The International Comparative Legal Guide To: Merger Control 2015 - Slovenia - Corporate and Company Law

1 RELEVANT AUTHORITIES AND LEGISLATION

1.1 Who is/are the relevant merger authority(ies)?

The Slovenian Competition Protection Agency ("CPA") is entrusted with the enforcement of merger control under the Prevention of the Restriction of Competition Act of 2008 ("PRCA").

The CPA is an independent agency, which has started operating in January 2013 and replaced the Slovenian Competition Protection Office ("CPO"), which was an administrative body under the supervision of the Ministry of Economy.

The CPA's acts may be reviewed by the Administrative Court in an administrative dispute in accordance with the provisions of the Administrative Dispute Act.

1.2 What is the merger legislation?

Part III of the PRCA sets out the Slovenian merger control rules. The currently valid PRCA entered into force on 26 April 2008, replacing the 1999 Prevention of Restriction of Competition Act and has been amended in 2009, 2011, 2012, 2013 and 2014. The procedural rules are set out in Part V Chapter 3 PRCA; in instances not specifically regulated by the PRCA, the CPA is obliged to abide by the General Administrative Procedure Act.

The (compulsory) merger notification form is prescribed by a government regulation, passed on the basis of the PRCA (please see question 3.8 below).

1.3 Is there any other relevant legislation for foreign mergers?

There is no specific legislation for foreign concentrations as such. However, particular sector-specific legislation (e.g., energy, investment funds, banking, insurance, media) contains certain restrictions (such as additional approval requirements/grounds for refusal) for non-EU Member State shareholders to hold controlling stakes in Slovenian companies active in the specified sectors.

1.4 Is there any other relevant legislation for mergers in particular sectors?

The sector-specific legislation governing the sectors for energy, telecommunications, financial services and media, as well as the Takeovers Act contain specific merger provisions. However, the jurisdiction to review mergers from the antitrust perspective remains primarily with the CPA.

Energy Sector

The energy sector is regulated primarily by the Energy Act. According to the Energy Act the Agency for Energy performs the role of the market regulator, and is, inter alia, authorised to supervise the transparency and competitiveness of gas and electricity markets as well as access to the transport and distribution networks. The Agency for Energy may be involved in the assessment of mergers in the energy sector.

Electronic Communications

The electronic communications sector is regulated by the Electronic Communications Act ("ECA"). The Agency for Communication Networks and Services of the Republic of Slovenia ("AKOS") is an independent body that regulates and supervises the electronic communications market, manages and supervises the radio frequency spectrum in the Republic of Slovenia, performs tasks in the field of radio and television broadcasting, and regulates and supervises the postal and railway service markets. The ECA provides for specific rules on cooperation between the AKOS and the CPA, they are obliged to: (i) furnish each other with information necessary for the performance of their responsibilities; and (ii) cooperate in analysing relevant markets and determining significant market power. The AKOS retains exclusive competence for assessing the significant market power and defining the relevant markets under the ECA. The CPA is likely to involve the AKOS's expertise when deciding upon the mergers in the telecommunications sector, but retains exclusive competence under the PRCA.

Financial Sector

Pursuant to the laws regulating banks, insurance companies, stock broking companies and fund management companies, an approval from the respective public regulators is required for the acquisition of a qualifying holding in such institutions. Qualifying holdings are, in principle, defined as 10%, 20%, 33% and 50% of the voting rights or capital of the company; however, even a stake below 10% may be viewed as a qualifying holding if, given the ownership structure of the company, it enables the holder the possibility to exercise important influence. A person obtaining a qualifying holding without consent of the regulatory body loses voting rights based on the shares beyond the qualifying holdings. The procedural rules for the assessment of such acquisitions/increases in holdings are in line with the Directive 2007/44/EC.

Media Sector

Mergers in the public media sector are specifically regulated by the Media Act. As a general rule, the Media Act prohibits concentrations between issuers of daily newspapers, radio and/or television broadcasters. Moreover, the Media Act requires that all mergers in the media sector are approved by the Ministry of Culture before closing – regardless of the publishers' market position. The PRCA is still applicable to concentrations of publishers of public media if the notifying thresholds from the PRCA are met; however, the Media Act sets forth a number of specific limitations. According to Article 58(3) of the Media Act, the Ministry of Culture shall refuse to approve a merger, when it results in a dominant position of the merged publisher in the media market or in the advertising market. It is deemed that a dominant position in the media market occurs if the coverage for the analogue terrestrial radio signal reaches 15% of all listeners in the Slovenian market, or, if the coverage for the analogue terrestrial TV signal reaches 30% of all viewers in Slovenia, or if the relevant market share for daily newspapers reaches more than 40% in the territory of Slovenia.

Consent of the ministry of culture is required for any acquisition of:

more than 20% shareholding (or voting rights) in any publisher of a radio or TV programme; the Ministry of Culture issues such consent after obtaining an opinion by PECA; or
more than 20% shareholding (or voting rights) in any publisher of a printed daily newspaper.

2 TRANSACTIONS CAUGHT BY MERGER CONTROL Legislation

2.1 Which types of transaction are caught – in particular, how is the concept of "control" defined?

The PRCA provisions on concentrations cover mergers, acquisitions and full-function joint ventures. Article 10 of the PRCA specifies that a concentration occurs when:

two or more previously independent undertakings merge;
one or more persons already controlling at least one undertaking, or one or more undertakings, acquire, whether by purchase of shares/securities or assets, by contract or by any other means, direct or indirect control of the whole or parts of one or more other undertakings; or
two or more undertakings create a joint venture performing on a lasting basis all the functions of an autonomous economic entity.

