BOSNIA AND HERZEGOVINA

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Content last updated: 28-08-2019

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  • Merger Control Regime
  • Merger Screening
  • Merger Filing

1. Overall description of merger control regime

1.1 Supranationality

1.1.1 Is the jurisdiction a member of/party to a supranational jurisdiction?

No.

1.1.2 Is the jurisdiction itself a supranational jurisdiction?

No.

1.1.3 If the answer to Section 1.1.1 and/or 1.1.2 above is in the affirmative, what are the implications hereof?

Not applicable.

2. Nature of merger control regime

2.1 Mandatory or voluntary

2.1.1 Is filing mandatory or voluntary?

Filing is mandatory, provided thresholds described in Section 2.3.1 under the merger screening schedule below are met.

2.2 Suspensory effect

2.2.1 Must completion of the transaction await clearance by the relevant authorities?

The completion must await clearance by the Bosnian competition authority.

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

A transaction is caught by the merger control rules if it brings a change of control on a lasting basis resulting from:

a) merger or other change of status which includes merging between two or more previously independent undertakings;

b) acquisition of direct or indirect control by one or more undertakings over other undertaking(s), or acquisition of part of other undertakings, which could constitute a separate business unit; or

c) joint venture by two or more undertakings with the aim of creating a new undertaking or acquisition of joint control over the existing undertaking, which operates on a long-term basis and has all characteristics of the independent undertaking.

1.2 Joint ventures

1.2.1 What types of joint ventures are caught by the merger control rules?

The creation of joint ventures performing on a lasting basis all the functions of an autonomous economic entity resulting in permanent structural market change, i.e. a so-called "full function" joint venture.

1.3 Definition of "control"

1.3.1 How are the concepts of "control" and "change of control" defined?

"Control" exists when one or more undertakings jointly have a dominant influence over another undertaking or group of undertakings, individually or jointly, on the basis of the law, by entering into an agreement or by any other means, and considering all legal circumstances and facts.

Only transactions that bring a lasting "change of control" to the undertakings concerned and in the structure of the market are covered by the merger control rules. Thus, transactions resulting only in a temporary change of control, such as for instance a transitory transaction, are not covered.

1.4 Minority shareholdings

1.4.1 Are minority and other interests less than control caught by the merger control rules?

Acquisitions of minority or other interests that do not lead to an acquisition of control do not fall within the Bosnian merger control rules.

2. Establishing jurisdiction for notification of mergers

2.1 Merging parties/undertakings concerned

2.1.1 Which undertakings are considered parties to the merger ("undertakings concerned") in the various types of transactions identified under Section 1.1.1 and 1.2.1.

In a merger, the "undertakings concerned" are each of the merging entities.

 In an acquisition of control, the undertakings concerned may vary depending on the characteristics of the transaction.

 In case of acquisition of sole control, the undertakings concerned are the acquiring undertaking consisting of all entities belonging to the same group (i.e. parent, subsidiaries, sister companies etc.) and the target undertaking (i.e. not including the seller).

 In case of acquisition of joint control of a newly created joint venture, the undertakings concerned are each of the undertakings jointly acquiring control. The same applies where one undertaking contributes a pre-existing subsidiary or a business (over which it exercises sole control) to a newly created joint venture.

 In case of acquisition of joint control over a pre-existing undertaking or business, the undertakings concerned are each of the undertakings acquiring joint control, and the pre-existing acquired undertaking.

 - In case of entry of a new shareholder in a pre-existing joint venture, which leads to a change in the quality of control for the remaining controlling shareholders, the undertakings concerned are the newly entering controlling shareholder alongside with the remaining controlling shareholders.

 - In case where a pre-existing, full-function joint venture acquires control over another undertaking, the undertakings concerned are the joint venture and the target undertaking. Where a joint venture is mere acquisition vehicle, the undertakings concerned are in such situation the parent companies to the joint venture and the target undertaking.

