Articles

ECONOMIC CONCENTRATIONS – MERGER CONTROL THRESHOLD

18 November 2004 (Insight)

As the brown field investments are still of interest, the concerned investors should carefully analyze beforehand whether the investment represents an economic concentration by reference to the Romanian Competition Law.

An economic concentration is realized by means of any legal act which, regardless of its form, either operates the transfer the ownership or the right of possession over the whole or part of an undertaking's property, his rights and obligations, or has as an object or an effect to enable an undertaking or a group of undertakings to significantly influence, directly or indirectly, another undertaking or several undertakings.

Such an operation takes place also when one or more persons, already holding control over at least one undertaking, or one or more undertakings, directly or indirectly acquire control over one or more undertakings or parts of them, either through acquiring share capital or through acquiring assets, by contract or other means.

Control results from rights, contracts or other elements granting, individually or taken together and considering de facto and de jure circumstances, the possibility to exercise decisive influence over an undertaking, especially through: (a) ownership or possession rights over the whole or part of an undertaking's assets; (b) rights or contracts granting a decisive influence over the setting up, deliberations or decision-making of an undertaking's governance bodies.

In this sense, control is acquired, by the person or persons or the undertakings who are holding the rights or are beneficiaries of the contracts mentioned above, or who, without holding such rights/contracts, have the power to exert a decisive influence pertaining to such rights or contracts.

The principle provided by the Competition Law is that the economic concentrations that have as an effect creating or consolidating a dominant position that lead to or are likely to lead to a significant restriction, prevention or distortion of competition on the Romanian market or on a part of the Romanian market shall be deemed illegal. However, economic concentration operations should be notified to the Competition Council only if certain relevant turnover thresholds are applicable. The cumulative conditions that have to be met in order to notify are: (i) the aggregate turnover of the undertakings involved reaches or is higher than the ROL equivalent of 10,000,000 Euro and (ii) there are at least two undertakings involved in the operation who each reach a turnover higher than the ROL equivalent of 4,000,000 Euro in Romania.