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New simplified merger clearance

Effective September 1 2009, the Czech Republic's Act on Protection of Economic Competition has been amended. The amendment introduces the possibility of a simplified merger clearance procedure.

The simplified procedure is available to the undertakings concerned if (i) none of them is active in the same relevant market or their combined market share in a market is lower than 15% and (ii) none of them is active in a market vertically linked to the relevant market, or the undertakings' market share in any such market is lower than 25%. The simplified procedure is also available if an undertaking is acquiring sole control over a joint venture over which it previously exercised joint control.

Compared to the standard merger clearance application, the application for approval is based on a simplified questionnaire, which omits the detailed discussion of relevant markets and general conditions in those markets. These general conditions include the structure of supply and demand, the conditions for market entry, the significance of research and development for long-term competitiveness in the individual markets, the existence of cooperation agreements and associations of undertakings relevant to the assessed concentration.

Upon receipt of the simplified merger clearance application, the Office for Protection of Economic Competition announces the launch of the simplified procedure without undue delay on the internet and stipulates a deadline for filing objections against the notified concentration; the announcement of the launch is not published in the Commercial Bulletin (as in the standard clearance procedure).

If the Office concludes within the scope of the simplified procedure that the concentration is subject to notification and that the Office needs additional information to make a proper assessment, it dispatches a request to the participants in the proceeding within 20 days from the date of notification requesting the filing of a full merger clearance application.

If the Office concludes that it does not require additional information, it issues a clearance decision within the same period. The reasoning of the clearance is limited to the identification of the concentrating undertakings, definition of the relevant market or the sector in which the concentrating undertakings are active and the fact that the clearance has been issued within the scope of a simplified procedure. If the Office does not render the decision within the specified period, the concentration is deemed approved.

The new simplified procedure has been received well by investors as it reduces the costs and the time required to obtain merger clearance; however, the filing fee is the same for the standard and simplified procedure (Kc100,000, or approximately €4,000). Although the standard review procedure is also limited to 30 days, the preparation of a full filing is typically more time-consuming and the Office often asks additional questions after filing that suspend the period for decision until the questions are answered.

Pavel Marc and Michal Pravda

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