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Recent Activities of the Slovak Antimonopoly Office in Merger Control - Recent Practice in Settlement Proceeding

Recent Activities of the Slovak Antimonopoly Office in Merger Control - Recent Practice in Settlement Proceeding

Briefings
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In 2015, the Antimonopoly Office of the Slovak Republic (hereinafter referred to as the "Office") approved 21 merger control cases and none of the notified concentrations have been prohibited.

According to the information published by the Office, in cases of admission of an infringement, the undertakings increasingly use the legal instrument of settlement that provides the possibility to reduce the fine by 30 to 50% depending on the type of infringement in line with Act No. 136/2001 Coll. on Protection of Competition, as amended (hereinafter referred to as the "Act on Protection of Competition"). The settlement proceeding may be used with respect to agreements restricting competition but also in mergers in particular by failure to notify a concentration prior to exercising the rights and obligations resulting from a concentration and violation of the prohibition to exercise the rights and obligations resulting from a concentration. 

Overview of the decision-making activities of the Office in 2015 

Overview of the Office´s activities in the area of merger review in 2015

To give you a brief overview of the Office's activities in the area of merger control, we have pointed out some highlights of the M-MARKET merger case in the area of wholesale and retail of daily consumer goods that the Office has dealt with in the past year. In this case, the Office proved that the undertaking exercised rights and obligations resulting from a concentration for a long time before the Office issued a valid decision. 

Fine for M-MARKET for violating the obligation to notify merger

The Office issued a decision imposing a fine on M-MARKET, a.s. ("M-MARKET") for violation of several provisions of the Act on Protection of Competition relating to merger control. The Office identified the breach of the obligation to notify merger by M-MARKET with respect to the acquisition of exclusive control over the part of the enterprise of ZDROJ-VOPO, s.r.o. ("Acquired Enterprise"). 

The merger emerged on October 29, 2010 by means of a transfer of assets relating to retail and wholesale activities of the Acquired Enterprise based on an oral purchase contract. The conclusion of merger was proven by the invoices between the Acquired Enterprise on one hand and CBA Slovakia, a.s. in Lučenec which was a subsidiary of M-MARKET or M-MARKET on the other hand. According to the Office, this case at hand represented a less serious form of infringement of the Act on Protection of Competition mainly due to its nature in the context of misconducts relating to merger and also due to its real impact on the relevant market as the Office issued a decision approving this respective concentration. The Office also considered the fact that it was a less standard form of concentration due to the fact that the assets have been transferred continually within certain time and therefore, the specific time of the establishment of concentration was difficult to determine. In this specific case, the breach lasted for more than 4,5 years however, M-MARKET notified the concentration on June 12, 2015.

As a second breach, the Office proved that M-MARKET performed the rights and obligations resulting from a concentration even before the Office issued a valid decision approving the concentration. Such breach was proven by the fact that M-MARKET actually acquired the part of the Acquired Enterprise, paid the purchase price for the assets and as a result it has been exercising exclusive continuous control over this part of the Acquired Enterprise almost 5 years. 

Within the process of imposing the fine, the Office was evaluating the fact that M-MARKET has been using the transferred assets from the beginning for its business and performed continuous control over the Acquired Enterprise. On the other hand, the Office also considered the fact that it issued a decision approving this concentration, since no negative impacts on the relevant market resulted from this concentration. Following these assessments, the Office imposed a fine in the amount of EUR 81.440 for both violations. 

Based on the request of M-MARKET, the Office also opened a settlement discussion whereby M-MARKET admitted its participation in the infringement as well as its liability for such infringement and the Office then reduced the fine by 50% to EUR 40.720 in line with Section 38d of the Act on Protection of Competition. 

New proposed regulation on certain rules governing actions for damages 

In the light of implementing the EU Directive 2014/104/EU on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (the "EU Directive"), the Ministry of Justice of the Slovak Republic has prepared a draft of a new special act, which is aimed at governing actions for damages for the infringements of competition law and amends also the Act on Protection of Competition (the "Proposed Act"). 

According to the Proposed Act any natural or legal person who has suffered damage caused by an infringement of competition law is entitled to claim full compensation for such damage, including actual loss, loss of profit and payment of interest. 

Section 6 of the Proposed Act states that the limitation period shall not begin to run before the infringement of competition law has ceased and the claimant knows, or can reasonably be expected to know: (i) of the behaviour and the fact that it constitutes an infringement of competition law; (ii) of the fact that the infringement of competition law caused damages to it; and (iii) the identity of the infringer. Furthermore, this provision sets a new limitation period of at least five years from the fulfilment of the conditions for the right to claim damages. 

Furthermore, the Proposed Act states that the limitation period is interrupted if the competition authority takes action for the purpose of the investigation or its proceedings in respect of an infringement of competition law to which the action for claiming damages relates. The interruption of the limitation period shall end at the earliest one year after the infringement decision has become final or after the proceedings are otherwise terminated. 

Finally, the Proposed Act also contains provisions with respect to the joint and several liability for damages, the rules for access to the evidence in the court proceeding for claiming damages, penalties for not providing such access as well as provisions governing out-of-court settlement. 

The Proposed Act will now have to be approved by both, the Slovak Government and the Slovak Parliament in order to become binding and effective. We will keep you posted on the developments of this important change. 

By Michaela Stessl, Country Managing Partner, and Daniela Koncierova, Senior Associate, DLA Piper