For the purposes of the PRCA, control is deemed to be constituted by way of (acquisition of) rights, contracts or any other means which (either separately or in combination, and having regard to the particularities of the facts or law involved) confer the possibility of exercising decisive influence over an undertaking, in particular by way of:

ownership of the entire capital or of a capital interest;
ownership or the right to use all or part of the assets of an undertaking; or
right or contract, which confers decisive influence on the voting or decisions of the organs of an undertaking.

When establishing the existence of control, the CPO usually took into consideration the provisions of the Companies Act, the Takeovers Act and Markets in Financial Instruments Act, which include specific definitions of terms such as affiliated persons, acting in concert, dominating/dominated company, holdings, groupings, etc.; however, it needs to be noted that the CPA is not bound by such definitions. Moreover, the CPO was inclined to rely on the European Commission's practice on the existence of control (though it is not formally binding on the CPA), which has been the practice of the CPA as well.

De Facto and De Jure Control

Control often results from the acquisition of the majority of the voting rights (50% + 1 share), but can also be acquired on a de jure basis (e.g., a minority shareholding with special rights) or on a de facto basis (having the majority at the shareholders' meeting). The possibility to exercise decisive influence on an undertaking does not require the existence of "visible" influence on the management of the company. For instance, ownership of shares in a company, allowing for the passing of a resolution at the shareholders' general assembly, on its own, would – regardless of the other shareholders – suffice in order to establish the existence of sole control.

Joint Control

"Acting in concert" of the shareholders in a target company constitutes joint control within the meaning of the PRCA. In the absence of a formal shareholders' agreement, the CPA may also review the voting history of the shareholders in order to establish whether they have been acting in concert.

Share Options

Convertible warrants, share options, or other instruments that may create an entitlement to acquire an equity interest in the future do not – in the absence of other agreements conveying control over the target company – constitute a possibility to control the target company per se and are thus not caught by the merger control provisions. However, the ownership of share options may trigger an obligation to make a tender offer which must be notified to the CPA on the basis of the Takeovers Act.

2.2 Can the acquisition of a minority shareholding amount to a "merger"?

Minority shareholdings are caught by the merger control rules if they result in de facto or de jure control (without holding 50% + 1 vote in the equity capital) of the company (please see question 2.1 above).

2.3 Are joint ventures subject to merger control?

The creation of a joint venture by two or more undertakings that performs all the functions of an autonomous economic entity on a lasting basis (full function joint venture) constitutes a concentration within the meaning of the PRCA.

Pursuant to Article 11(3) of the PRCA, the establishment of a joint venture that has as its aim or effect the coordination of the competitive behaviour of undertakings that remain independent, shall also be assessed in the light of the cartel prohibition pursuant to Article 6 of the PRCA. Should the CPA find that the conditions for the exemption of restrictive agreements from prohibition (improvement of production or distribution of goods, promotion of technical and economic progress while allowing consumers a fair share of the resulting benefit without (i) imposing restrictions which are not indispensable to the attainment of these objectives, and (ii) allowing such undertakings the possibility of eliminating the competition in respect of a substantial part of the products or services which are the subject of the agreement) are not met, the CPA will not approve such a concentration.

2.4 What are the jurisdictional thresholds for application of merger control?

A concentration must be notified to the CPA if the parties to the merger meet the following thresholds:

the combined aggregate annual turnover of all the undertakings concerned (including undertakings belonging to the same group), exceeds EUR 35 million before tax on the Slovenian market in the last business year; and
1. the annual turnover of the target company (including undertakings belonging to the same group) exceeds EUR 1 million on the Slovenian market in the last business year; or
2. in the event of creation of a joint venture, the annual turnover of at least two participating undertakings (including undertakings belonging to the same groups) exceeds EUR 1 million on the Slovenian market in the last business year.

If a concentration does not meet the above thresholds, but the market share of the undertakings concerned exceeds 60% in the Republic of Slovenia, Article 42(3) of the PRCA provides for an (implied) obligation of the undertakings concerned to inform the CPA of the concentration (but not submit a formal notification). Pursuant to Article 42(3) of the PRCA, the CPA may request that a concentration be notified "...within 15 days upon having been informed by the undertakings", or upon having learned about the concentration from market sources. In any of the two events, the transaction would have to be suspended until a clearance is obtained from the CPA (please also see question 3.7 below). We note that – in spite of the ambiguous wording of the respective provision – the general understanding is that no penalty may be imposed for the failure of an undertaking to inform the CPA of a transaction falling within the scope of Article 42(3) of the PRCA.

Turnover Calculation

Calculation of the turnover is based on the audited, or, in the absence thereof, on the unaudited annual accounts. Pursuant to Article 3 of the PRCA, the annual turnover comprises all revenues generated by undertakings participating in the concentration together with group undertakings (see below), excluding net revenues from the sale of products and services between group undertakings. Where the concentration arises from acquiring control of a part of one or more undertakings, regardless of whether these parts have the status of a legal entity, only the turnover relating to the parts that are the subject of the concentration shall be taken into account with regard to the seller or sellers.

