closing before clearance are also applicable in foreign-to-foreign mergers. However, we are not aware of these sanctions having been applied in practice to such mergers since the introduction of the Competition Act, as they usually fall outside the scope of the Croatian merger control regime (inter alia, a merger filing is only required if at least one of the undertakings concerned has its seat or a subsidiary in Croatia, see question 5).

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

The Competition Act does not explicitly provide for hold-separate (carve-out) solutions. Foreign-to-foreign concentrations are therefore assessed and treated in the same way as local concentrations. The Competition Act includes an additional local jurisdictional threshold requirement, according to which at least one of the undertakings concerned is required to have its seat or a subsidiary in Croatia (see question 5). If this (additional) requirement is not met, a concentration does not require a notification in Croatia. As a result, since the introduction of the Competition Act, most foreign-to-foreign mergers that could require hold-separate (carve-out) solutions fall outside the scope of the application of the Croatian merger control regime. The CCA may, in particularly justified cases, upon the request of the parties, permit the implementation of particular actions relating to the implementation of the notified concentration before the expiry of the applicable waiting period (see question 11).

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

The Croatian Takeover Act (Official Gazette, No. 148/13) stipulates that the deadline for requesting an approval from the Croatian Financial Services Agency to publish the public offer for shares in stock companies is suspended until merger clearance is granted by the CCA. Therefore, potential acquirers are not required to submit their public offers before the CCA has issued the merger clearance.

Documentation

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

The information and documentation to be submitted in a merger notification is set out in article 20 of the Competition Act and in the Regulation on the Notification and Assessment of Concentrations (the Regulation).

Inter alia, the following needs to be provided:

  • information on the parties to the concentration (eg, names, registered seats, excerpts from the commercial register, nature of the business, ownership and control; description of the distribution and retail networks; annual financial reports for the last preceding business year);
  • power of attorney;
  • description of the intended concentration;
  • certified copies or originals of all documents on the basis of which the concentration takes place;
  • definition of the relevant markets;
  • market shares held by the undertakings concerned on the relevant markets;
  • information on main competitors and their market shares in the relevant markets;
  • description of the distribution and retail networks in the relevant markets, relevance of research and development;
  • economic rationale of the concentration;
  • description of the benefits expected to result from the concentration for consumers; and
  • (if available) copies of analyses, reports or studies related to the relevant markets.

The CCA may request additional information from the undertakings concerned, such as information on the number of their employees, their top five suppliers and customers, or sales figures (value and volume). If some of the information requested in the Regulation is not available to the parties, this must be stated in the filing, together with information as to where the undertakings tried to collect the data concerned, the reasons why this collection was not successful, and where the CCA may obtain the missing information.

The notification and all documents attached thereto need to be submitted in the Croatian language. In addition, all documents submitted to the CCA must be in the form of an original or a certified copy bearing an apostille (depending on the jurisdiction of origin of a particular document). If a document requires translation, both the original or a certified copy and its certified Croatian translation have to be provided.

The Competition Act also envisages the possibility to submit a short-form notification in cases that - from experience - usually do not give rise to competition law concerns. The Regulation, defining the precise content of short-form notifications, has been published in the Official Gazette (No. 38/2011) and came into force on 9 April 2011.

According to article 20 of the Competition Act, a short-form notification may be submitted if:

  • none of the parties to the concentration are engaged in business activities in the same relevant product and geographic market (ie, no horizontal overlaps), or in a market that is upstream or downstream of a market in which another party to the concentration is engaged (ie, no vertical relationship);
  • two or more of the parties to the concentration are engaged in business activities in the same relevant product and geographic market (horizontal relationship), provided that their combined market share is less than 15 per cent, or when one or more of the parties to the concentration are engaged in business activities in a relevant product market that is upstream or downstream of a product market in which any other party to the concentration is engaged (vertical relationship), provided that none of their individual or combined market shares at either level is 25 per cent or more;
  • a party to the concentration is to acquire sole control of an undertaking over which it already has joint control; or
  • in cases in which two or more undertakings acquire control over a joint venture, where the joint venture has no, or negligible, actual or foreseen activities within Croatia.

However, even in these cases, the CCA may require a full notification to be made if it finds that the concentration may lead to a significant impediment of effective competition.

In case the merger filing provides incorrect or false information about the parties and their businesses, the CCA may impose a fine of up to 1 per cent of the undertaking’s total annual turnover generated in the preceding business year (see question 12).

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

See question 11.

What is the statutory timetable for clearance? Can it be speeded up?

For the statutory timetable for clearance, see question 11. From publicly available information one can see that the CCA usually strives to clear concentrations in Phase I (ie, within 30 days as of the day when the complete filing was submitted).

The Competition Act does not provide the possibility for the parties to obtain a waiver or to apply for expedited proceedings.