 In case of change from joint control to sole control, the undertakings concerned are the undertaking acquiring the sole control and the target. The other "existing" shareholder (i.e. the seller) is not considered an undertaking concerned. 

2.2 Date for establishing jurisdiction

2.2.1 Which date is relevant for concluding whether the transaction is notifiable?

Whichever date is earlier of the date of conclusion of the binding legal agreement; the announcement of public bid or the acquisition of a controlling interest.

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

If either of the two alternative thresholds is met, the transaction will have to be notified to the Bosnian competition authority.

 The first alternative threshold:

 a) the combined aggregate worldwide turnover of all the undertakings concerned is more than BAM 100 million; and

b) turnover generated by at least two of the undertakings concerned is more than BAM 8 million in Bosnia and Herzegovina.

 The second alternative threshold:

 a) the combined aggregate worldwide turnover of all the undertakings concerned is more than BAM 100 million; and

b) combined market share of the undertakings concerned exceeds 40% in any relevant market in Bosnia and Herzegovina.

2.3.2 For each threshold, can the threshold be triggered by only one party having local turnover?

In relation to the second alternative threshold described in Section 2.3.1 above, local practice is not clear in relation to the question of whether it suffices that only one party holds a market share of more than 40% or whether both parties have to have some market share on the local market. Theoretically, if only one party holds a market share of more than 40% and the other party holds 0% (and 0 turnover), the notification may still be required based on the other’s party market share (and a resulting turnover).

2.3.3 For each threshold, can the threshold be triggered without any party having local turnover?

Neither of the sets of thresholds can be triggered by non-existence of local turnover.

2.3.4 Are there any circumstances where transactions falling below these thresholds may be still investigated?

Transactions falling below the thresholds may not be investigated by the Bosnian competition authority.

2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)

2.4.1 Relevant thresholds for sector-specific or other ex ante merger control rules?

There are no special rules related to foreign investments, special sectors or other relevant approvals in the competition law of Bosnia and Herzegovina. However, in certain business sectors, such as (i) banking; (ii) telecommunications; (iii) energy; and (iv) pharmaceuticals, additional regulatory provisions exist that need to be observed. For example, certain changes in the shareholding structure of a telecommunication provider require a notification to or approval by the competent telecommunications agency. This notification or approval from the telecommunications agency is required in addition to the merger approval by the competition authority, if any.

2.4.2 Are any such schemes mandatory or voluntary?

Mandatory.

2.5 Foreign-to-foreign mergers

2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?

Transactions meeting the above thresholds have to be notified to the Bosnian competition authority, regardless of whether the undertakings concerned are domiciled outside of Bosnia and Herzegovina. 

3. Calculation and allocation of turnover, asset value, transaction value etc.

3.1 Relevant turnover

3.1.1 How is turnover defined (e.g. is income from other sources than "ordinary activities to be included, and how are rebates, taxes, internal turnover etc. treated)?

The relevant turnover to be taken into account is the net turnover related to the sale of goods and/or services in the ordinary course of business exclusive of (i) rebates; (ii) value added tax and other taxes directly related to the turnover; and (iii) group internal sales.

3.1.2 Identification and link to any official rules, guidance etc. on how to calculate turnover?

There is no official guidance on the calculation of turnover.

3.2 Relevant period for calculation of turnover

3.2.1 Which financial year(s) is relevant for the calculation of turnover?

The turnover should be based on the latest financial year for which audited annual accounts exist.

If the audited financial report is not ready for the latest financial year, it is advisable to provide internal data together with the latest audited financial report.

3.2.2 Should adjustments be made for e.g. divestitures, acquisitions, closings and other changes of the economic reality of the undertaking concerned made after or during the relevant financial year?

Adjustments must be made for any divestitures/acquisitions made during/after the latest financial year. Turnover stemming from such divested/acquired assets should be excluded/included.

Though not specifically regulated under local rules, the Bosnian competition authority would most likely adopt the approach explained under the EC Consolidated Jurisdictional Notice, given that, thus far, the competition authority has never deviated from the rules stipulated therein.