Generally, the CPA will establish the turnover of companies involved in the merger solely on the basis of their balance sheets. In case of groups of companies the total turnover on the Slovenian market needs to be assessed regardless of the geographical scope of the product market in which it is achieved. Pursuant to Article 3 of the PRCA, the following companies are deemed to be belonging to the same group:

undertakings (directly) involved in the concentration;
undertakings controlled by the undertakings (directly) involved in the concentration;
undertakings controlling the undertakings (directly) involved in the concentration;
undertakings controlled by the undertakings from the preceding indent; and
undertakings in which one or more of the undertakings mentioned in the preceding indents jointly or in collaboration with one or more undertakings exercises decisive influence.

As a rule, the CPA will only include those affiliates in the turnover calculation that are listed in the consolidated balance sheet of the companies involved in the merger. If the balance sheets do not reflect the turnover achieved on the Slovenian market, the companies involved in the merger must calculate the turnover on the Slovenian market separately.

Two specific examples may be given:

Where banks, saving organisations or other financial institutions are involved in the merger, the turnover shall consist of the income from interests charged, net profits from financial transactions, commissions charged, income from securities held by these organisations and of the income from other business activities.
Insurance companies' turnover shall consist of gross insurance and reinsurance premiums charged by these companies in a given year.

Market Share Calculation

With regard to the relevant product market, all the products and/or services that the consumer and/or user considers to be interchangeable or substitutable by reason of their characteristics, price or intended use, are deemed as constituting a single relevant product market. The relevant geographic market comprises all areas in which competitors on the relevant product market compete in the sale or purchase of products, in which the conditions of competition are sufficiently homogeneous, and which can be distinguished from neighbouring areas because the competition conditions are appreciably different.

Please note that the relevant geographic market might be (and usually is) broader than the Slovenian market. However, when determining whether a concentration falls under the regime of Article 42(3) of the PRCA (i.e., whether or not the CPA may request its notification in the absence of turnover thresholds – please see above), the market share for relevant products and services on the Slovenian market only must be taken into account.

2.5 Does merger control apply in the absence of a substantive overlap?

Yes. As soon as the thresholds set out under question 2.4 above are met, merger control regulation applies. Please note that this applies also for concentrations, which may be subject to review by the CPA on the basis of Article 42(3) of the PRCA (i.e., where the undertakings concerned do not meet the turnover thresholds but have a market share exceeding 60% in the Slovenian market).

2.6 In what circumstances is it likely that transactions between parties outside Slovenia ("foreign-to-foreign" transactions) would be caught by your merger control legislation?

Foreign-to-foreign transactions shall be notified to the CPA if the jurisdictional thresholds are met, as it is not necessary for foreign companies to have an established legal entity or subsidiary in Slovenia. It suffices that at least the (foreign) target company achieved turnover on the Slovenian market. The only exemption from the stated is, when the subject concentration is to be appraised by the European Commission in accordance with Regulation 139/2004/EC. In such a case, the "foreign-to-foreign" transaction (as all the others) does not need to be notified to the CPA.

2.7 Please describe any mechanisms whereby the operation of the jurisdictional thresholds may be overridden by other provisions.

Concentrations with an EU dimension must be notified to the European Commission and the CPA does not have the jurisdiction to review such mergers.

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?

Apart from stipulating – for the purpose of turnover calculation – that two or more transactions executed within two years by the same persons with respect to the same target undertaking are deemed as one transaction (occurring with the execution of the latest one), the PRCA does not contain any specific rules on how to deal with a merger that takes place in stages. Furthermore, no guidelines have been adopted on the issue. Usually, the CPA will consider a merger in stages as a single transaction as long as all the stages of the transaction have been disclosed in the notification and the steps take place only among the undertakings participating in the concentration as disclosed in the merger notification.

If the target company is purchased by a group of joint purchasers, with the intention of dividing up the assets of the target between the joint purchasers, it would, in principle, be possible to notify the original purchase of the target company as well as the subsequent series of steps dividing the assets as one transaction and the CPA would most likely consider it as only one transaction. However, please note that the CPA would only consider and decide upon the transaction based on the facts existing at the time of rendering the decision. Should, for example, the control in one or more of the joint purchasers change subsequently to the decision of the CPA clearing the joint purchase of the target company, such a joint purchaser would most likely nevertheless have to notify again the subsequent acquisition of parts of the target company.

3 NOTIFICATION AND ITS IMPACT ON THE TRANSACTION TIMETABLE

3.1 Where the jurisdictional thresholds are met, is notification compulsory and is there a deadline for notification?

Notification is mandatory if the jurisdictional thresholds are met. The participants to the concentration must notify a concentration to the CPA no later than 30 days after the conclusion of the underlying agreement, the announcement of the public bid or acquisition of a controlling interest. The 30-day deadline starts running when the first of those events occurs.

With regard to takeovers, the CPA shall be notified of a compulsory tender offer (takeover bid) in accordance with the provisions of the Takeovers Act – even if the planned concentration does not constitute a concentration within the meaning of the PRCA (note that the takeover process is primarily monitored by the Slovenian Securities Market Agency); in such an event, the obligation to inform the CPA pursuant to the Takeovers Act is fulfilled by way of a simple letter sent to the CPA and there is no requirement that the formal Merger Notification Form is submitted to the CPA.

