TerraLex Cross-Border Guide to Pre-Merger Notification Guide

Yes.

No.

The following transactions effected on a permanent basis must be notified to the Office:

• merger or amalgamation of two or more separate entrepreneurs,
• acquisition of direct or indirect control by one or several entrepreneurs over another entrepreneur or its part, or over several entrepreneurs or their parts; or
• establishment of a joint venture jointly controlled by two or more undertakings, if the JV performs all the functions of an independent economic entity on a lasting basis.

The term “part of entrepreneur” mentioned above means as- sets based on which turnover may be attained.

A concentration is subject to review by the Office if:

• the combined aggregate turnover of the parties to the concentration is at least €46 million for the accounting period preceding the establishment of the concentration in Slovakia and at least two of the parties to the concentration attain a turnover of at least €14 million each in Slovakia for the accounting period preceding the establishment of the concentration; or
• combined turnover for the accounting period preceding the establishment of the concentration in Slovakia:
  • in case of a merger or amalgamation by at least one of the parties to the concentration is €14 million and simultaneously the global combined turnover for the accounting period preceding the establishment of the concentration attained by another party to the concentration is at least €46 million;
  • in case of acquisition of control by at least one party to the concentration over which (or its part) the control will be acquired is at least €14 million and simultaneously the global combined turnover for the accounting period preceding the establishment of the concentration attained by any other party to the concentration is at least €46 million.

Even if one party has no or very limited sales in Slovakia, the transaction must be notified to the Office if the turnover criteria are met.

For the purpose of merger control notification duty assessment, several natural persons or legal entities that are connected on the basis of control relations or other contractual, property, personnel or organizational relations may also be considered as one “entrepreneur”. For the merger or amalgamation of several entrepreneurs the overall turnovers of the participants belonging to the same group are summed for the purpose of determining whether the concentration is subject to the merger control. For acquisition of control, the overall turnovers of the participants or their parts being acquired belonging to the same economic group are summed for the purpose of determining whether the concentration is subject to the merger control.

Control, as defined by the law, means the ability to exercise a controlling influence on the activities of an entrepreneur, especially by means of (i) the ownership rights or other rights, or (ii) the rights, contracts or other facts allowing the exercising of a controlling influence on the composition, voting or decisions of the undertaking's bodies.

Two or more concentrations that are effected within two years between the same entrepreneurs and are jointly subject to control are deemed to be one and the same concentration that arose on the day of the last concentration.

Establishment of a joint venture is subject to mandatory notification if the joint venture performs all of the functions of an independent economic entity on a lasting basis, i.e., the notification is mandatory in the case of a full-function joint venture.

As far as the threshold test for a joint venture is concerned, the thresholds mentioned above in question 4. apply, with the addition that calculation of the aggregate turnover does not include the turnover resulting from the sales between the joint venture and the concerned undertakings or any other undertakings associated with any of them. The turnover from the sales between the joint venture and other (third-party) undertakings is equally apportioned among the concerned undertakings.

The duty to notify a concentration also applies to activities occurring abroad, provided they lead or can lead to a restriction of competition on the Slovak market.

The decisive criterion to determine whether a concentration must be notified to the Office is the respective minimum turnovers as noted above, i.e. if the turnover criteria are met, the concentration must be notified to the Office, even if the transaction occurred abroad (except if the transaction has been reviewed by the EU).

A merger notification must comply with the requirements set in the generally binding Regulation issued by the Office. Under the current Regulation, a merger-control notification must contain the following information:

• Summary (general description of the concentration);
• Basic identification of the parties to the concentration;
• Detailed description of the concentration;
• Information about exercising control and any personal links;
• General market information;
• Definition of the affected markets and potentially affected markets;
• Data on the affected markets and potentially affected markets;
• General market conditions on the affected markets and potentially affected markets;
• Information on the cooperative effects;
• Reasons for, and effects of, the concentration and their impact on competition;
• Information on the notification of the concentration to other merger-control authorities;
• Supporting documents.

The Office may reduce the amount of information or documents required upon a reasonable request by the notifying party. Notwithstanding this, if the Office, in the assessment of the concentration, finds out that such reduced scope information is insufficient for the assessment, the Office may request providing additional information. From the day of dispatch of the Office’s request to provide additional information until the required additional information is provided by the party to the concentration, the period for issuing of a decision by the Office is suspended.

