In early 2019 the Competition Protection Agency (CPA) imposed a record fine of almost €54 million for a failure to notify a concentration (so-called 'gun jumping'): €53.9 million on the infringing undertaking and €5,000 on its responsible representative. This is by far the highest fine imposed by the CPA for gun jumping (and in general).
As precedent concerning the CPA's practice on gun jumping is scarce, this decision provides important insight into circumstances and criteria that the CPA considers when determining fines in this regard. While the full decision remains unavailable, a CPA press release set out the following relevant criteria for determining such fines:
- the extent of any delay to notify;
- the form of the infringing undertaking's fault;
- whether the concentration remained unnotified even after the CPA informed the infringing undertaking of the obligation to notify;
- the infringing undertaking's behaviour; and
- the need for general prevention.
Regarding the latter criterion, the CPA emphasised that timely notifications are crucial for assessing and handling concentrations effectively. However, the above conditions are noticeably general and it remains unclear what has justified the record fine imposed in this case compared with previous fines.
The legal framework on gun jumping is also rather scarce. Under Article 74 of the Prevention of Restriction of Competition Act (Competition Act),(1) an infringing undertaking can be penalised with a fine of up to 10% of its annual turnover in the preceding business year. In addition, a fine of between €5,000 and €10,000 may be levied on the responsible representative of such an undertaking, whereby in case of particularly serious infringements, the respective fine may be up to €30,000.
The abovementioned upper limit (ie, 10% percent of an undertaking's annual turnover) is limited by only the general rules of the Minor Offences Act.(2) According to these, the CPA must consider the gravity of the infringement and the respective undertaking's negligence or intent when determining the basic amount of the fine,(3) which is then adjusted according to the existence of mitigating or aggravating circumstances(4) – in particular:
- whether the infringing undertaking has been penalised before; and
- the infringing undertaking's behaviour (eg, whether it cooperated with the CPA during the proceedings).(5)
The CPA has broad discretion when it comes to determining fines, especially as it has yet to issue any guidance explaining in more detail how basic fine amounts are calculated or how individual mitigating or aggravating circumstances are weighted.
Between 2014 and 2018 the CPA issued five decisions imposing fines for late notification and/or implementing a concentration before obtaining a clearance decision.(6) The fines ranged up to €210,000 for the infringing undertakings and €12,500 for their responsible representatives; however, the fining decisions are not publicly available.
- 0.08% of the relevant group turnover in the preceding financial year; and
- 0.02% of the relevant group turnover in the preceding financial year for each month that the infringing undertaking failed to notify the concentration after the mandatory filing deadline had lapsed.
Once the basic amount was determined, the CPA adjusted the amount considering mitigating circumstances (including the fact that the undertaking had not been previously penalised, the undertaking's cooperation with the CPA, whether failure to notify had no negative effects on competition and the undertaking's recognition of the breach) and aggravating circumstances duration of the infringement.
This case suggests that the CPA will no longer hesitate to impose higher fines, which is why undertakings are advised to comply with all applicable Slovenian merger control rules (as well as the Competition Act generally). However, the CPA should provide additional guidelines explaining its fining methodology or at least publish its fining decisions, which would render the fining process more transparent and legitimate.
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(1) Zakon o preprecevanju omejevanja konkurence (Official Gazette RS, 36/08, 40/09, 26/11, 87/11, 57/12, 39/13 – odl US, 63/13 – ZS-K, 33/14, 76/15 and 23/17).
(2) Zakon o prekrških (Official Gazette RS, št 29/11 – official consolidated text, 21/13, 111/13, 74/14 – odl US, 92/14 – odl US, 32/16 and 15/17 – odl US).
(3) As stated in Article 26(1) of the Minor Offences Act.
(4) As stated in Article 26(2) of the Minor Offences Act.
(5) T Bratina and E Kerševan (chapter authors), Prevention of Restriction of Competition Act (with commentary) 2009, pp 601 and 602.
(6) As provided in the CPA's annual reports for each respective business year. Available in Slovenian here.
(7) Available in Slovenian here.
(8) CPA decisions 306-61/2013-16 of 25 October 2013 (Garnol, inženiring, gradnje in kadri d o o) and 306-8/2012-20 of 10 October 2012 (IGEM, inženiring, gradbeništvo, ekologija, marketing d o o).