3.2 Please describe any exceptions where, even though the jurisdictional thresholds are met, clearance is not required.

There is one exception to the filing obligation that applies to banks, insurance companies, savings institutions and other financial undertakings, whose regular activities include trading securities on their own behalf or on behalf of others. No notification is required if such an institution acquires equity interests in an undertaking with the purpose of resale, provided that it does not exercise voting rights arising from such equity interests in order to affect the competitive actions of the undertaking in question, or provided that it only exercises such voting rights in the interest of arranging for the sale of such equity interests, with a further condition that such sale is made within one year upon purchase of the equity interests. The one-year period may be extended by the CPA at the request of the undertaking if such an undertaking is able to demonstrate that the sale could not be properly executed within the prescribed period.

3.3 Where a merger technically requires notification and clearance, what are the risks of not filing? Are there any formal sanctions?

The exercise of any rights arising from a notifiable concentration prior to receiving clearance from the CPA may entail the following sanctions:

Fines: a penalty in the amount of up to 10% of the turnover achieved by the undertaking (along with other undertakings of the same group) in the preceding business year, in case of a failure to notify and for late filing of the concentration. In addition, a fine between EUR 5,000 and 10,000 may be levied on the responsible person of such an undertaking or on the responsible independent contractor. If the nature of the offence is deemed to be particularly serious given the amount of resulting damages or the amount of unlawfully acquired pecuniary benefits, the undertaking's responsible person may be fined by up to EUR 30,000.

The fines imposed by the CPA may be annulled or reduced through an appeal process to the Administrative Court.
Suspension of Rights and Nullity: the parties are prohibited from exercising the rights arising from the merger before a clearance decision is issued by the CPA. Article 12(3) of the PRCA authorises the CPA to file a lawsuit to declare such an act (i.e., the exercise of rights in the absence of a notification) null and void. The acquirer of shares in the target company in breach of the filing obligation may lose its voting rights from the shares acquired. Consequently, the remaining shareholders can judicially challenge any resolution of the target company's general assembly passed on the basis of voting rights stemming from the shares acquired without notification to the CPA.
Other CPA Measures: the CPA may order division of the undertaking, disposal of all the shares acquired, sale of interests, sale of securities, or other measures appropriate to achieve a restoration of the situation prevailing before the implementation of the concentration. However, the CPA may only do so if the merger resulted in strengthening of the power of one or more undertakings, individually or jointly, as a result of which effective competition on the relevant market is significantly impeded or excluded.

3.4 Is it possible to carve out local completion of a merger to avoid delaying global completion?

In principle yes, but it depends on the transaction structure. The PRCA only covers the effects of a merger on the Slovenian market. Consequently, the CPA is only competent to appraise those effects of the merger which can be clearly defined to exist on the Slovenian market. It should therefore be possible to carve out the part of the transaction that affects only the Slovenian market and proceed with the implementation outside Slovenia, or vice versa.

3.5 At what stage in the transaction timetable can the notification be filed?

The PRCA only provides for the latest date by which the filing must be completed, i.e., in general 30 days after signing the agreement (see question 3.1 above). The CPA has established the practice that a notification can be filed before the parties execute a binding agreement (e.g., the execution of the agreement is still subject to internal corporate approval measures), if the undertakings concerned show a serious intent to enter into the planned transaction and disclose to the CPA all the milestones of the envisaged transaction. In addition, even if clearance is obtained, the CPA may withdraw or amend such a clearance if the material facts existing at the time of the completion of the merger change substantially from the time when the clearance had initially been given.

3.6 What is the timeframe for scrutiny of the merger by the merger authority? What are the main stages in the regulatory process? Can the timeframe be suspended by the authority?

Pre-notification Phase

First and foremost, it needs to be noted that the pre-notification phase is not a statutory part of the merger control process and is not regulated by the PRCA. Prior to the notification, the CPA is usually willing to provide information at the request of the parties. Moreover, in the past years, the CPO has even been prepared to meet with the parties prior to the submission of a formal notification.

Phase I

In Phase I procedures the CPA may adopt one of the following three decisions:

If the CPA finds that the concentration notified does not fall within the scope of the provisions of the PRCA, it shall issue such a finding by way of a decision.
If the CPA finds that the notified concentration, although falling within the scope of the provisions of the PRCA, does not raise serious doubts as to its compatibility with competition rules, it shall issue a decision not to oppose the concentration, and declare the concentration compatible with competition rules.
If the CPA finds that the concentration notified falls within the scope of the provisions of the PRCA and raises serious doubts as to its compatibility with the competition rules, it shall issue a decision on the instigation of a Phase II procedure.

All of the Phase I decisions are legally required to be taken within 25 working days from the filing of the merger notification. However, the said deadline only starts running once the filing has been deemed complete by the CPA. Given the exhaustive nature of the Merger Notification Form (see question 3.8 below), requests by the CPA for supplementation of the filing (prolonging the initiation of the deadline) will not be uncommon and can, in practice, significantly impact the transaction timetable. Moreover, as this time limit is only instructive to the CPA, it may even happen that no Phase I decision is taken within the said time limit. The parties may, however, following a notice to the CPA giving the CPA an additional seven days to issue a Phase I decision, file a lawsuit with the Administrative Court demanding the CPA to issue a Phase I decision. We note that, in the meantime, the exercise of rights deriving from a concentration prior to a Phase I decision(s) is not allowed.

