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Content last updated: 29-08-2019

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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, if the thresholds described in Section 2.3.1 under the Merger Screening Schedule below are met and the exceptions do not apply.

2.2 Suspensory effect

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

Yes. Transactions shall be notified to the competition agency after the announcement of the competition/auction but no later than its factual implementation (before registration) or before having entered into a relevant agreement.

In cases where there is no bidding round, the notification should be filed before the conclusion of the agreement. If the agreement is subject to registration in Georgia, the filing should be made before registration.

If the acquisition of control occurs in more than one transaction within three continuous calendar years, the economic agent gaining control will be obliged to notify before implementation of the transaction by which control is gained.

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?

The following transactions are caught by the merger control rules:

a) The merger of two or more independent economic agents resulting in the formation of one economic agent;

b) The gaining of direct or indirect control over the economic agent or any part of its business through purchase of securities or assets, through agreement or otherwise by a person already controlling at least one economic agent;

c) Participation of one and the same person in management boards of different economic agents;

d) Establishment of a joint venture, if it independently performs all functions conferred upon an economic agent for a long period.

1.2 Joint ventures

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

Only joint ventures which independently perform all functions conferred upon an economic agent for a long period of time are subject to a filing obligation in Georgia. However, even a joint venture that sells all, or a majority of, its output to its parents or purchases all, or a majority of, its output from its parent could become subject to notification if the statutory thresholds are met.

There is no distinction between incorporated or non-incorporated joint ventures. A non-incorporated joint venture could be subject to merger control provided that it performs all functions conferred upon an independent economic agent for a long period of time. Applicable laws similarly apply in case of contractual arrangements, which are not registered with the registration authorities.

1.3 Definition of "control"

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

“Control” implies rights, agreements or any other means, providing separately, or in aggregate, a possibility of exercising substantial influence over the enterprise or any part thereof, in particular:

  • Ownership of the enterprise and/or the right to use all/any part of its assets;
  • Rights (including contractual), providing a possibility to exercise substantial influence over the composition of the management boards, voting rights, decisions of the economic agent.

1.4 Minority shareholdings

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

Unless the acquisition results in acquiring control, filing obligation shall not be triggered.

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.

Upon reasonable interpretation of the Law, the following should be “undertakings concerned”:

In case of mergers, the merging entities.

In other cases, the parties to the transaction should be identified based on the specifics of the transaction. The competition laws of Georgia do not provide any ready-made guidance on this matter.

2.2 Date for establishing jurisdiction

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

The date of factual implementation (before registration) or before the date of entering into a relevant agreement or before implementation of the transaction by which control is gained, whichever date is earlier.

2.3 General thresholds

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

Concentration is subject to preliminary written notification to the competition agency and prior approval of the competition agency is required if:

  • the total annual turnover of the undertakings concerned in the territory of Georgia exceeds GEL 20 million (approx.  EUR 6,173,792), where the annual turnover of each of at least two of the undertakings concerned exceeds GEL 5 million (approx. EUR 1,543,448) in Georgia; or
  • the total value of the assets of the undertakings concerned in the territory of Georgia exceeds GEL 10 million (approx. EUR 3,086,896), where the value of the assets of each of at least two of the undertakings concerned in the territory of Georgia exceeds GEL 4 million (approx. EUR 1,234,758).

Please note that when assessing the aggregate annual turnover of the undertakings concerned, where one of the participants is a foreign company, only those operations of the foreign company which were performed in Georgia will be taken into account.

Economic agents are exempt from the filing obligations in certain circumstances as outlined below:

  • concentration results from insolvency and is provided in accordance with the procedures specified by the Law of Georgia on Insolvency Proceedings;
  • concentration results from liquidation, with the exception of cases where the competing enterprise or group, to which the competitors of an insolvent enterprise belong gains control;
  • control is gained temporarily, to secure a loan, provided that the rights gained through ownership of the assets are not exercised, with the exception of the right of disposal;
  • concentration applies to the participants of the interdependent persons (as defined under the Law); 
  • financial institution purchases with its own or client’s funds the participation interests or shares in the other enterprise and gains control over it temporarily or purchases assets for their further disposal, in the ordinary course of its business, provided that this transaction is made no later than 1 calendar year from the date of their purchase/gaining control over them. Additional conditions: (a) such institution has no rights with respect to ownership of the shares or participation interests, with the exception of rights on dividends; (b) such institution uses its rights only for the purposes of preparation of a sale, fully or partially, of the company, the company’s assets or its shares and interests.

