1 Relevant Authorities and Legislation
1.1 Who is/are the relevant merger authority(ies)?
The merger authority in Kosovo is the Competition Authority (hereinafter referred to as the "CA"), which is managed by the Kosovo Competition Commission, a collegial organ composed of five (5) members.
The CA is a legal person having public authority, independent in performing its duties set out in the Competition Law (Law no. 03/L- 229 as amended by Law no. 04/L-226, hereinafter referred to as the "Competition Law") and Law no. 04/L-024 "On state aid". Pursuant to the provisions of the Competition Law, the President, Vice President and members of the Kosovo Competition Commission are proposed by the Government and appointed by the Assembly. The Kosovo Competition Commission has the responsibility and authority to enforce the law and promote competition among entrepreneurs and protect consumers in Kosovo.
1.2 What is the merger legislation?
Mergers in the Republic of Kosovo are governed by the Competition Law and several administrative acts for the implementation of the Competition Law, such as:
- Administrative Instruction no. 04/2012 "On the form and content of legitimacy".
- Administrative Instruction no. 05/2012 "On criteria and terms for determining agreements of minor importance".
- Administrative Instruction no. 06/2012 "On forms for submitting requests and criteria for determining the concentration of enterprises".
- Administrative Instruction no. 07/2012 "On criteria to reduce or release administrative measures".
1.3 Is there any other relevant legislation for foreign mergers?
Kosovo legislation does not provide specific guidelines which would exempt foreign mergers. The merger control rules apply to foreign mergers when the jurisdictional thresholds are met (see question 2.6 below).
1.4 Is there any other relevant legislation for mergers in particular sectors?
The Competition Law does not provide for different thresholds for specific sectors. In addition to Competition Law provisions that are applicable to all undertakings, mergers in some sectors are conditioned by prior notifications or approvals (i.e. mergers in the banking and insurance sector, energy sector, or telecommunications sector). When such mergers are to take place, notification or approvals should be made to, or obtained by, the relevant authorities, such as the Central Bank of Kosovo, the Energy Regulatory Office, or the Regulatory Authority of Electronic and Postal Communications.
2 Transactions Caught by Merger Control Legislation
2.1 Which types of transaction are caught – in particular, what constitutes a "merger" and how is the concept of "control" defined?
Pursuant to the provisions of the Competition Law, the types of transaction that are caught by merger control legislation are those that result in a concentration of enterprises. A concentration is created by establishing control through: (i) the merger of two or more independent enterprises or parts of these enterprises; and (ii) the acquisition of direct or indirect control, or influence over the activities of one or more enterprises or parts of enterprises by: (a) taking over the majority of shares or a part of them; (b) taking over the majority of voting rights; or (c) in any other way envisioned by the laws in force and other regulations. Control is defined as the acquisition of rights, contracts or other acts through which one or more enterprise, either individually or together, taking into consideration all legal and factual circumstances, acquire the ability to achieve decisive influence over the activities of an enterprise.
2.2 Can the acquisition of a minority shareholding amount to a "merger"?
In order to amount to a merger, the acquisition of a minority shareholding should result in the acquisition of direct or indirect control over the target. An undertaking is deemed to have control over the target when it can exercise decisive influence over the target's activities.
In cases where the acquired minority shareholding does not grant any control over the target, it would not amount to a "merger" and no filing would be required.
2.3 Are joint ventures subject to merger control?
Joint ventures are subject to merger control insofar as they result from the merger of one or more autonomous enterprises and work as autonomous economic entities.
2.4 What are the jurisdictional thresholds for application of merger control?
A concentration of enterprises is subject to the clearance and approval of the CA if the following jurisdictional thresholds are met: i. the aggregate income of all the participating undertakings in the international market exceeds twenty (20) million Euros, based on financial reports of the financial year preceding the year of the concentration, and if at least one of the participating undertakings is located in the Republic of Kosovo; and ii. the general income in the Kosovo domestic market of at least two (2) of the participating undertakings exceeds three (3) million Euros based on financial reports preceding the year of the concentration.
The Competition Law does not clearly specify the methodology for calculating the turnover of the participating undertakings for purposes of this jurisdictional threshold. It only provides that income from the sale of goods or services made between undertakings which are part of a group are not taken into consideration in the calculation of the total annual turnover. If, at the time of the notification, the financial statement for the preceding year is not available, the relevant turnover will be the one achieved in the year for which the last financial statement has been prepared.
Article 66 of the Competition Law provides that the law shall be implemented in pursuance to the Directives of the EU on competition. It may be assumed that the CA will refer to the EU laws if the Kosovo Competition Law lacks clarity.
2.5 Does merger control apply in the absence of a substantive overlap?
The Competition Law does not provide whether merger control applies also in the absence of a substantive overlap. However, it may be inferred that, provided the jurisdictional thresholds are met, participants must notify the CA, even when the merger appears not to raise any competition concerns.
2.6 In what circumstances is it likely that transactions between parties outside your jurisdiction ("foreignto- foreign" transactions) would be caught by your merger control legislation?
The Competition Law applies to any restriction of the competition in the territory of the Republic of Kosovo or outside this territory if these actions present their effects in Kosovo. In this regard, foreign-to-foreign mergers become subject to Kosovo merger control rules when the jurisdictional thresholds are met, and when such acts have an effect in Kosovo in order to trigger a filing obligation. On the other hand, the undertakings relevant to a merger/concentration are obliged to notify the concentration if the notification thresholds are met. One of the requirements for the notification threshold is that at least one of the participating undertakings has the registered office in Kosovo, which could mean that a foreign-to-foreign transaction would not be caught by the Competition Law. The CA is yet to adopt new secondary legislation which may address this issue.
2.7 Please describe any mechanisms whereby the operation of the jurisdictional thresholds may be overridden by other provisions.
See question 1.4 above.
2.8 Where a merger takes place in stages, what principles are applied in order to identify whether the various stages constitute a single transaction or a series of transactions?
The provisions of the Competition Law imply that the notification obligation is triggered at the moment of the acquisition of the shares that allows the acquirer to exercise decisive influence over the target's business activities, and when the acquirer has therefore established control over the target.
Furthermore, pursuant to the provisions of the Competition Law, two or more agreements (concentrations) between the same undertakings carried out within a period of two years will be deemed as one concentration when meeting the threshold criteria.
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