Conditions under which the absolute rights of the holder of an asset to freely dispose of and benefit from it may be derogated from the rules of the competition.
The Bulgarian competition legislation is contained in the Protection of Competition Act (“PCA”).
The rules that stipulated and limit the rights for transaction of assets which might affect the competition are given Section Two, Chapter Five – Control Over Concentrations Between Undertakings of the PCA.
A competition clearance should be granted by the Bulgarian Competition Protection Commission (“CPC”). Its approval is required for the “concentration of business activities” which, under PCA, exists when a permanent change of control occurs in case of:
(i) Merger or acquisition of two or more companies;
(ii) Acquisition by a person controlling one company of a direct or indirect control of other Bulgarian companies or parts thereof; or
(iii) Joint venture,
provided that the total consolidated turnover of the participants in the concentration for the year preceding the concentration on the relevant market in Bulgaria exceeds 25,000,000 BGN and the turnover of each of at least two of the undertakings participating in the concentration on the territory of The Republic of Bulgaria for the previous financial year exceeds BGN 3 million, or the turnover of the undertaking which is the object of acquisition on the territory of the Republic of Bulgaria for the previous financial year exceeds BGN 3 million. Also, this merge should not be deemed as a “concentration with Community dimension” within the meaning of Art. 1, paragraph 2 of Regulation (EC) № 139/2004. It should be noted that PCA applies to any and all enterprises operating on the territory of Bulgaria or outside the territory of the state if these enterprises infringe or may infringe the competition within the state. This is to say that even though a transaction is carried out abroad, if it leads to the described consequences, it will still fall under the provisions of the law.
Article 23 of the LPC provides three cases that are not deemed as concentration. Also, the concentration must be distinguished from the cases of merger, consolidation or acquisition of control, which takes place between enterprises of the same economic group or between such controlled by the same entity or any intergroup restructuring.
The undertakings are obliged to notify CPC of the concentration after the contract is concluded, after the tender bid is publicly announced, or after control is gained, but before any real actions are undertaken to implement the transaction. In certain cases, upon the parties' request, CPC may perform an assessment of the contemplated concentration prior to contract conclusion or tender bid announcement, should the parties present sufficient evidence of their intentions to enter into contract or have publically announce their plan to submit an offer.
Art. 25, LPC contains the general rules for calculation of the turnover of undertaking party to the concentration. It includes the net income from sales of enterprise during the previous financial year, representing proceeds from the sale of products, goods and services generated from ordinary operations of the company, reduced the rebates, discounts, rebates and value added tax. The turnover does not include proceeds from the sale of products, goods and services between companies belonging to the same economic group. In cases only part of an enterprise is being acquired its turnover is been assessed regardless to whether this business is s separate legal entity or not.
It is important to mention that the main focus in the assessment of CPC is determined by definition of the relevant market. The market analysis for the intended concentration is predictive, i.e. the possible impact of the proposed concentration on the market is evaluated. According to the practice of the CPC there are three factors that are most important for competition on the market: demand substitutability, supply substitutability and potential competition.
Within one month as of the submittal of the notification, the Commission valuates the concentration and may issue a decision with which it prohibits the concentration or decides that the concentration does not fall under the prohibitions established by the law. It is also possible for the Commission to decide that even there is a concentration, then it is permissible as it does not lead to creation or increase of the monopolistic or dominant position of the participants involved in the market.
The assessment of concentration procedure, which is carried by the CPC is in two forms – an accelerated study and thorough examination, the decisions by which the CPC prohibits concentration allowed unconditionally concentration or authorizes it under certain conditions to be met by companies involved and penalty powers of the commission.
The Bulgarian competition legislation is contained in the Protection of Competition Act (“PCA”).
The rules that stipulated and limit the rights for transaction of assets which might affect the competition are given Section Two, Chapter Five – Control Over Concentrations Between Undertakings of the PCA.
A competition clearance should be granted by the Bulgarian Competition Protection Commission (“CPC”). Its approval is required for the “concentration of business activities” which, under PCA, exists when a permanent change of control occurs in case of:
(i) Merger or acquisition of two or more companies;
(ii) Acquisition by a person controlling one company of a direct or indirect control of other Bulgarian companies or parts thereof; or
(iii) Joint venture,
provided that the total consolidated turnover of the participants in the concentration for the year preceding the concentration on the relevant market in Bulgaria exceeds 25,000,000 BGN and the turnover of each of at least two of the undertakings participating in the concentration on the territory of The Republic of Bulgaria for the previous financial year exceeds BGN 3 million, or the turnover of the undertaking which is the object of acquisition on the territory of the Republic of Bulgaria for the previous financial year exceeds BGN 3 million. Also, this merge should not be deemed as a “concentration with Community dimension” within the meaning of Art. 1, paragraph 2 of Regulation (EC) № 139/2004. It should be noted that PCA applies to any and all enterprises operating on the territory of Bulgaria or outside the territory of the state if these enterprises infringe or may infringe the competition within the state. This is to say that even though a transaction is carried out abroad, if it leads to the described consequences, it will still fall under the provisions of the law.
Article 23 of the LPC provides three cases that are not deemed as concentration. Also, the concentration must be distinguished from the cases of merger, consolidation or acquisition of control, which takes place between enterprises of the same economic group or between such controlled by the same entity or any intergroup restructuring.
The undertakings are obliged to notify CPC of the concentration after the contract is concluded, after the tender bid is publicly announced, or after control is gained, but before any real actions are undertaken to implement the transaction. In certain cases, upon the parties' request, CPC may perform an assessment of the contemplated concentration prior to contract conclusion or tender bid announcement, should the parties present sufficient evidence of their intentions to enter into contract or have publically announce their plan to submit an offer.
Art. 25, LPC contains the general rules for calculation of the turnover of undertaking party to the concentration. It includes the net income from sales of enterprise during the previous financial year, representing proceeds from the sale of products, goods and services generated from ordinary operations of the company, reduced the rebates, discounts, rebates and value added tax. The turnover does not include proceeds from the sale of products, goods and services between companies belonging to the same economic group. In cases only part of an enterprise is being acquired its turnover is been assessed regardless to whether this business is s separate legal entity or not.
It is important to mention that the main focus in the assessment of CPC is determined by definition of the relevant market. The market analysis for the intended concentration is predictive, i.e. the possible impact of the proposed concentration on the market is evaluated. According to the practice of the CPC there are three factors that are most important for competition on the market: demand substitutability, supply substitutability and potential competition.
Within one month as of the submittal of the notification, the Commission valuates the concentration and may issue a decision with which it prohibits the concentration or decides that the concentration does not fall under the prohibitions established by the law. It is also possible for the Commission to decide that even there is a concentration, then it is permissible as it does not lead to creation or increase of the monopolistic or dominant position of the participants involved in the market.
The assessment of concentration procedure, which is carried by the CPC is in two forms – an accelerated study and thorough examination, the decisions by which the CPC prohibits concentration allowed unconditionally concentration or authorizes it under certain conditions to be met by companies involved and penalty powers of the commission.
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