3.3 Relevant undertakings for the calculation of turnover

3.3.1 The "undertakings concerned", i.e. which parties?

See Section 2.1.1 above. 

3.3.2 The undertakings whose turnover is taken into account?

See the definition of the "undertakings concerned" in Section 2.1.1 above. In short, the undertakings whose turnover is taken into account comprise the entire group that the acquirer belongs to and the target (including its subsidiaries).

3.3.3 Shall the turnover of the existing seller be included in the target's group turnover?

The seller's turnover shall not be included in the target's group turnover. 

The target company and its subsidiaries are to be taken into account.

3.4 Geographical allocation of turnover

3.4.1 The principles for the geographical allocation of turnover?

In general, the turnover should be allocated geographically based on where the customer was located at the time of the turnover generating transaction, i.e. typically where the goods were actually delivered or services actually provided.

Though not specifically regulated under local rules, the Bosnian competition authority would most likely adopt the approach explained under the EC Consolidated Jurisdictional Notice, given that the competition authority has never deviated from the rules stipulated therein. 

3.5 Valuation and allocation of assets

3.5.1 The principles for valuation and allocation of assets?

Not applicable.

3.6 Calculation of other thresholds

3.6.1 The principles for calculation of metrics for other thresholds (e.g. transaction value, market share, share of supply etc.)?

Not applicable.

3.7 Special rules

3.7.1 Do any special rules or principles apply to the calculation, allocation etc. of turnover, assets etc. for specific undertakings (e.g. State-owned undertakings, investment funds, credit and financial institutions, insurance companies, financial holding companies, others)?

There are specific rules of calculation for undertakings performing financial services, as well as insurance and reinsurance companies.

Concerning undertakings performing financial services (banks and financial institutions), their turnover is calculated as a sum of: (i) income from interest rates and similar income sources, (ii) income from securities, (iii) commissions, (iv) net profit from financial operations, and (v) other operating income, exclusive of (i) rebates; (ii) value added tax and other taxes directly related to the turnover; and (iii) group internal sales.

Concerning insurance and reinsurance companies, their turnover is calculated as a sum of gross premiums, which include all received and expected premiums, as well as re-insurance premiums, net of taxes and fees charged by reference to the amounts of the individual premiums or the aggregate amount of premiums.

3.7.2 Does any exemptions apply?

Not applicable.

1. Practical information

1.1 Responsibility for filing

1.1.1 The parties responsible for filing?

In case of acquisition of sole control, the acquirer is responsible for filing.

In case of acquisition of joint control or a merger creating a new entity, the notification must be jointly submitted.

1.2 Deadlines for filing

1.2.1 Are there any mandatory deadlines for filing, and, if so, how these are calculated?

The mandatory deadline for filing of merger notification is 15 calendar days after the conclusion of an agreement or contract, announcement of public invitation, i.e. bid or closing of public bid, or acquisition of control whichever happens first.

1.2.2 Are there any sanctions for not filing within the deadlines?

There is a procedural penalty for late filing ranging up to 1% of the total annual turnover in a previous financial year. The Bosnian legislation is not clear whether the turnover is global or local. In the previous practice of the Bosnian competition authority, its decisions did not state which turnover is taken into account for calculation of penalty. The responsible person within the company can also be fined an amount of between BAM 5,000 and BAM 15,000.

In the case of the implementation of a concentration without clearance, the competition authority could fine the filing party up to 10 per cent of its annual worldwide turnover from the financial year preceding the year of infringement. The responsible person within the company can also be fined an amount of between BAM 15,000 and BAM 50,000. The statute of limitations for such an infringement is five years.

1.3 Early filing

1.3.1 Is it possible to file before the signing of merger agreement?

Notification may be made where the undertakings concerned demonstrate a good faith intention to conclude an agreement by signing a letter of intent or in any other manner or, in the case of a public bid, where they have publicly announced an intention to make such a bid, provided that the intended agreement or bid would result in a notifiable transaction.