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

Yes, if the thresholds regarding asset value are exceeded.

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

Yes, if the thresholds regarding asset value are exceeded.

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

Transactions falling below the above thresholds may not be investigated by the competition agency.

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 sector-specific merger control rules.

Economic agents operating in certain regulated fields are exempt from filing obligations to the competition agency and must file the transaction to other regulatory authorities, where necessary as required by applicable laws relevant to such agents.

In particular, the following regulated fields and agents fall under exemption(the list if not exhaustive): financial institutions (as listed under the Organic Law of Georgia on the National Bank of Georgia); commercial banks (pursuant to the Law of Georgia on the Activities of Commercial Banks); investment funds (pursuant to the Law of Georgia on Investment Funds); electronic communications (pursuant to the Law of Georgia on Electronic Communications), broadcasting (pursuant to the Law of Georgia on Broadcasting); electricity and natural gas (pursuant to the Law of Georgia on Electricity and Natural Gas) and certain regulated municipality services.

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?

No.

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)?

For the purposes of the calculation of the turnover of the participant of the concentration, the joint annual turnover of the following entities shall be taken into account:

(i) Participant of the concentration;

(ii) Companies directly or indirectly controlled by the participants of the concentration or the companies directly or indirectly controlling the participants of the concentration;

(iii) Other companies controlled by the company, implementing control on a party to the merger; and

(iv) Companies under joint control of the parties to the concentration.

Joint annual turnover shall include the financial data of the year before the one in which the concentration takes place (including income received from sold products/goods/services, excluding VAT, other taxes related to the receipt of such income, and discounts).

If the concentration involves the acquisition of the part/parts of one/several companies, whether or not they are independent units, only the relevant turnover of the part/parts of these companies which are the subject of the concentration shall be taken into consideration in calculating the annual turnover of the parties to the concentration, based on the relevant methodological instructions of the market analysis.

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

Guidance to the calculation of turnover as such is not available. However, on September 30, 2014, the Chairman of the competition agency issued Order No. 30/09-3 and adopted methodological guidelines of market analysis (the “Guidelines”). The Guidelines are, inter alia, relied upon for consideration of the concentration cases that are subject to notification or the concentration cases that violate the law.

The Guidelines can be found on: http://competition.ge/en/page2.php?p=4&m=138

3.2 Relevant period for calculation of turnover

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

The turnover is calculated according to the data for the financial year preceding the year in which the concentration takes place.

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?

The laws merely provide that joint annual turnover shall include the financial data of the year preceding the year in which the concentration takes place.

3.3 Relevant undertakings for the calculation of turnover

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

See Section 3.1.1 above.

3.3.2 The undertakings whose turnover is taken into account?

See Section 3.1.1 above.

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

The applicable laws do not differentiate between the participants of the concentration as long as the turnover or asset thresholds are met. The textual interpretation of the Law suggests that the seller may also be considered as participant.

3.4 Geographical allocation of turnover

3.4.1 The principles for the geographical allocation of turnover?

The turnover and asset threshold explicitly relate to the income/assets in the territory of Georgia. The laws do not provide any further guidance on this matter.

3.5 Valuation and allocation of assets

3.5.1 The principles for valuation and allocation of assets?

There is no specific guidance on the matter. Please see Section 3.1.1 above. 

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)?

Not applicable. 

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 control, the obligation to notify rests upon the acquirer(s) of controlling rights.

In case of mergers, the obligation rests upon all parties to the merger – separately, or jointly.

In case of acquisition of sole control, only the acquiring company is under the obligation to notify the transaction.

