First experiences with the new Competition Law

Author: | Published: 1 Feb 2006
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Wolf Theiss (Bosnia and Herzegovina)

Address

Sarajevo

Telephone

+387 33 296 444

Fax

+387 33 296 425

Bank Austria Creditanstalt AG recently acquired shares in Nova Banjalucka Banka ad, Banja Luka, creating the first concentration in Bosnia and Herzegovina (BiH) ever to be cleared by the new competent authority, the Competition Council. The transaction highlighted some important procedural provisions to be aware of when submitting a filing for a transaction in BiH under the new Competition Law (Zakon o konkurenciji), which took effect on July 27 2005.

Composition of the Council

The Competition Council consists of six members, who are each elected for a term of six years. The rules on the appointment of members to the Council ensure that the ethnic groups and entities (or territories) within BiH are duly represented. Three members of the Council are appointed by the Council of Ministers of BiH – one member for each of the three constituent peoples; two members are appointed by the government of the Federation of Bosnia and Herzegovina, and one member of the Council is appointed by the Government of the Republic of Srpska. At present, two members of the Council belong to each of the three main ethnic groups (Bosniaks, Croats and Serbs). To pass Council decisions, a minimum of five members has to be present. Decisions require a majority vote of the present members, whereby every decision must be voted on by at least one representative of each constituent people. Our recent experience showed that members of the same ethnic group are likely to reach the same conclusion. Therefore, all members have to agree to approve a concentration.

As the Council is a recently established institution, its work is based on the practical experiences of neighbouring countries and the countries of the EU. So it is advisable to support the Council's decision-making process by presenting it with decisions passed by other competition authorities.

Procedural issues

In transactions in which the thresholds set out in the Competition Law are met, merger notifications have to be submitted to the Council within eight days of concluding an agreement, announcing a public bid, or acquiring a controlling interest, whichever takes place first. Together with the merger notification of the intended concentration, it is necessary to submit the following documents:

  • the original or certified copy of the document serving as the legal basis for the concentration, and a certified translation of the document if the original is not in languages officially used in BiH;
  • annual financial statements of the participants in the concentration for the year proceeding the concentration; and
  • other data required by the Competition Law.

Although it is not explicitly stated in the Competition Law, as a matter of precaution the Council has also insisted on the delivery of certified translations of the participants' annual financial statements if they were originally produced in foreign languages. To speed proceedings up, it is advisable to add these translations to the notification.

Immediately after receipt of the complete notification, the Council delivers a written confirmation to the notifying party that the notification is considered complete and that the procedure has officially commenced.

Upon receipt of a complete notification, the Council may render a decision to permit the concentration within 60 days if it estimates that the notified concentration will not have any negative effects. If it finds that the concentration could distort competition in BiH, the Council is obliged to initiate the decision-initiating proceedings within 15 days. In that case, the administrative proceeding officially starts on the date on which the decision was passed and the Council has a further six months to render a final decision. This official start of the Council's proceeding differs from the proceeding of other administrative bodies, which would normally be treated as having been initiated at the moment the notification was filed. If a decision is not issued within this time, the concentration is deemed approved. The final decision must approve the transaction, approve it under certain conditions, or prohibit the transaction.

A concentration may not be carried out until receipt of a decision confirming that the transaction is compatible with the rules laid down in the Competition Law, as the Law sets out serious fines for non-compliance.

In the Bank Austria Creditanstalt transaction, the Council assessed that the concentration would not have any negative effects on BiH's banking sector. Within 15 days of filing the complete notification, the Council cleared the acquisition of shares and made it possible for the transaction to be closed within one month of signing the agreements. Wolf Theiss, in cooperation with local attorney at law Sead Miljkovic, represented Bank Austria Creditanstalt AG in this transaction.

Mariana Spasojevic and Katja Tautscher