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New Competition Act exercises concentration control

19.09.2001

The new Competition Act comes into force on October 1 2001. According to the act a concentration is deemed to arise where:

• previously independent undertakings merge (as defined in the Commercial Code);
• one or more undertakings acquire overall or partial control of another undertaking; or
• one or more individuals who hold control over at least one undertaking acquires overall or partial control of another undertaking.

Concentration is deemed not to arise if a transaction is carried out as restructuring within a group.

Parties

The following are parties to a concentration:

• the merging undertakings;
• the individuals or undertakings that acquire overall or partial control of another; and
• the undertaking over which overall or partial control is acquired.

Application

A concentration shall be controlled if:

• the total global sales of the participants for the previous financial year exceeded Ekr500 million;
• the global sales of at least two parties exceeded Ekr100 million; and
• the commercial activities of at least one merging undertaking (or the undertaking of which overall or partial control is acquired) are carried out in Estonia.

A concentration shall not be controlled if a credit institution, financial institution, insurer or securities broker (whose daily commercial activities are securities transactions) acquires the securities of another undertaking for the purpose of re-selling, provided that it exercises the voting rights arising from the securities only for the purpose of preparing the sale (ie, not for influencing the competing activities of the undertaking that issued these securities) and that such securities are re-sold within one year of acquisition.

Provision of an Opinion

Assessment of a proposed concentration shall be based on the need to preserve and develop competition, thereby considering the structure of markets, and the actual and potential competition in a market including:

• the market positions, economic and financial power of the parties to the concentration;
• the access of competitors to the market;
• legal or other hindrances in entering a market;
• the supply and demand of goods; and
• the interests of buyers, sellers and end consumers.

The director general of the Competition Board (or his or her deputy) shall prohibit a concentration if it might result in the creation or reinforcement of a dominant position and thus restrict competition.

Notification

The Competition Board must be notified of a concentration that is subject to control within one week of:

• entry into the merger agreement;
• the acquisition of control; and
• the notice of the purchase bid for securities.

A written notice of concentration shall be filed with the Competition Board.

Proceedings

Within 30 days of the notice of concentration being filed with the Competition Board, the director general (or his or her deputy) will decide to:

• grant the permit for the concentration;
• start additional proceedings; or
• send a written notice to the individual who submitted the notice of concentration if it is disallowed.

Within four months, in the case of additional proceedings, the director general (or his or her deputy) will decide to:

• grant the permit for the concentration;
• prohibit the concentration; or
• terminate the proceedings if the parties to the concentration forego it.

In the decision granting the permit for concentration the director general may impose conditions and obligations upon the parties to prevent the restriction of competition.

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