A new Law on the Protection of Competition (Official Gazette of the Republic of Montenegro, no. 44/2012) ("Competition Act") will come into force in Montenegro on 9 October 2012. The Competition Act regulates both market behaviour (restrictive agreements and abuse of dominance) and merger control.
With respect to merger control, the most significant changes concern notification thresholds and deadlines, as well as deadlines within which the competition authority must review mergers and issue appropriate decisions.
The Agency for the Protection of Competition
The Agency for the Protection of Competition ("Agency"), although formally a new body established by the Competition Act in the form of a public agency, is the successor of the Directorate for the Protection of Competition established in 2008. The Agency is responsible for competition law but has recourse to misdemeanour courts in order to levy fines for competition law violations. Decisions rendered by the Agency can be challenged before the Administrative Court of Montenegro.
A concentration must be notified to the Agency if either of the following thresholds is met:
- the aggregate local annual turnover of at least two parties to the concentration exceeds EUR 5 million; or
- the aggregate worldwide annual turnover of the parties to the concentration exceeds EUR 20 million, provided that at least one of the parties achieved a turnover of EUR 1 million within the territory of Montenegro in the same year.
However, upon learning that a concentration has been carried out, the Agency can order the participants to the concentration to notify the concentration if their joint market share in a relevant market in Montenegro is at least 60%. The burden of proof lies with the Agency.
A concentration must be notified within 15 days following: (i) the conclusion of an agreement; (ii) announcement of a public bid, offer, or closing of the public offer; or (iii) the acquisition of control (whichever occurs first).
However, the parties may notify a transaction to the Agency even before one of the abovementioned events if they demonstrate their serious intent to enter into an agreement, e.g. by signing a letter of intent, publicising their intent to make an offer or in any other way which precedes any of the triggering events mentioned.
Upon submission of a complete notification, the Agency must render a decision approving the concentration unconditionally within 105 working days or a decision approving the concentration subject to conditions within 125 working days. If the concentration creates or strengthens a dominant market position and consequently prevents, restricts or distorts competition, the Agency shall prohibit the concentration within 130 working days.
If the Agency does render a decision within the abovementioned deadlines, the transaction is deemed to be cleared. However, it is unclear after which of the aforementioned deadlines has passed may a transaction be presumed cleared (e.g. the shortest 105 or longest 130 working day deadline).
Currently, there is no information available concerning filing and/or clearance fees. However, the Agency is due to, pursuant to the Competition Act and with government approval, publish the respective tariff.
The Competition Act prescribes fines in the event parties to a transaction fail to file a merger notification within the fifteen-day deadline. In that case, the parties to the concentration may be subject to fines ranging from EUR 4,000 to EUR 40,000. The persons in charge within the undertaking in breach may be fined from EUR 1,000 to EUR 4,000.
If an undertaking carries out a concentration without prior clearance from the Agency (in violation of the suspension obligation) or carries out a prohibited concentration, it may be fined from 1% to 10% of its total annual turnover in the financial year preceding the violation. The persons in charge within the undertaking in breach may be fined from EUR 1,000 to EUR 4,000.
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.