Phase II

Should the CPA decide to initiate Phase II proceedings, it is bound to issue a final decision in 60 days upon having issued a decision on the opening of a Phase II. Again, the 60 day period is only instructive in nature and the CPO sometimes took longer to issue the Phase II decision. In case the CPA does not issue a Phase II decision in time, the parties may file a lawsuit with the Administrative Court demanding that the CPA issues such a decision.

In general, the CPO issued decisions in merger proceedings without an oral hearing.

If, in the course of merger control proceedings, the CPA should ask the parties to submit (additional) data and/or documents, the parties may, in principle, always ask the CPA to extend a deadline for the submission of documents and legal submissions (with the exception of the 30-day deadline for filing the merger notification).

3.7 Is there any prohibition on completing the transaction before clearance is received or any compulsory waiting period has ended? What are the risks in completing before clearance is received?

The PRCA only prohibits the exercise of rights deriving from a concentration prior to a final clearance decision (please see question 3.3 above). It is therefore argued that mere completion of a transaction (i.e. the transfer of title to shares/assets of the target undertaking) is not prohibited per se. However, please note that, to date, the CPO's practice has not yet established a definite answer in this regard; a possibility that the CPA might adopt a different position can consequently not be excluded.

Upon a proposal of an undertaking, the CPA may issue an order permitting the implementation of concentration within a specified scope and under specified conditions prior to issuing a clearance, provided that the undertaking can demonstrate in its proposal that such implementation is essential to maintain the full value of the investment or to perform services of general interest. The CPA is obliged to decide on such a request within 15 working days.

Parties that exercise rights arising from a concentration that should have been notified prior to obtaining approval by the CPA risk fines and other sanctions (see question 3.3 above for details).

3.8 Where notification is required, is there a prescribed format?

The notification must be submitted on a Merger Notification Form – a questionnaire prescribed by the Decree Defining the Contents and Elements Required for the Notification Form for the Concentration of Undertakings (passed in 2009 and revised in 2014). The scope of information requested by the Merger Notification Form is quite exhaustive (it closely mirrors the EC Merger Regulation's Form CO) and includes, inter alia:

certified copies of the documents or the draft documents bringing about the planned concentration;
a list of the members of the management board, major shareholders or interest holders in the undertakings which have participated or are planning to participate in the concentration;
audited accounting statements of the participants in the concentration for a minimum of the preceding three tax years; in the event that a participant is not obliged to audited accounting statements, regular accounting statements are to be submitted;
a report on any form of participation in a concentration of undertakings in Slovenia in the last three years;
a list of controlled undertakings and subsidiaries;
a list of controlling undertakings;
data on the market shares of the participants in the transaction;
data on all relevant product/service markets wherein the parties to the concentration operate (including size, past and future development, structure of demand and supply, market access, etc.); and
data on the main customers, suppliers and competitors; and data on the expected economic consequences of the concentration.

The parties to the notification may ask the CPA for a waiver with regard to some of the requested information in the Merger Notification Form.

Furthermore, the Merger Notification Form must be accompanied by a so-called Publication Form, upon which the CPA shall publish on its website a notice on the start of the merger notification procedure. Information published shall include names of the companies involved, date of the receipt of the notification by the CPA, case number and the industry sector. The acquirer, as the notifying party, may object to such publication on the basis of justifiable reasons such as trade secret protection. This shall be assessed by the CPA, who may adopt a decision not to publish the notice and the accompanying data. This procedure was only introduced on 3 April 2013, when the CPA introduced the Instruction on the publication of the data and information on the CPA's website in the merger notification procedures ("Publication Instruction"). There has been little practice so far in this respect and it is not yet known in which cases the CPA will agree not to publish the relevant information.

3.9 Is there a short form or accelerated procedure for any types of mergers? Are there any informal ways in which the clearance timetable can be speeded up?

The Slovenian merger control regime does not provide for an official short-form filing, however the CPA is in certain cases willing to accept a shortened notification. The circumstances, which allow the submission of a shortened filing in practice resemble those of the EU Commission's Short-Form CO, i.e., there have to be no overlap between the parties with a combined market share exceeding 15%, no vertical link between the parties with a market share exceeding 25% on one of the related markets, or no neighbouring market where either party enjoys a market share of more than 25%.

In addition, it should be noted that one can always speed up the clearance timetable by supplying the CPA with a notification that is as detailed as possible and taking into account relevant sector specific rules, as each request of the CPA for the submission of additional information extends the applicable deadline.

3.10 Who is responsible for making the notification and are there any filing fees?

The filing obligation lies with the acquirer. However, a joint notification by the acquirer and the target company is possible.

The filing fee currently amounts to approximately EUR 2,000.00. We note that the amount of the filing fee is regularly subject to adjustment by the Government of the Republic of Slovenia. The filing fees need to be paid to the CPA by way of a bank transfer at the time of the filing.

3.11 What impact, if any, do rules governing a public offer for a listed business have on the merger control clearance process in such cases?

The Slovenian merger control regime mirrors the EU Merger Control Regulation to the extent that public bids can be closed prior to clearance, provided that the respective bid has been notified in a timely manner and the acquired voting rights are not exercised prior to clearance.

3.12 Will the notification be published?

No, only the clearance decision will be published. However, basic information of the notification will be made public as described under question 3.8 above.

