This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.
The Slovak Competition Act was amended on 1 June 2009. The amendment primarily concerns the regulation of concentrations. But the modifications are insufficient; the Slovak concentration regulations require much more significant changes.
Introduction
The Slovak Competition Act No. 136/2001 (Zákon o ochrane hospodárskej sú súª aze SCA) was amended by Act 165/2009 on 1 June 2009. The amendment mainly affected concentration regulations. Further changes were made in connection with Slovakia's switch from the Slovak crown to the Euro.
The amendment also modified the leniency application. Under the
amended Sec 38 (11) (a) of the SCA, full immunity under the
leniency programme is also possible if the applicant provides the
Slovak Competition Office (the Office) with information and
evidence decisive for an inspection with the aim of receiving
decisive evidence of the existence of a cartel agreement.
Finally, the system of fines for failing to provide information
and evidence requested by the Office, or for providing false or
incomplete information or evidence, was changed. The previous
system of fixed fines was replaced by fines calculated from the
turnover of the undertaking that breached the obligation to provide
the requested information.
Amendments to concentration regulations
As mentioned, Slovakia switched to the Euro on 1 January 2009. The amendment therefore created notification thresholds in Euros. The previous notification thresholds in Slovak crowns were converted to Euros on the basis of the exchange rate of EUR 1 = SKK 30.126. The Office must be notified of a concentration if: (i) the aggregate worldwide turnover of all parties to the concentration in the last accounting period was at least EUR 46 mln and at least two parties to the concentration had a Slovak turnover of at least EUR 14 mln, or (ii) one of the parties to the concentration had a Slovak turnover of at least EUR 19 mln in the last accounting period, and at least one other party to the concentration had a worldwide turnover of at least EUR 46 mln.
The amendment further removed from the SCA the deadline of 30 working days for notification of a concentration. In Section 10 (14), the SCA prohibits the parties to the concentration from executing rights or obligations arising from the concentration prior to the effective decision of the Slovak Competition Authority on the notified concentration (standstill clause). The notification obligation was therefore redundant. Furthermore, this obligation resulted in the Slovak Competition Authority being provided with incomplete notifications to meet the deadline.
The amendment also clarified conditions regarding when the Office must be notified of a concentration which is based on a takeover offer. Pursuant to the new wording of Section 10(9)(d) of the SCA, the Office must be notified of a concentration after the announcement of a takeover bid. This is in line with the practice in other jurisdictions as well as with reactions to comments from practice.
The last change created by the amendment is that notification of a concentration prior to the execution of a legal act on which the concentration is based (e.g. a share purchase agreement) is possible. This will certainly be wel- comed by the public since until now pre-notification was not possible. A concentration notification was possible only after the execution of the respective legal basis of the concentration. As the competition authority has 60 working days from the complete notification to decide within the first phase, this meant that a significant period of time was necessary to obtain clearance in Slovakia. This fact caused particular problems for multi-jurisdictional transactions, where Slovakia was always one of the last jurisdictions where clearance was obtained.
In connection with the amendment of the concentration regulations in the SCA, the Office adopted a new decree1
by which details of a concentration notification are specified. One significant change in the decree is that, except for the excerpt from the Commercial Register, the documents do not need to be originals or certified copies. A simple copy with a declaration on oath stating that the simple copy corresponds to the original is sufficient. Similar provisions also apply to translations of foreign documents into Slovak. Originally, a translation by a certified translator was requested. It is now possible to provide a non-certified translation, it now being the responsibility of the notifying party to ensure that the translation is true and correct. These changes will certainly speed up the process of preparing a notification. It will also save a lot of money for the parties to the concentration.
Remaining problems
The SCA still contains a number of problematic provisions which should have been changed. The amendment can therefore be considered something of a missed opportunity. This is particularly the case for the notification thresholds described above. They are constructed in such a way that a large number of concentrations with almost no relation to the Slovak market must be announced to the Office. This is particularly true for the second notification threshold. Based on this, a concentration can be notified in Slovakia as long as the target company meets the worldwide turnover threshold, even if it has no Slovak turnover. Both turnover thresholds should therefore be amended so that the Slovak turnover is significant only for the target company and not for the acquiring party.
Another practical problem is the long deadlines for the assessment of a concentration by the Office. The Office now has 60 working days from the completion of the notification to assess a concentration within the first phase. In the second phase, the deadline can repeatedly be extended by another 90 working days. Although the Office usually finishes its assessment earlier, the deadlines are still too long for the current business climate, especially if the concentration is part of an undertaking experiencing economic difficulties.
Finally, the whole process of assessing a concentration is still extremely bureaucratic. The above changes in the decree on the details of a notification are insufficient. The Office should have the power to assess a concentration in a less bureaucratic way and to take into account the reasons for and conditions of a concentration. The Office currently has to focus too much on the procedural and formal side rather than assessing the real influence of a concentration on the relevant market.
The Slovakian merger control regime, despite being modernised earlier this year, still requires several procedural changes to overcome deficiencies.
This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.
Footnote
1 Decree of the Office No. 204/2009 of 21 May 2009.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