1.4 Filing fees

1.4.1 Are there any fees for filing, and, if so, please describe how such fees are calculated?

The filing fee is BAM 2,000. In addition, there is also a clearance fee in the amount of BAM 5,000.

The filing fee in Phase II procedures is BAM 25,000 (see Section 2.1.1 below).

1.4.2 When must the filing fee must be paid?

With the submission of the notification (or within couple of days from filing, in practice).

1.5 Publicity

1.5.1 When and in which format will the authority publish receiving a notification?

The authority publishes a non-confidential notice of the fact that it has received a notification on its website and in the Official Gazettes of Bosnia and Herzegovina, Official Gazette of Federation of Bosnia and Herzegovina and Official Gazette of the Republic of Srpska, inviting third parties to comment on the proposed transaction.

1.5.2 How will the authority in general handle the case publicly, e.g. will it usually comment in the media, send out press releases etc.?

The authority is reluctant to publicly comment on cases it handles.

1.5.3 Will third parties be able to review the notification?

Third parties may upon a reasoned request be granted access to file a non-confidential version of the notification. However, the local counsel is not aware of any third party being granted access to the notification.

2. Procedure and timing

2.1 Normal and simplified procedures

2.1.1. Does the regime allow for a simplified (fast track) procedure, and, if so, what are the criteria for using the simplified procedure?

The Bosnian Competition Law does not provide for a simplified notification procedure. The law merely distinguishes between Phase I (no competition concern transaction) and Phase II (an in-depth procedure in more complex cases with competition concerns) filings (see Section 2.3.1 below).

2.2 Procedural stages (cf. timetable below)

2.2.1 The various stages of (i) a simplified procedure and (ii) a normal procedure?

Once the merger notification is submitted, the competition authority may return with additional information requests. After the authority has obtained all the necessary information for the decision and has issued a confirmation on completeness, it will issue a decision on the merger (clearance, conditional clearance or rejection).

2.2.2 Is pre-notification contact with the relevant authorities customary/obligatory/encouraged/etc.?

The Competition Law does not provide for pre-notification discussions with the competition authority. Members of the Council and case handlers are generally reluctant to enter into any verbal discussions with prospective applicants. Pre-notification discussions are nevertheless possible, but are not customary (i.e., not a formal part of the procedure). They are used only by exception, e.g., in certain more complex (Phase II) cases. 

2.2.3 Are there any sanctions for not filing within the deadlines?

There is a procedural penalty for late filing ranging up to 1% of the total annual turnover in a previous financial year. The Bosnian legislation is not clear whether the turnover is global or local. In the previous practice of the Bosnian competition authority, its decisions did not state which turnover is taken into account for calculation of penalty. The responsible person within the company can also be fined an amount of between BAM 5,000 and BAM 15,000.

In the case of the implementation of a concentration without clearance, the competition authority could fine the filing party up to 10 per cent of its annual worldwide turnover from the financial year preceding the year of infringement. The responsible person within the company can also be fined an amount of between BAM 15,000 and BAM 50,000. The statute of limitations for such an infringement is five years.

2.3 Timetable (cf. timetable below)

2.3.1 The statutory timetable/deadlines for review of a notification?

Phase I: Firstly, the competition authority has to review the completeness of the notification and to issue a declaration to this effect. If the competition authority considers a notification incomplete it will ask the notifying party to complete it within 8 days. Extension of this deadline is possible upon request and the authority may issue such requests multiple times. After the notification is declared complete, the competition authority has 30 days to decide whether to open a Phase II procedure or to issue a Phase I decision. The clearance deadline, therefore, only starts to run after the confirmation on completeness is issued. It should be noted that there is no deadline for the competition authority to issue the declaration (confirmation) on completeness of the filing. In practice, the competition authority usually makes a decision in Phase I cases within three to five months from the initial filing.

Phase II: In case a phase II procedure is initiated, the competition authority has to make a decision within (an additional) 3 months following the day of adoption of a decision to initiate phase II. In case the competition authority considers additional expert examinations are necessary, the phase II decision deadline may be extended by up to (an additional) 3 months.