4 SUBSTANTIVE ASSESSMENT OF THE MERGER AND OUTCOME OF THE PROCESS

4.1 What is the substantive test against which a merger will be assessed?

The CPA shall assess concentrations within the purpose of the PRCA primarily with a view to establish whether or not a threat of creating or strengthening a dominant position exists, as a result of which effective competition could be distorted or significantly impeded. The market test applied by the CPO (and that will be applied by the CPA) corresponds broadly to the European Commission's "substantial impediment of effective competition test".

The effects of concentrations are analysed on the relevant product and geographic market. A high market share, however, does not always give rise to competition concerns, as the CPO appraised market shares together with other competition parameters, such as the choice available to suppliers and users, and the openness of the market for new entrances. Pursuant to the PRCA the CPA will – amongst others – take the following factors into account (Article 11 (2) PRCA):

the choice available to suppliers and users;
the market positions of undertakings concerned;
the access to sources of supply and to the market itself;
the structure of the relevant markets;
the barriers to entry for competing undertakings;
the financial capability of affected undertakings;
the level of international competitiveness of the undertakings under appraisal; and
supply and demand trends on the relevant markets.

4.2 To what extent are efficiency considerations taken into account?

The CPA shall take efficiency considerations into account in the process of its assessment, as long as the parties to the merger are able to demonstrate that consumers shall benefit from these efficiencies as well.

A concentration that leads to a substantial lessening of competition may still be cleared if the parties can evidence that the transaction will lead to overriding efficiencies. To this end, synergies and other pro-competitive effects shall be set out in the filing already and can be substantiated in the further proceedings.

Due to the small geographical market size of Slovenia, the CPO has approved mergers that resulted in very high market shares (more than 90%) in Slovenia. Owing to this, the CPO, as a rule, used to put a lot of emphasis on the definition of the relevant (cross-border) geographic market, which is expected from the CPA as well.

The CPA generally focuses on the horizontal and vertical effects of the merger, though conglomerate effects also figure in its market assessment.

4.3 Are non-competition issues taken into account in assessing the merger?

As the CPA is not required by the PRCA to include criteria other than those outlined above in their market test, the impact of a merger on the public interest or other non-competition issues (e.g., employment, industrial policy) does not play a role in the assessment of a concentration.

We note, however, that non-competition issues arising from concentrations in certain regulated industries may be taken into account by sector regulators (see question 1.4 above). For example, the Bank of Slovenia – when assessing whether or not a certain person is suitable to hold a qualified share (10% or more) in a Slovenian bank – takes into account factors such as the competence of the investor for the involvement in the target bank's business, its financial stability and even its reputation. An analogue test is performed by the Insurance Supervision Agency when deciding on issuing of a permission for the acquisition of a qualified shareholding in a Slovenian insurance company.

4.4 What is the scope for the involvement of third parties (or complainants) in the regulatory scrutiny process?

Third parties may request to participate in the proceedings if they are able to demonstrate a legally recognised interest in the outcome of the proceedings. The decision as to whether to admit the third party to the procedure lies with the CPA. If the interest is not recognised, the third party may challenge the CPA's refusal (to grant standing) before the Administrative Court.

Phase I and Phase II Proceedings

The CPA publishes a list of all notified transactions on its website in accordance with the Publication Instruction as well as all decisions on the instigation of Phase II proceedings. On this basis third parties may identify the transactions, which are of their concern and require the CPA to allow them to participate as a party with legal interest, however they must be able to establish that they should participate in the proceeding in order to safeguard their legal entitlements.

If the CPA recognises such third parties' interest to join the procedures, the third parties will be (i) able to participate in the entire procedure, (ii) granted access to file, (iii) entitled to propose evidence and present their opinion on all relevant issues, and (iv) entitled to file a lawsuit with the Administrative Court challenging the final decision issued by the CPA.

It should be noted that the CPA is not inclined to acknowledge the existence of a legally recognised interest to third parties.

Informal Involvement

Furthermore, third parties may submit statements and evidence to the CPA even without formally joining the proceedings. Although the CPA is not required to take such submissions and evidence into account (and may not base its decision on such evidence without having given the parties a chance to comment on them beforehand), such submissions may, in practice, have an impact on the assessment of the merger.

Information Requests

The CPA may, on its own initiative, contact third parties (usually the competitors to the notifying parties, their customers or suppliers) and send them requests for information (see also question 4.3 below).

4.5 What information gathering powers does the regulator enjoy in relation to the scrutiny of a merger?

Pursuant to Article 27 of the PRCA, the CPA is entitled to request specific information from any market participant – even without having instigated a formal procedure against such undertakings. This provision is relied upon by the CPA when conducting market tests with regard to proposed concentrations.

If the undertaking either fails to submit the requested data, provides the CPA with incorrect or misleading data, or simply fails to comply with the CPA's request in a timely manner, the CPA may impose a fine of up to EUR 50,000 on such an undertaking. If the undertaking continues with not complying with the CPA's request for information, the CPA may continue to impose sanctions until the aggregate amount of the respective monetary penalties reaches 1% of the undertaking's annual turnover in the preceding business year.

Undertakings and/or persons against which/whom the procedures are not formally opened may be summoned as witnesses under the General Administrative Procedure Act, which implies an obligation to co-operate with the CPA under the threat of fines. A witness may therefore be compelled to give testimony.

