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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 that the thresholds described in Section 2.3.1 under the Merger Screening Schedule are met.

2.2 Suspensory effect

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

Yes, the completion must await clearance by the Montenegrin 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) the 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 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" is defined as the possibility of exercising decisive influence over other undertaking in full or over its operations, specifically by ownership, other rights, contracts or any other means, either separately or in combination and having regard to the considerations of fact or law involved.

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 Montenegrin 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 Montenegrin competition authority.

The first alternative threshold:

a) the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 20 million; and

b) turnover generated by at least one of the undertakings concerned is more than EUR 1 million in Montenegro.

The second alternative threshold

a) The aggregate turnover in Montenegro of all undertakings concerned is more than EUR 5 million.

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

The first alternative threshold may be triggered by only one party having local turnover.

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

Neither of the alternative thresholds may be triggered without at least one party having local turnover.

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

Transactions falling below the above thresholds may be investigated, i.e. the Montenegrin competition authority may instruct the parties to the concentration to submit a merger notification if their joint market share on the relevant market in Montenegro exceeds 60%.

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?

The banking sector: For each acquisition of 5% (the qualified holding) to 20%, and further acquisitions reaching above 20%, 33% or above, 50% or above of voting rights in a bank are all subject to the approval of the Central Bank of Montenegro. The same applies for acquisitions of (re)insurance and leasing companies (the qualified holding is set at 10%), except that the approval is provided by the Insurance Supervision Agency. Approval should also be obtained from the Montenegrin Electronic Media Agency of any change in the ownership structure of electronic media services providers if it results in a shareholder acquiring 10% or more of the shares.

Electronic communications: It is recommended that telecom license holders inform the Agency for Electronic Communications and Postal Services of any changes to their corporate structure.

Concessions: The Law on Concessions provides that the change of control in concession companies is subject to approval by the concession grantor (i.e. the Government, the Parliament or the Municipality). The Concession Commission, established pursuant to the Law on Concessions, keeps the register of all changes regarding the concession contracts.

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 Montenegrin competition authority, regardless of whether the undertakings concerned are domiciled outside of Montenegro.

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)?

Turnover is defined as the total annual turnover before taxation.

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 figures 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.

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.

This is not specifically regulated under local rules, but the Montenegrin 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.

3.5 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, their turnover is calculated net of taxes as a sum of: (i) turnover from interest and similar turnover; (ii) turnover from securities (turnover from stocks and other securities which have fluctuating yield, turnover from shares with the undertaking, turnover from stocks in affiliate companies); (iii) net gains based on financial business; (iv) other operating income.

Concerning insurance and reinsurance companies, their turnover is calculated as the sum of premiums paid on insurance and reinsurance contracts concluded by, or on behalf of such companies, net of tax payable on the premium amount per single contract, or the total 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 from EUR 4,000 to EUR 40,000 after the deadline elapses. Additionally, a responsible person in the company may be fined in the amount ranging from EUR 1,000 to EUR 4,000 for late filing.

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?

There is a clearance fee amounting to 0.03% of the annual turnover generated by the undertakings concerned in the financial year preceding the merger notification (the amount is capped at EUR 15,000). The fee is payable in two installments: (i) upon submission of the filing: EUR 600, and (ii) after the notification that the merger is cleared a maximum of EUR 14,400 is payable.

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?

The authority will publish the receipt of the notification in the Official Gazette of Montenegro including: (i) names of the parties to the concentration; (ii) nature and manner of the concentration (acquisition of joint/sole control, creation of joint venture); (iii) industry sector in which the concentration is being conducted. Also, it will publish the non-confidential version of the decision (without reasoning) on its website.

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.

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 Montenegrin competition law does not provide for a simplified notification procedure.

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, it will issue a decision on the merger (clearance, conditional clearance or rejection).

Additional information requests may restart the review clock.

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

Pre-notification contact with the local competition authority is not a formal part of the procedure and is not customary in Montenegro. Local competition authority is usually reluctant to communicate before the submission of the merger notification.

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

There is a procedural penalty for late filing ranging from EUR 4,000 to EUR 40,000 after the deadline elapses. Additionally, a responsible person in the company may be fined in the amount ranging from EUR 1,000 to EUR 4,000 for late filing.

2.3 Timetable (cf. timetable below)

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

The Montenegrin competition authority is obliged to issue a decision within (i) 105 working days where the merger is to be cleared unconditionally (i.e. it was determined that it does not significantly prevent, restrict or distort competition, in particular through establishing or strengthening a dominant position) (ii) 125 working days where the merger is to be cleared with certain conditions. (iii) 130 working days where the merger is prohibited because it was determined that the concentration significantly prevents, restricts or distorts competition. Notification is deemed cleared if the decision is not issued within the prescribed deadlines.

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

The Montenegrin competition authority is authorized to issue requests for information to the parties to the concentration, which may reset the statutory deadline for issuance of the decision. 

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 Montenegrin 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?

The original documents that should be provided should be apostilled.

The Montenegrin competition authority may request original extracts from the company (business, commercial) registers for companies that are parties to the transaction, and also for Montenegrin companies directly/indirectly owning 25% or more shares in the party to the concentration (i.e. exercising control in any other manner). Additionally, the authority has been seen to have requested an original copy of the act of concentration (agreement, letter of intent and/or other).

However, in a large majority of transactions, this condition is not met and it is rarely provided in the merger filing (especially in foreign-to-foreign transactions).

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?

No. It is sufficient to submit only basic information on the parties and the transaction within the mandatory deadline and follow up with complete information and documents later. 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 the 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 Montenegrin, Bosnian, Albanian, 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

Pre-notification contact with the local competition authority is not a formal part of the procedure and is not customary in Montenegro. Local competition authority is usually reluctant to communicate before the submission of the merger notification.


Not applicable.

2

Assessment of the notification and decision on the merger

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, it will issue a decision on the merger (clearance, conditional clearance or rejection).

The Montenegrin competition authority is obliged to issue a decision within (i) 105 working days where the merger is to be cleared unconditionally (ii) 125 working days where the merger is to be cleared with certain conditions (iii) 130 working days where the merger is prohibited.

Notification is deemed cleared if the decision is not issued within the prescribed deadlines.

Please be aware that "stop-the-clock" is possible (cf. 2.3.2 above).

  • Step 1 1
  • Step 2 2
  • Not applicable
  • 105 - 130 days

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 Montenegro. 

Karanovic & Partners is a regional legal practice in Southeast Europe with a tradition spanning two decades and cooperating offices in Serbia, Croatia, Slovenia, Montenegro, North Macedonia, and Bosnia and Herzegovina. With more than 100 attorneys at law cooperating across the region, we provide integrated services focusing on effectiveness and practicalities in providing solutions to the clients.

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

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