Merger control in Montenegro

At the end of April 2013, a new set of bylaws elaborating provisions of the Law on Protection of Competition came into force: 1) Rulebook on the content and the manner of submission of the application for individual exemption; 2) Rulebook on the manner and the criteria for defining relevant market; 3) Rulebook on the form and the content of official identification for officials and special authorities for performing inspections and 4) Instruction on the content and the manner of submitting a request for approval of concentration. This, to a certain extent, rounds up the legal framework available to one of the youngest independent agencies for protection of competition in Europe – the Montenegrin Agency for Protection of Competition was established under the Law on Protection of Competition of 2012, and became operational at the beginning of 2013. Before the establishment of the Agency, competition matters were within the competence of the Directorate for Protection of Competition, which was part of the Ministry of Economy.

This post looks at the novelties introduced with respect to the content of the application for concentration approval

The Law on Protection of Competition defines concentration as the merger of two or more previously independent undertakings or parts of undertakings, acquisition of control of the whole or parts of one or more other undertakings, establishment of joint venture preforming on a lasting basis all the functions of an autonomous economic entity or acquisition of joint control. Concentration must be notified to the Agency for Protection of Competition if in the financial year preceding the concentration: (i) the combined aggregate turnover of the concentration participants on the Montenegrin market was in excess of 5 million euros or (ii) combined aggregate worldwide turnover of all concentration participants was in excess of 20 million euros, provided that at least one of undertakings concerned recorded a turnover of more than 1 million euros on the Montenegrin market.

The Instruction on the content and the manner of submitting a request for approval of concentration prescribes which documents and information must be provided to the Agency for Protection of Competition along with a request for a concentration approval. Besides standard information and documents, such as registry excerpts for the undertakings concerned, information on affiliated companies, financial reports, number of employees, information on customers and suppliers etc., the Instruction imposes additional requirements which we consider excessive and capable of imposing additional costs on applicants, as well as prolonging an already long period for the Agency’s decision (the Agency has 105 working days to render a decision on unconditional approval of concentration, 125 working days for a decision on conditional approval and 130 working days for a decision on prohibition of concentration. For example, the Instruction requires information on:

-competitors from surrounding countries who are not directly or indirectly present on the Montenegrin market;

-undertakings that have exited the relevant market in the last 3 years, undertakings that have entered the relevant market in the last 3 years, and information on all concentrations conducted on the relevant market in the last 3 years;

-existence of horizontal agreements between the concentration participants or their affiliates in and outside Montenegro;

-projected market shares of concentration participants over a period of 3 years following the implementation of concentration;

-other markets which are closely linked and/or interdependent with the defined relevant market, or products from other markets that are purchased by the same group of customers, together with the estimated impact of concentration on those other markets;

-relevant markets where affiliates of the concentration participants are present.

The Instruction prescribes that the above-mentioned information does not have to be provided within a “simplified notification”, However, simplified notification can be made only in the following circumstances: (i) when the combined market share of the undertakings concerned on the relevant market is less than 10%, i.e. 15% on a vertically integrated market, or (ii) if the market participant acquires individual control whereas it previously held joint control over the target or (iii) if the undertakings concerned are not present on the same relevant product market or vertically integrated markets, or markets that are closely connected in or outside Montenegro.