In addition, under the current Regulation (see point 6 above) in the merger-control notification, the notifying party may skip definition of the affected markets and potentially affected markets, data and general market conditions on the affected markets and potentially affected markets, if it is related to a concentration within which:

• the acquiring party gains sole control over the entrepreneur over which it already exercised a joint control;
• for all alternative definitions of the relevant product and geographic market that can be taken into consideration, none of the participants to the concentration and its affiliates is active on the same relevant product and geographic market comprising Slovakia as another participant or its affiliate, and none of the participants to the concentration and its affiliates is active on the upstream or downstream market in respect of the relevant product and geographic market in Slovakia, on which the other participant to the concentration or its affiliate is present; or
• for all alternative definitions of the relevant product and geographic market that can be taken into consideration, the common market share of the parties to the concentration and their affiliates on the same product and geographic relevant market comprising Slovakia is below 15%, and for all alternative definitions of the relevant product and geographic market that can be taken into consideration, the participant to the concentration or its affiliate is present on the relevant upstream or downstream market in respect of the relevant market, on which the other participant to the concentration or its affiliate is present, and their individual or common market share on any of these markets comprising Slovakia in terms of geographic determination is below 30%, irrespective if there is a purchaser-supplier relationship between them.

There is an administrative fee of €5,000.

Notification must be filed with the Office before the rights and obligations resulting from a concentration are executed and after the conclusion of the agreement or the occurrence of another even which resulted in the concentration (such as notification of acceptance of the bid in a public tender, delivery of the resolution of the state authority, announcement of an acquisition bid, and so on).

Notification may also be filed in the form of intention, i.e., before the agreement is concluded or other legalcircumstance causing a merger, the acquisition of control or the establishment of a joint venture occurs, if it resultsin a concentration which is subject to control by the Office.

The parties are not allowed to exercise any rights or fulfill any duties arising out of the concentration until the decision of the Office clearing the concentration becomes final.

This prohibition does not prejudice executing an acquisition bid or effecting the transactions with securities at the securities market through which control is acquired, if the concentration is immediately notified to the Office and the acquiring party does not exercise its voting rights connected with the securities or it only does so to maintain the full value of these investments based on the exemption granted by the Office.

Upon the request of a party to the concentration the Office may grant an exception from this prohibition, if there are serious reasons for that.

Under Slovak law if the Office does not issue a decision on a concentration within a certain time, consent is not automatically presumed and consequently the parties are not allowed to close the transaction.

The Office issues a decision on the concentration within 25 business days of receiving complete notification. Such a decision usually contains simplified grounds.

If in-depth analysis is required to appraise the concentration (mainly due to identification of the competition concerns), the office must notify the party to the merger-control proceedings in writing and in such case the office issues a decision within 90 business days of delivering the notification to the party to the merger-control proceedings.

If the notification is incomplete, the Office requests the notifying party to provide additional information and/or documents. A period to issue a decision is suspended from the day when the Office dispatched a request to the party to the merger-control proceedings to complete the notification, until the delivery of the complete notification. The Office provides a confirmation to the party to the merger-control proceedings as soon as the notification is complete; this also includes confirmation that the period for issuing the decision commenced.

If, in the proceedings, the Office discovers that notification contains false information, the Office immediately notifies the party to the proceedings and a new period for issuing the decision on concentration begins to run on the day following the day when true information was delivered to the Office.

If the Office does not receive all information required by law or the parties to the concentration are unable to submit it, the Office may conduct its own investigation which can lead to a delay in proceedings as the notification is not deemed complete and the period for issuing the decision does not commence.

The typical time in which the clearance is granted is several weeks to four months from the submission of the notification (the most frequent reason for extending proceedings is the incompleteness of the submitted information).

Failure to notify a concentration which is subject to the notification duty before exercising the rights or fulfilling duties arising out of the concentration or breaching the prohibition to exercise the rights and the obligations arising out of the concentration (if the Office did not grant an exemption) are administrative offences under Slovak law.

The Office imposes a fine of up to 10% of the turnover for the previous accounting period. For the purpose of imposing fines, the previous accounting period is the accounting period for which the last (most recent) statement of finances was prepared. The fine may be imposed repeatedly.

If the turnover of the breaching party cannot be determined, a fine of up to €330,000 can be imposed.

