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New Competition Act in Slovakia: A Practical Update but Not a Revolution

New Competition Act in Slovakia: A Practical Update but Not a Revolution

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A new competition act will come into force in Slovakia on 1 June 2021, replacing the former competition act applicable since 2001. The completely new act was adopted because the Slovak competition authority wanted a fresh start for the Slovak competition legislation and not just adopt its 11 amendments due to the need to implement the ECN+ directive.

Although the new act does not revolutionise competition law in Slovakia, it still introduces a few interesting developments.  

Definition of an undertaking

The former Slovak competition act defined an undertaking as a person with separate legal personality. This was followed by other provisions, according to which the party to the sanction proceedings was always the person that committed the unlawful conduct, which also incurred a fine calculated from its turnover.

However, this did not comply with EU case-law developments, which are based on a more economic approach to the term "undertaking". Therefore, the new act defined an undertaking to also include a group of companies that can be treated as a single undertaking, while fines can be calculated based on the global turnover of the entire group. Members of the group on which a sanction will be imposed can be jointly and severally liable.

In addition, the new act introduces the concept of economic succession, under which the liability for infringement will pass to the economic successor that continues the economic activity of its predecessor (if the respective entity has ceased to legally or factually perform its economic activity).

Merger clearance thresholds

The new act introduces a major change in relation to joint ventures. Under the former act, joint ventures without any link to Slovakia (so-called extraterritorial joint ventures) could fall under merger control notification requirements in Slovakia also if only one of its parent companies had turnover in Slovakia. This requirement led to many merger control proceedings of concentrations without any real impact on the Slovak market (e.g. creation of a joint venture to be active only in Asia). This will now change and extraterritorial joint ventures will no longer be subject to the merger notification.

The notification thresholds and general procedure of merger clearance proceedings have not been changed substantially. However, the original wording of the new competition act contained a proposal to introduce a new de facto alternative threshold (a transaction where the domestic turnover of the two parties is at least EUR 4m and the horizontally or vertically overlapping market share of at least 40 % was supposed to be subject to a specific screening mechanism), but this proposal was dropped during the legislative process.

New powers for the competition authority

Under the new act, the Slovak Antimonopoly Office (Protimonopolný úrad Slovenskej republiky) will have new powers that are partially based on the ECN+ directive. These powers include:

  • the possibility to adopt interim measures, especially if there is a reasonable presumption that there has been a cartel or an abuse of dominant position and that there is a risk of serious or irreparable distortion of competition; and

  • special remedies (either structural or behavioural, and even for an indefinite period) in case of cartels or an abuse of dominant position.

The new act also clarifies the position of the authority and its representatives, its internal governance as well as the selection process.

Procedural changes

The new competition act will also introduce various procedural changes, which should provide clearer rules for proceedings. These changes include calculation of the period for Phase II merger proceedings or rules applicable in specific situations (such as the current COVID-19 pandemic).

However, the new competition act also provides for procedural changes which all undertakings active in Slovakia should bear in mind. For instance, the authority can impose a fine of up to 10 % of the undertaking's worldwide turnover for every breach of competition rules, which can lead to cumulative fines for several infringements. Another important change is that the limitation period for the imposition of sanctions will be extended from the current eight years to 10 years counting from the end of the infringement.

An interesting procedural novelty will also be introduced to merger control proceedings. The notifying party will be obliged to inform the authority without delay of changes to the facts provided in the notification of the concentration and of any material facts that arise during the proceedings relating to the notification. Until such a change is duly notified, the deadline for the authority to adopt the decision will automatically stop running without need for a specific decision on this.

Outlook

Slovakia's new competition act indeed introduces various practical changes to competition law and its enforcement. It remains to be seen how the Antimonopoly Office will apply the new measures in practice and whether the enforcement of competition law will change.

By Michal Lucivjansky, Counsel, Schoenherr

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