In April 2021, the Serbian Competition Authority ("SCA") issued an opinion on the fundamental merger control notion of a "concentration" in cases involving interrelated transactions (the "Opinion").1
The Opinion is one of the most important interpretative documents issued by the SCA in recent years, as it marks a U-turn in how the SCA will treat several transactions for merger control purposes and reaffirms the role of EU rules and precedents in interpreting Serbian merger control rules.
The SCA's approach so far
As many companies and their advisors know, the SCA took a unique position compared to most European competition authorities in terms of how it treats several interrelated transactions for merger control purposes. Specifically, the SCA had a strict stance pursuant to which several transactions, even if related and interlinked legally and/or economically, could not be treated as a single unitary concentration but as several separate concentrations. Because of how Serbian merger control filing thresholds are set up, this approach often meant that M&A operations involving several steps and sequences required several separate merger notifications, review processes and clearances.
This stance was widely deemed inadequate, as it stood in contrast to the treatment of comparable M&A scenarios in the EU and most European countries. While Serbian merger control rules are a transplant from EU law, they notably diverged in this regard, as the SCA seemed not to recognise that to constitute a concentration, a transaction must lead to a lasting change of control and thereby to a lasting change in the structure of the market.
Besides this conceptual objection, the SCA's stance led to many undesired consequences. For example, while an operation would require a single merger control clearance in most jurisdictions, in some instances, the same operation could require two or more separate clearances in Serbia. This translated into increased legal risks and costs, as well as prolonged waiting periods. In some instances, it even led merging parties to restructure their operations in a way that reduced the number of required merger control approvals.
The SCA's approach going forward
In this context, the Opinion is a welcome clarification and change of position from the SCA, as it rectifies the above concerns and further aligns Serbia's merger control regime with that of the EU. The Opinion especially clarifies the following key points:
- EU merger control rules formulated in legal instruments and precedents are a source of interpretation for Serbian merger control rules. While this is in line with Serbia's overall EU ambitions and the SCA's prior practice on most topics related to merger control, a number of earlier decisions clearly diverged from this principle, calling into question the extent to which EU rules actually have an effect and can be relied upon in Serbia. Hence, the Opinion is a welcome re-affirmation of the role of EU merger control rules in Serbian legal practice.
- The Opinion explicitly refers to Recital 20 of the EU Merger Regulation,2 the EC's Consolidated Jurisdictional Notice,3 and the Cementbouw judgment of the European General Court.4 In doing so, the SCA introduces and confirms the requirement that a transaction must lead to a lasting change of control, and thereby to a lasting change in the structure of the market, for it to constitute a concentration, thereby aligning Serbian and EU/European merger control rules in this fundamental aspect.
- The SCA further confirms that it is appropriate to treat closely connected transactions as a single concentration in that they are linked by condition. For this assessment, the economic reality underlying the transactions is to be identified and thus the economic aim pursued by the parties. To determine the unitary nature of a transaction, it is necessary to ascertain in each case whether the transactions are interdependent, in such a way that one transaction would not have been carried out without the other (and therefore constitutes a single operation).
- Such conditionality is normally demonstrated if the transactions are linked de jure, i.e. the agreements themselves are linked by mutual conditionality. However, if de facto conditionality can be satisfactorily demonstrated, it may also suffice for treating the transactions as a single concentration. This requires an economic assessment of whether each of the transactions necessarily depends on the conclusion of the others. Important indications of the interdependence of several transactions may be the simultaneous conclusion of the relevant agreements. A conclusion of de facto inter-conditionality of several transactions will be difficult to reach in the absence of their simultaneity. A pronounced lack of simultaneity of legally inter-conditional transactions may likewise put into doubt their true interdependence.
- The Opinion also clarifies that the above applies to parallel and serial acquisitions of control. In a parallel acquisition of control, undertaking A acquires control of undertaking B and C in parallel from separate sellers, on condition that A is not obliged to buy and neither seller is obliged to sell, unless both transactions proceed. In a serial acquisition of control, undertaking A acquires control of undertaking B conditional on B's prior or simultaneous acquisition of undertaking C.
- Serial acquisitions of control can also lead to joint control, and these are scenarios where an undertaking agrees to acquire first sole control of a target undertaking, with a view to directly selling parts of the acquired stake in the target to another undertaking, finally resulting in joint control of both acquirers over the target company. If both acquisitions are inter-conditional, the two transactions can constitute a single concentration resulting in the acquisition of joint control.
While the SCA's position as outlined in the Opinion is well-established within the EU, it is a long-awaited addition to the Serbian merger control regime and is expected to result in a number of benefits for merging parties as well as the SCA. Specifically, it will allow parties more freedom in structuring their transactions, as it removes the need to account for several merger control clearance for what is essentially a single M&A operation/concentration. It will also harmonise the procedural approach of the SCA with that of EU competition authorities, which will be convenient for merging parties, as it will streamline their filing strategies in the EU and Serbia. Finally, it will also free up valuable resources for the SCA, allowing it to apply them more efficiently. Hence, the Opinion is a welcome development and the SCA should be applauded for its effort to introduce it.
2 Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ L 24).
3 Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (2008/C 95/01).
4 Judgment in Case T-282/02 Cementbouw v Commission,  ECR II-319.
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