1.2 Deadlines for filing

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

There are no mandatory deadlines, however, the parties to the concentration are obliged to notify prior to factual implementation (before registration) of the concentration or before having entered into a relevant agreement, where registration is not carried out in Georgia.

If the acquisition of control occurs in more than one transaction within three continuous calendar years, the economic agent gaining control will be obliged to notify before implementation of the transaction by which control is gained.

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

Filing obligation is mandatory, however, the applicable laws and regulations do not provide any specific fines for failure to notify or for implementing a transaction without notification or approval. The competition agency, in general, has authority to order remedial actions to be taken by an economic agent in breach of antitrust regulations. 

1.3 Early filing

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

Yes. In fact, as noted above, the filing should be made before entering into an agreement. 

1.4 Filing fees

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

There are no filing fees. 

1.4.2 When must the filing fee must be paid?

Not applicable. 

1.5 Publicity

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

Receipt of notification is not published by the competition agency. The Decisions adopted by the competition agency are published in the form of press releases at the web-site. See the following link: http://competition.ge/en/page2.php?p=6&m=29

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 competition agency will publish a press release following the adoption of a decision. 

1.5.3 Will third parties be able to review the notification?

The law does not include any guidance on the matter. However, we would assume that the content of notification should be considered as public information, unless it is regarded as confidential as provided under the applicable laws.

The applicable laws, in general, oblige the competition agency to maintain confidentiality of the provided information. In particular, the competition agency is required to: (a) protect the confidentiality of information regarding undertakings that includes commercial and/or tax secrets; (b) protect the confidentiality of personal data of a person who provides information to the competition agency and requests the competition agency to protect the confidentiality of his/her personal data; and (c) ensure the confidentiality and non-disclosure of state secrets. The Law further provides that any disclosure and dissemination of confidential information is inadmissible, except where otherwise provided for by the legislation of Georgia. Use and disclosure of confidential information by employees of the competition agency, including for personal, academic, scientific purposes or for other activities is inadmissible.

The Law provides that generalized information regarding the relevant market, information about the number of undertakings, received income and incurred costs is not confidential.

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 laws do not provide an option of a simplified procedure. 

2.2 Procedural stages (cf. timetable below)

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

The merger control proceedings in Georgia are not split up into different phases.

The notified transactions are examined by the competition agency within a one-month period that may be extended for no more than two weeks.

Should the competition agency not issue a decision on the transaction within the above-mentioned statutory timeframe, the application will be deemed automatically cleared.

Please note that the investigation period starts running after the competition agency receives all required information.

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

Prior consultation is possible and in certain cases (e.g. cross-border transaction) advisable. Consultations before signing are allowed. 

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

Not applicable.

2.3 Timetable (cf. timetable below)

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

See Section 2.2.1 above.

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

No.

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

The laws do not provide for pre-notification with the competition agency. However, as noted in Section 2.2.2 above, the parties may consult the competition agency before filing.

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 competition agency has approved a template for notification of the concentration, which is included as an attachment to Order No. 30/09-4 on Approval of the Procedure on Submission and Consideration of Notification about Concentration. The notification should, inter alia, include information about participants and general and detailed information about the concentration. 

Please see: http://competition.ge/en/page2.php?p=4&m=141.

3.2 Supporting documentation

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

The laws do not include such list.

3.3 Originals, legalization and apostillation

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

No specific regulations are included under the competition laws. Please note, however, that all documents executed abroad should be legalized or notarized and certified by apostille, as 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?

Not applicable. 

3.4 Language

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

The notification must be made in the Georgian language.

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

Yes.

Statutory timetable

Step Description Time
1

Merger control proceeding

The merger control proceedings in Georgia are not split up into different phases.

Should the competition agency not issue a decision on the transaction within the statutory timeframe, the application will be deemed automatically cleared.

The notified transactions are examined by the competition agency within a one-month period that may be extended for no more than two weeks.

Please note that the investigation period starts running after the competition agency receives all required information.

  • Step 1 1
  • 1 month + 2 weeks
This content was delivered
and last updated on 29-08-2019 by
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