I already wrote in this blog about the January 2012 decision of the Serbian Commission for Protection of Competition blocking Sunoko’s takeover of Hellenic Sugar and the subsequent judgment of the Administrative Court quashing the Commission’s decision on procedural grounds. The Commission prohibited the proposed concentration that would have increased Sunoko’s market share from 50% to approximately 80%. Even though the Commission never published the reasoning of its decision, it follows from the judgment of the Administrative Court that the Commission’s main concern was in the fact that Sunoko charged higher prices to its Serbian customers than to its foreign buyers. The measures of behavioral and structural nature proposed by Sunoko, aimed at aligning local with export prices and decreasing the post-merger market share, respectively, were found by the Commission to be insufficient to eliminate anti competitive concerns arising out of the planned concentration.
Following the court’s judgment, the matter came back before the Commission last August; however, the proceedings were terminated in October 2012 without a decision on the merits, since Sunoko withdrew its request for merger clearance.
On the same day when it withdrew its original request for merger clearance, Sunoko filed with the Commission a new request, on grounds that new tender proceedings for the sale of Hellenic Sugar were launched. Following a full-scale investigation, the Commission decided on 13 February 2013,a year after the initial decision to prohibit the proposed acquisition of Hellenic Sugar by Sunoko, to conditionally approve the same concentration. Unfortunately, the Commission has not (yet) published its decision but only a press release.
It follows from the press release that one of the conditions imposed on Sunoko is to deliver to the Commission six-month reports “with a pre-determined content” for as long as customs and other import duties continue to apply (on customs and other import duties on sugar, see section 3 of my previous post on Sunoko). The press release does not offer details on the content of the Sunoko’s reporting obligation, but presumably the reporting concerns Sunoko’s pricing policies.
Another condition for approval of the concentration is of structural nature, and it obliges Sunoko to divest the refinery in Žabalj, one of the two Serbian refineries currently controlled by Hellenic Sugar. According to the press release, the divestment is supposed to decrease Sunoko’s post-merger share on the Serbian market of sugar refining to around 65%. It should be recalled that the divestment proposal was estimated by the Commission as insufficient in January 2012.
According to the Commission, the relevant facts today are significantly different than one year ago. The Commission established that, unlike in 2011 when prices charged by Sunoko to Serbian customers were higher than Sunoko’s export prices, domestic prices in 2012 were on average 10.4% lower than the prices charged to foreign buyers. This data seems to have carried the day in the direction of the Commission’s finding that the strengthening of Sunoko’s dominance will not adversely affect consumer welfare in Serbia.
Update: Since the publication of our blog post, the Serbian Commission for Protection of Competition published on its website the dispositive part of the decision (but not the reasoning). It follows from the published part of the decision that Sunoko is obliged to notify the Commission on the appointment of divestment trustees and of its divestment plan within three months of acquiring effective control of Hellenic Sugar, and sell the refinery in Žabalj within a further period of one year. If the divestment is not completed within the deadline despite Sunoko having undertaken all reasonable measures, as assessed by the Commission, the deadline can be extended for an additional one-year period. If Sunoko does not manage to ultimately sell the designated part of the business, the Commission may modify its decision on conditional approval.
