The Slovak national competition authority (Antimonopoly Office of the Slovak Republic, the “AMO”) released the first draft of the new Competition Act for consultation. The authorities and the public may submit comments to the draft until 6 November 2020. The proposed date of entry into force of the new legislation is 4 February 2021. In this legal update, we are summarising the most important proposed changes. It should be borne on mind that the current draft is only the first stage of the legislative procedure, and the final wording of the act may vary.
New definition of undertaking
Definition of “undertaking” as addressee of the Competition Act should be amended in line with the EU law concept to: “an entity engaged in economic activity or concerning its activities and actions related to competition, regardless of its legal form, existence of a legal personality, method of financing, or whether the purpose of its activity is profit generation; more legal entities connected by control or other contractual, property, personal or organisational relations may be considered as one undertaking; an association of undertakings and association of such associations is considered an undertaking as well”.
Compared to the current legislation, an undertaking should no longer have to correspond to a particular legal entity or individual. As a result, more companies may act as parties to the proceedings on the side of one undertaking, fines should be calculated from the turnover of the entire undertaking (not the respective legal entity), and the AMO should have the possibility to impose antitrust fines on more entities belonging to the same undertaking, which should be liable jointly and severally.
Merger Control
Important changes in merger control are proposed:
- The current notification criterion for concentrations by establishment of a full-function joint venture, based on which such a concentration is subject to notification in Slovakia if the turnover in Slovakia for the last financial year of at least one of the undertakings creating the joint venture was at least EUR 14 Million, and the worldwide turnover for the last financial year of another undertaking concerned was at least EUR 46 Million, should be abolished. This change is positive, since the current threshold covered numerous foreign-to-foreign transactions with no relation to the Slovak market. Under the new legislation, concentrations by establishment of a full-function joint venture should be considered under the general notification test, or the test for concentrations by acquisition of control, which are based on turnover of both, or the target undertaking, generated in Slovakia.
- The possibility to review concentrations not meeting the notification turnover thresholds should be introduced. Based on the proposal, the undertakings should be obliged to request a statement from the AMO whether the concentration should be subject to control of the AMO (in effect to notify the concentration) even if the turnover thresholds are not met, if the aggregate turnover for the last financial year generated by at least two undertakings concerned in Slovakia was at least EUR 4 Million and, at the same time, the concentration will lead to (a) a combined market share of the undertakings concerned of at least 40 % in any relevant market covering the territory of Slovakia, or (b) an individual or combined market share of the undertakings concerned of at least 40 % in any relevant market covering the territory of Slovakia, being an upstream or downstream market to any relevant market covering the territory of Slovakia, where any undertaking concerned or its affiliated company is active. If, following such a pre-notification, the AMO concludes there is reasonable doubt of whether the concentration meets the merger clearance test (does not lead to significant impediment of effective competition), it shall start the review proceedings, otherwise, it shall issue an opinion that the concentration is not subject to its control. This proposal is controversial, since it creates a substantial administrative burden on the undertakings, combined with uncertainty whether the transaction will be finally reviewed by the AMO. Introduction of the test based on market shares is also controversial, since market definition is often a contentious topic in merger review proceedings and, therefore, even identification whether the undertakings are obliged to pre-notify a concentration may be challenging.
Transposition of ECN+ Directive
The primary purpose of the new legislation is transposition of EU Directive 2019/1 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (ECN+ Directive). While numerous provisions on the powers of the AMO and proceedings should only undergo minor changes, the legislation should introduce several new procedural concepts, such as:
- The AMO should be able to adopt interim measures in case of a reasonable suspicion of an agreement restricting competition or abuse of a dominant position, if there is a threat of serious or irreparable harm to competition, or if it is necessary to secure due and unhindered proceedings. Further, the AMO should be able to adopt interim measures to restore or preserve the conditions of effective competition in merger control cases. If AMO decision on an interim measure is reviewed by a court, the court should decide in three months from the delivery of the statement of the defendant; similarly, an appeal should be decided in three months from its delivery to the appellate court.
- In decisions on agreements restricting competition and abuses of a dominant position, the AMO should be able to impose structural and behavioural remedies for certain time, even repeatedly, including appointment of a monitoring trustee.
- The AMO should be able to reject a complaint alleging a potential anti-competitive conduct, if it falls outside the current AMO enforcement priorities.
- The AMO should be able to impose periodic penalty payments up to 5 % of the average daily turnover for the previous accounting period for each day of delay of fulfilment of an obligation imposed by the AMO.
- If fine is imposed on an association of undertakings, and the association is not solvent, it should be obliged to call for contributions from its members to cover the amount of the fine. Where such contributions are not paid in full, the AMO should be able to require the payment of the fine directly by any of the undertakings whose representatives were members of the decision-making bodies of that association.
- Rules of mutual assistance between EU competition authorities should be introduced.
This Legal Updated was prepared on 30 October 2020. For any questions, please contact our competition law specialists Tomáš Maretta (tomas.maretta@cechova.sk) and/or Marek Holka (marek.holka@cechova.sk).