Investigations shall be carried out by persons employed with the CPA (which may also be assisted by authorised external experts) on the basis of a written authorisation issued by the CPA. Since 2014, the CPA has needed an annotated written judicial approval or the undertakings consent to enter premises of the registered corporate seat of the undertaking subject to an investigation and any other premises in which the respective undertaking or other authorised undertakings carry out activities and business operations from which a violation of competition law might have arisen. The court can only issue an order for investigation (odredba za preiskavo) based on CPA's reasoned proposal and if there are reasonable grounds to believe the undertaking is in breach of the respective merger specific PRCA provisions. Additionally it must be reasonable to expect that the investigation will provide the CPA with information, which are important for the procedure.

If the undertaking subject to inspection (a) refuses to allow access to its business premises, (b) otherwise obstructs the investigation, or (c) if such obstruction may be reasonably expected, the CPA officials may enter the premises and access business books or other documentation by force; the police may be called upon to support the CPA officials. Obstructing the investigation may be sanctioned by fines of up to 1% of the respective undertaking's annual turnover. Furthermore, penalties of up to EUR 50,000.00 may be imposed on "third persons" – natural persons not attributable to the investigated undertaking (i.e., persons other than representatives, employees or contractual co-workers) – for the obstruction of the investigation.

Whether or not an inspected undertaking has a right to immediate legal assistance in the event of a "dawn raid" is not explicitly regulated by the PRCA; pursuant to the established practice, the CPA officials are not obliged to wait for the arrival of an external counsel, unless the investigation has been initiated by the Public Prosecutor (based on an alleged infringement of the Slovenian Criminal Code).

The CPA officials are further empowered to: (i) review business books and other documentation, regardless of the medium on which it is written or stored; (ii) obtain copies of or extracts from business books and other documentation in any form using photocopying devices and computer equipment of the undertaking or the CPA; (iii); seal all business premises and business books and other documentations during the investigation and to the extent required; (iv) seize items and business books and other documentation for a maximum period of 20 working days; and (v) require any representative or employee to give an oral or written explanation of facts or documents which relate to the subject or purpose of the investigation, and record this in the minutes.

The CPA may not review:

confidential attorney/client correspondence; letters, notifications and other methods of communication related to the procedure between the undertaking and its legal representatives are exempted from the investigative action. The privilege also applies to in-house lawyers if the in-house lawyer is admitted to the bar and he/she represents the undertaking based on a power of attorney; or
correspondence/documents not relating to the subject-matter of the investigation; the officials have to be enabled to ascertain the (ir-)relevance of all books and other records. If it is disputed whether a document is in fact privileged, the respective document shall be put in a sealed envelope. The CPA will then decide on the permissibility of the review of such documents. Ultimately, this question will be decided by the Administrative Court.

4.6 During the regulatory process, what provision is there for the protection of commercially sensitive information?

Confidentiality

The information and data provided to the CPA during the investigation is treated as confidential provided that the submitting party (i) requests protection of business secrets, and (ii) demonstrates that data (with regard to which protection is sought) constitute business secrets. In principle, the CPA is obliged to evaluate whether certain information or data indeed constitute business secrets and may not rely purely on the parties' designation – in practice, the CPO relied on the definition of the notion of a "business secret" from the Companies Act (ZGD-1).

Recent developments in the practice show that the CPA will only grant such protection if the interested party has (i) explicitly requested protection of business secrets, and (ii) provided the CPA with a "clean" version of the respective documents (i.e., documents containing only information which does not constitute business secrets).

With regard to the mandatory publications pursuant to the PRCA (final decisions of the CPA are published on its website), the CPA is required to protect the confidentiality of data and may publish only data indispensable for achieving the purpose of the publication. All officials of the CPA must keep the information and data obtained during the procedures confidential, and shall be liable for unauthorised disclosure. Even when delivering the decision to the parties of the procedure, the CPA is obliged to blacken the parts of the decision containing business secrets of the other party. The PRCA further provides that CPA must, upon request, keep the identity of a company or an individual, who has filed a complaint or provided the CPA with information, secret – if it is likely that the disclosure of the identity could cause significant damage to such company or individual.

Access to Files

Access to files is regulated by the PRCA as well as by the General Administrative procedure Act. The parties are granted access to file, however the CPA may deny a party access to (a) internal documents of the CPA relating to the case, (b) documents which are deemed to constitute a business secret of another undertaking (please see above), and/or (c) data pertaining to the identity of an information source which has requested confidentiality.

5 THE END OF THE PROCESS: REMEDIES, APPEALS AND ENFORCEMENT

5.1 How does the regulatory process end?

Please see question 3.6 above regarding the end of Phase I. Should the CPA open Phase II, it may (within 60 days) close it in either of the following ways:

Unconditional clearance: if the CPA finds that a concentration is not incompatible with the provisions of the PRCA, it shall issue a decision declaring the concentration compatible with competition rules.
Conditional clearance: the CPA may impose additional obligations and conditions intended to ensure that the concentration complies with the requirements laid down in the PRCA.
Prohibition of merger: if the CPA finds that the concentration is incompatible with the provisions of the PRCA, it shall issue a decision declaring the concentration incompatible with competition rules. In its decision the CPA may impose measures with a view to eliminate the effects of the prohibited concentration, which have already occurred (e.g., division of the undertaking, disposal of all the shares acquired, sale of interests, sale of securities, or other measures appropriate to achieve a restoration of the situation prevailing before the implementation of the concentration). If the undertakings concerned fail to comply with the decision containing de-merger or other obligations addressed to the parties within the specified deadline, the CPA may impose fines of up to 10% of the turnover of the infringing undertaking (together with other undertakings belonging to the same group) in the preceding business year. A fine of EUR 5,000 to 10,000 may be levied on the responsible person of such undertakings or a responsible independent contractor. If the nature of the offence is deemed to be particularly serious given the amount of resulting damages or amount of unlawfully acquired pecuniary benefits, the undertaking's responsible person may be fined up to EUR 30,000.00.

