A leading figure of the Montenegrin Agency for Protection of Competition has confirmed media reports about a significant gun-jumping fine imposed against a telecom company, for implementing a transaction before obtaining a clearance from the country’s competition watchdog. So, what was this case all about?
What transaction did the gun-jumping fine relate to?
The transaction for which the gun-jumping fine was imposed concerned the acquisition of 50% of shares in Slovenian company Arena Sport doo Ljubljana by Serbian company Arena Channels Group doo Beograd. Apparently, the transaction was completed in 2020 and was cleared by the Montenegrin competition watchdog only in 2021.
The acquirer belongs to a group of companies controlled by the Serbian telecom incumbent, Telecom Serbia. The group is also present in Montenegro, through a company Mtel doo Podgorica (m:tel), active primarily in the provision of mobile phone services.
Can parties implement a notifiable transaction in Montenegro without clearance from the competition authority?
No – if a transaction triggers the mandatory merger filing thresholds in Montenegro, the parties need to wait with implementing it until the competition authority clears it or one of the clearance deadline expires. In this case, it appears that the parties had first implemented the transaction and only then notified it to the Montenegrin Agency for Protection of Competition.
What Montenegrin authority did impose the gun-jumping fine?
In Montenegro, the competition watchdog (the Agency for Protection of Competition) does not have the authority to impose fines on antitrust infringers. Rather, once it completes an infringement investigation, the Agency can turn to the misdemeanor court with a request for initiation of misdemeanor proceedings against the infringer. And the court could then conduct misdemeanor proceedings and impose a fine on the infringer.
What company was on the receiving end of the gun-jumping fine?
It appears that the misdemeanor court imposed a fine on the acquiring group’s Montenegrin company, m:tel. This is significant since the acquirer in the contentious transaction was another company from the acquiring group – Arena Channels Group doo Beograd.
According to the Montenegrin Competition Act, related undertakings (companies) are considered as a single undertaking within the meaning of the act. And it seems that the Montenegrin competition watchdog and the misdemeanor court hold the view that this allows for the possibility that the fine be imposed on any company within the infringer’s group (in this case, on the acquiring group’s Montenegrin subsidiary).
What was the amount of the gun-jumping fine?
According to reports, the misdemeanor court imposed on m:tel a fine of EUR 806,000.
The Montenegrin Competition Act provides that the amount of the gun-jumping fine shall be between 1% and 10% of the infringer’s turnover in the year preceding the year of infringement. Since the apparent infringement seems to have taken place in 2020, the year relevant for the calculation of the fine appears to be 2019.
Based on m:tel’s publicly available financial statements for 2019, the amount of the gun-jumping fine was around 1% of m:tel’s turnover for that year, or at the lower end of the scale prescribed by the law.
How often are gun-jumping fines imposed in Montenegro?
Since the imposition of gun-jumping fines in Montenegro is the prerogative of misdemeanor courts rather than the country’s competition watchdog, news about gun-jumping fines is not that easy to come by. Occasionally, the Agency for Protection of Competition publishes an overview of gun-jumping enforcement, as it did back in 2021. This lack of information about gun-jumping enforcement adds to the significance of the present case, which has been confirmed by both the Agency and the fined company.
Key takeaways
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For more information, please contact Dr. Dragan Gajin, Head of Competition at Doklestic Repic & Gajin.