The Serbian Commission for the Protection of Competition (“Commission“) has recently fined local IT company Prointer a total of approx. EUR 56,000 (approximately 0.25% of its relevant turnover) for implementation of a concentration prior to obtaining merger clearance. This is the Commission’s first gun-jumping case.
In 2015, Prointer acquired 50% of capital in Serbian company Alti, one of the leading distributors and manufacturers of computers, consumer goods and communication technologies in the region. In this manner, Prointer acquired joint control over Alti along with the remaining shareholder. The Commission cleared this acquisition in summary proceedings.
Relying on information available at the website of the Serbian Business Registers Agency, the Commission found out that in 2016, Prointer acquired the remaining 50% of capital in Alti, thus becoming the sole shareholder of this company. Even though this change from joint to sole control represented a notifiable concentration, Prointer failed to notify.
The Commission rejected Prointer’s defense that investigation is unwarranted because the implementation of the concentration does not have any adverse effects on the competition on the market. The Commission reiterated that the issue of whether a concentration distorts the market can be answered only after its evaluation on the merits and that there is no room for self-assessment in this respect.
‘Two transactions – single concentration’
The Commission also refuted Prointer’s defense that the two transactions (the initial acquisition of 50% of shares and the subsequent acquisition of the remainder of the shares) constitute a single concentration which was approved at the time when the first of the two transactions was cleared. The Commission stated that the two transactions cannot be regarded as a single concentration because they were not between the same parties (Prointer was a buyer in both transactions but sellers were different). It added that in a ‘two transactions- single concentration’ situation, it is normally the later of the two that has to be notified and approved. According to the Commission, Prointer would not have been obliged to notify the second acquisition if it had announced at the time of the first transaction that it had the intention of acquiring a controlling shareholding in Alti in two stages. In that hypothetical scenario, the Commission would have been able to examine the entire transaction in advance.
In gun-jumping proceedings, there is no presumption of approval
Prointer argued that because the Commission’s investigation lasted for more than four months, the statutory presumption of clearance should apply. However, the Commission held that the statutory deadline for a decision on merger clearance (four months from the initiation of the proceedings) applies solely when the proceedings are originally initiated by a party itself (e.g. acquirer), and not where the proceedings are initiated by the Commission because of the gun-jumping.
When assessing the amount of the fine, the Commission did not find any aggravating circumstances. As far as mitigating circumstances are concerned, the Commission took into account that Prointer’s failure to notify was not intentional and that Prointer duly submitted the first merger notification. Finally, the Commission considered that the second transaction would have been certainly cleared if it were notified, because it does not raise competition concerns. The Commission made a point that the fine is in this case issued primarily as a deterrent.