5.2 Where competition problems are identified, is it possible to negotiate "remedies" which are acceptable to the parties?

The CPA is required to present all of the findings deemed necessary for the decision to the parties prior to the final decision in a statement of objection. As a rule, the CPA will encourage the parties to propose remedies to any competition concerns the CPA may establish. The remedies (structural or behavioural), which the CPA would be willing to accept depend on the nature of the competition concern identified. In general, the remedies must be suitable to ensure a permanent solution for the identified concern, not to cause new competition problems, and should not require any additional supervision after their implementation. Please note that the CPA may, in case of a conditional merger clearance, impose conditions upon the parties, which were not previously agreed by the parties.

5.3 To what extent have remedies been imposed in foreign-to-foreign mergers?

There have been no pure foreign-to-foreign mergers, in which remedies were imposed and concentration cleared subject to conditions.

5.4 At what stage in the process can the negotiation of remedies be commenced? Please describe any relevant procedural steps and deadlines.

Negotiations of remedies will usually start at the end of the investigation phase (Phase II). The undertakings concerned are obliged to suggest such remedies prior to the adoption of a final decision on the concentration.

5.5 If a divestment remedy is required, does the merger authority have a standard approach to the terms and conditions to be applied to the divestment?

The PRCA empowers the CPA to impose divestment obligations onto the parties of a concentration; however, it does not provide for any detailed regulation of such measures. While the CPO has already imposed divestment obligations on a few occasions, the practice is still far from having established any solid/uniform approach to the applicable terms and conditions, which could be relied upon by market participants as standards for future conduct of the CPA.

5.6 Can the parties complete the merger before the remedies have been complied with?

The remedies imposed by the CPA may be such that they have to be complied with either prior to or after the completion of the merger. In principle, the parties could complete the merger before the remedies have been complied with if the CPA agrees with such time frame in its decision.

5.7 How are any negotiated remedies enforced?

The CPA decides on remedies in a formal decision in which the CPA also orders the suspension of the procedures until the fulfilment of commitments proposed by the party, or until the expiry of the deadline determined for their fulfilment.

5.8 Will a clearance decision cover ancillary restrictions?

The PCRA does not contain provisions on the assessment of ancillary restrictions. Nevertheless, the parties are required to describe any ancillary restrictions in the Merger Notification Form. As the CPA decides upon the compatibility of the notified merger with competition rules, it is usually argued that the permissibility of ancillary restrictions is covered by the merger clearance decision as well. However, there is no existing jurisprudence, which would clearly establish whether the clearance decision also covers ancillary restrictions.

As concerns the merits, the CPA, in principle, will follow the practice of the European Commission when assessing ancillary restrictions.

5.9 Can a decision on merger clearance be appealed?

The final decisions of the CPA in merger procedures as well as some procedural decisions may be appealed to the Administrative Court.

The appeal to the Administrative Court may only pertain to the facts and legal grounds in the CPA's final merger decision in substance, but not to fines imposed by the CPA in the procedure. The CPA decisions on fines must be separately challenged before a regular court – under certain conditions and with substantial limitations the final decision of a Circuit Court may be further appealed before the Higher Court.

When deciding upon the lawsuit, the Administrative Court may adopt any of the following decisions:

it may reject the lawsuit as unsubstantiated;
it may annul the decision of the CPA (partially or fully) and request the CPA to issue a new decision; or
on rare occasions the court may even amend or alter the CPA decision itself, if all the relevant facts were fully and correctly established by the CPA, but the CPA failed to correctly apply the law, and if any further delay in rendering a final decision would have a detrimental effect on the interests of the parties involved.

5.10 What is the time limit for any appeal?

Parties may appeal decisions of the CPA before the Administrative Court within 30 days from the service of notice.

5.11 Is there a time limit for enforcement of merger control legislation?

The PRCA does not provide for any time limit for the enforcement of merger control legislation. In principle, the CPA may, at any time, initiate procedures with regard to non-notified mergers ex officio.

The misdemeanour procedures for imposing monetary fines for the failure to notify the merger may not be initiated after a period of five years from the date when the merger should have been notified; after 10 years, no misdemeanour proceeding may be initiated or continued (absolute prescription).

6 MISCELLANEOUS

6.1 To what extent does the merger authority in Slovenia liaise with those in other jurisdictions?

The CPA is a member of the European Competition Network and the International Competition Network.

6.2 Are there any proposals for reform of the merger control regime in Slovenia?

No, we are not aware of any envisaged changes to the merger control regime.

6.3 Please identify the date as at which your answers are up to date.

These answers are up to date as of 10 October 2014.

This article appeared in the 2015 edition of The International Comparative Legal Guide to: Merger Control; published by Global Legal Group Ltd, London.

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.

Slovenia: The International Comparative Legal Guide To: Merger Control 2015 - Slovenia