1 Relevant Authorities and Legislation
1.1 Who is/are the relevant merger authority(ies)?
The Albanian Competition Authority ("ACA") is responsible for applying the merger control legislation in Albania. The ACA is an independent administrative entity composed of: (i) the Competition Secretariat (the investigation body); and (ii) the Competition Commission (the decision-making body).
1.2 What is the merger legislation?
Mergers in the Republic of Albania are mainly governed by: (i) Law no. 9901, dated 14 April 2008, "On Entrepreneurs and Commercial Companies", as amended; (ii) Law no. 9121, dated 28 July 2003, "On Protection of Competition" ("Competition Law"), as amended; and (iii) instructions and regulations issued by the ACA.
1.3 Is there any other relevant legislation for foreign mergers?
Besides the legislation mentioned in question 1.2 above, which is also applicable to foreign mergers, mergers between Albanian and European companies are also governed by Law no. 110/2012, dated 15 November 2012, "On Cross-border Mergers". Said law provides for the conditions, procedures and legal effects of a cross-border merger, as well as protective measures for employees and creditors of such companies.
1.4 Is there any other relevant legislation for mergers in particular sectors?
Besides the Competition Law, other legislation applies to mergers in particular sectors such as:
- the audiovisual broadcasting sector: where an entity or person may not hold more than 40% of the share capital in a national audiovisual company. An entity or person holding shares in a national audiovisual company may not hold more than 20% of the share capital in another national audiovisual company. An entity or person that holds shares in local or regional audiovisual companies may not hold more than 40% of the share capital in another local or regional audiovisual company. Any change in the ownership, or matters related to it, is subject to prior written approval by the Audiovisual Media Authority.
- the banking sector: where the Central Bank of Albania has the power to approve or decline any transfer of at least 10% of a bank's share capital or such a percentage that enables a shareholder to influence considerably in the management or policies of a bank;
- the insurance sector: where the Authority of Financial Supervision is the regulatory body having the power to approve or decline any transfer of 10% or more of the shares with voting rights held in a company engaged in insurance and/or reinsurance activity as well as any transfer which affects less than 10% of the said shares but confers a control over the management of the insurance company. In addition, companies shall be subject to approval from the Authority of Financial Supervision for any further participation that reaches or exceeds 20%, 30%, 50% or 75% of the voting rights or the share capital of the insurance company; and
- the telecommunications sector: where changes related to the licensee may be subject to notification to, or approval by, the Authority of Electronic and Postal Communication.
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?
A concentration shall be deemed to arise where a change of control on a lasting basis results from:
- the merger of two or more independent undertakings or parts of undertakings;
- the acquisition, by one or more persons already controlling at least one undertaking, or by one or more undertakings, whether by purchase of shares or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings; or
- direct or indirect control over one or more undertakings or part of the latter.
Control shall be constituted by rights, contracts or any other means which, either separately or in combination and having regard to the considerations of fact or law involved, confer the possibility of exercising decisive influence on an undertaking, particularly by:
- ownership or the right to use all or part of the assets of an undertaking; and (b) rights or contracts which confer decisive influence on the composition, voting or decisions of the organs of an undertaking.
2.2 Can the acquisition of a minority shareholding amount to a "merger"?
The above-mentioned definition of "control" is wide and no minimum percentages/amounts of control are provided by the law. It can also include acquisitions of a minority shareholding if they confer the possibility of exercising decisive influence on the undertaking.
2.3 Are joint ventures subject to merger control?
According to the Competition Legislation, the establishment of joint ventures shall constitute concentration (merger – and subject to merger control) if it does not have, as object or effect, the coordination of competitive activities between two or more independent undertakings.
Pursuant to the Instruction of the ACA on merger control, the creation of a joint venture as the entity exercising all the functions of an autonomous economic entity shall constitute a concentration.
2.4 What are the jurisdictional thresholds for application of merger control?
The merger control applies to mergers when all of the following turnover thresholds are met:
- the combined worldwide turnover of all participating undertakings is more than Leke 7 billion (approximately EUR 50 million) and the domestic turnover of at least one participating undertaking is more than Leke 200 million (approximately EUR 1.42 million); or
- the combined domestic turnover of all participating undertakings is more than Leke 400 million (approximately EUR 2.8 million) and the domestic turnover of at least one participating undertaking is more than Leke 200 million (approximately EUR 1.42 million).
In general, the aggregate turnover includes the income of the participating undertakings realised in the preceding financial year from the sale of products falling within the undertakings' ordinary activities, after deduction of taxes or fees directly related to the undertakings' turnover. In cases of mergers of credit or financial institutions, the turnover is the income resulting in annual or consolidated accounts deriving from interests, shares, bonds, equity interests, commissions, net profit from financial operations and other income, after deduction of taxes. For insurance undertakings, the turnover is the gross income of subscribed premiums which include all received and collected amounts as per insurance contracts, as well as reinsurance premiums, after the deduction of taxes.
When the merger consists of the acquisition of parts of one or more undertakings, for calculation of the seller/s' turnover, only the turnover corresponding to the parts which are the subject of the transaction shall be taken into account.
Specifically, when the participating undertaking is part of a group, its aggregate turnover is calculated by adding together the respective turnover of the members of the group (i.e. (i) the participating undertaking, (ii) its subsidiaries where the participating undertaking holds directly or indirectly more than half of the share capital or voting rights, or has the power to appoint more than half of the members of the supervisory board, the administrative board or other legal bodies representing the subsidiary, or has the right to manage the subsidiaries' affairs, (iii) its parent undertakings having the above-mentioned rights or powers, and (iv) the subsidiaries of its parent undertakings – those undertakings in which two or more undertakings as referred to under (i) to (iv) herein have jointly the rights or powers listed in (ii) herein). In cases where the participating undertaking is part of a group, the Competition Law excludes from the calculation of the turnover, the sale of products performed between undertakings that are part of the group.
2.5 Does merger control apply in the absence of a substantive overlap?
The merger control also applies in the absence of a substantive overlap.
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 Albanian Competition Law applies to "foreign to foreign" transactions carried out from undertakings whose activity has an impact/influence in the Albanian market. However, the concept of "impact/influence" has not been further defined from the Albanian competition regulatory framework. In practice, although the undertakings participating in the merger may not have any local physical presence (branch, subsidiary or assets), but are present in Albania indirectly (imports/sales through distributorship agreements), the ACA has so far considered the merger as subject to its control provided that the notification thresholds are met.
2.7 Please describe any mechanisms whereby the operation of the jurisdictional thresholds may be overridden by other provisions.
We do not identify any provision that may override the operation of the thresholds.
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 Competition Law does not provide for any general principle specific to the identification of the constitution of the transaction in cases where it takes place in various stages. However, when establishing the rules on calculation of turnover in the case of mergers consisting of the acquisition of parts of undertakings, the Competition Law provides that the series of these transactions performed between the same parties within a two-year period is assessed as a single transaction. In order to define the two-year period, reference is made to the last transaction date.
Pursuant to the Instruction of the ACA on merger control, two or more transactions constitute a single concentration if they are unitary in nature. It should therefore be determined whether the result leads to conferring to one or more undertakings, or direct or indirect economic control over the activities of one or more other undertakings.
To view the full article please click http://www.bogalaw.com/pdf/MC17_Chapter-5_Albania.pdf here.
Previously published in The International Comparative Legal Guide
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