2.3.2 Can the statutory timetable/deadlines be suspended ("stop-the-clock"), and if so under which conditions?

Once the competition authority declares the notification complete, there is no possibility to suspend the deadline. However, it should be noted that the competition authority does not have any deadline to declare the notification as complete.

2.3.3 If pre-notification with the relevant authorities contact is possible/customary, how long will the duration of such contact usually be?

Please refer to Section 2.2.2 above.

3. Format and content of notification

3.1 Notification forms

3.1.1 Must the notifying parties use any mandatory notification forms, e.g. for simplified and normal procedures, and, if relevant, add a link to the relevant forms?

The Bosnian competition authority does not have a mandatory form.

3.2 Supporting documentation

3.2.1 List of the supporting documentation which must as a minimum be submitted along with the notification?

Cf. checklist below.

3.3 Originals, legalization and apostillation (cf. checklist below)

3.3.1 List of all documents which must be submitted in original/legalized versions and whether any documents must be apostilled?

All documents listed in Section 3.2.1 above need to be provided as original or certified copies, and apostilled (if applicable).

3.3.2 If the merger regime has a mandatory filing deadline, must all the documents identified under Section 3.3.1 be submitted within this deadline?

It is sufficient to submit only basic information on the parties and the transaction within the mandatory deadline. The other missing documentation may be provided by the notifying party after the initial submission, on its own initiative or upon an order from the competition authority. Please note that missing the deadline provided by the competition authority may result in rejection of merger notification.

3.4 Language

3.4.1 Which languages may be used for drafting and filing a notification?

The notification can be made in the Bosnian, Croatian and Serbian languages.

3.4.2 Does translations have to be certified/legalized and apostilled?

The translations of the merger filing documentation need to be certified by an authorized translator. In most, if not all cases, the local counsel may organize the necessary certified translation.

Statutory timetable

Step Description Time
1

Pre-notification

The Competition Law does not provide for pre-notification discussions with the competition authority. Members of the Council and case handlers are generally reluctant to enter into any verbal discussions with prospective applicants. Pre-notification discussions are nevertheless possible, but are not customary (i.e., not a formal part of the procedure). They are used only by exception, e.g., in certain more complex (Phase II) cases. 

Not applicable.

2

Phase I

Firstly, the competition authority has to review the completeness of the notification and to issue a declaration to this effect. If the competition authority considers a notification incomplete it will ask the notifying party to complete it within 8 days. Extension of this deadline is possible upon request and the authority may issue such requests multiple times. After the notification is declared complete, the competition authority has 30 days to decide whether to open a Phase II procedure or to issue a Phase I decision. The clearance deadline, therefore, only starts to run after the confirmation on completeness is issued. It should be noted that there is no deadline for the competition authority to issue the declaration (confirmation) on completeness of the filing. In practice, the competition authority usually makes a decision in Phase I cases within three to five months from the initial filing.

There is no deadline for the competition authority to issue the declaration (confirmation) on completeness of the filing.

In practice, the competition authority usually makes a decision in Phase I cases within three to five months from the initial filing.

3

Phase II

Issuing Phase II decision on the merger (clearance, conditional clearance or rejection) if needed.

3 months following the day of adoption of a decision to initiate phase II.

In case the competition authority considers additional expert examinations are necessary, the phase 2 decision deadline may be extended by up to (an additional) 3 months.

  • Step 1 1
  • Step 2 2
  • Step 3 3
  • 0
  • 3-5 months
  • 3 + 3 months

Checklist

List of the supporting documentation which must as a minimum be submitted along with the notification.

Supporting documentation

This content was delivered
and last updated on 28-08-2019 by

Karanovic & Partners in cooperation with local lawyers has provided all input about merger control in Bosnia and Herzegovina.

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For more information about Karanovic & Partners and merger control in Bosnia and Herzegovina, please contact our Partner directly. 

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