The fines may be imposed not later than within ten years from the violation of the law.

The agreement on the basis of which the concentration occurred remains valid, but as mentioned in question ten the parties are not allowed to exercise any rights or full any duties arising out of the concentration until the decision of the Office clearing the concentration becomes final.

If the concentration is prohibited and the rights and obligations resulting from it are exercised (either before or after the decision prohibiting the concentration) the Office may impose an obligation to restore the level of competition that existed before the concentration, by imposing an obligation to divide the company, transfer the rights, or do something else.

Even if the decision has been rendered and become effective the Office may cancel its decision clearing the concentration and issue a new decision forbidding the concentration if (i) the resolution is based on incomplete or false information provided by the party, or (ii) a party to the concentration fails to comply with the condition(s) imposed in the clearance.

There is no statutory period whose expiry would enable the parties to act contrary to the Office’s decision regarding the concentration.

Please see item 13 above.

The Slovak Antimonopoly Office is the central public administration authority responsible for the protection and promotion of competition. The Office mainly decides if certain conduct or action is forbidden by law, carries out investigations in the relevant market, decides on any matter involving the protection of competition, gives official opinions pursuant to legislation and can impose in its decision relating to the concentration specific duties or conditions which must be fulfilled by entrepreneurs.

The Office does not review the concentrations where the EU has the powers to do so.

In the notification, the notifying party must provide a justification for treating the provided information or documents as a business secret or confidential in writing. It must also provide a separate version of the notification which does not contain a business secret or confidential information, including a description of the protected information and the documents.

The notification cannot be classified as a business secret or confidential as a whole.

The Office may not accept the justification given by the party, if the conditions for their protection as a business secret or confidential information are not met. In such a case, the Office will inform such party thereabout and it will treat the information and documents as if they did not contain a business secret or confidential information.

The Office protects information containing a business secret and confidential information.

Access to such information or the documents may be granted exceptionally, only to an applicant being a party to the proceeding or its proxy (attorney), only if such information or document represent evidence of a violation of the Act on the Protection of Competition and they are necessary for using the right to attorney in the proceedings in which the access was granted, and only if the information or the documents provided under the rules above (i.e., a separate version not containing a business secret or confidential information) are insufficient for this purpose. Written consent of the party providing information containing a business secret or confidential information is required. If such consent is not granted, access to such information is granted solely to the requiring party’s proxy (incl. attorney, but not the requiring party’s employee).

In the case of confidential information or business secrets, it is only possible to study the information or the documents, making copies is not allowed.

The confidential nature of the confidential information does not prevent the disclosure of the information to a court in civil or criminal proceedings, police and criminal prosecution authorities in a criminal prosecution, or the competition authorities of other states.

Slovak law only generally states that the Office forbids a concentration if it significantly distorts competition on the relevant market mainly due to the creation or strengthening of a dominant position or the coordination of competitive behaviour which is inconsistent with the law. Therefore, the probability of facing a challenge depends on the circumstances of each particular case and on the Office’s deliberations.

It is strongly recommended to prepare the notification along with other transactional documents and to have the notification of the concentration prepared (including all the relevant supporting documents) in advance and to notify the concentration to the Office as soon as possible after the transaction is effectuated.

Also, it is necessary to provide the Office with all required documents and information.

There is also a possibility of “pre-notification contacts” with the Office, which are voluntary, where the parties to a concentration have the opportunity to discuss the intended concentration informally with the Office prior to its formal notification. Under the Office’s statement, the parties are highly recommended to use this possibility.

The pre-notification contacts are strictly confidential; the parties may be represented by their employees or by the attorneys. Pre-notification contacts may be initiated by e-mail, phone or written submission; preferred methods are informal e-mail communication or other communication by phone or in person. The parties are recommended to initiate pre-notification contacts sufficiently in advance (at least several weeks before a notification is filed). The pre-notification contacts do not include any binding opinion by the Office nor any resolution and they do not release the parties from filing the notification, if the concentration is subject to notification duty.

Finally, due to the complexity of merger proceedings, it is recommended that the parties to the concentration be represented by a law firm skilled in this area.

No. Except for cases where the EU has reviewing powers (in such cases the Office does not review the concentrations). Although there may be some specific regulations, particularly for strategic or sensitive investments in sectors such as the military, financial sector - banks, energy, etc.