Happy Holidays To The IT Sector

Karanovic & Partners in cooperation with local lawyers | View firm profile

Near the tail-end of 2016, the Serbian Competition Commission initiated an investigation for an alleged competition infringement that took place in June of the same year. The infringement involved a failure to notify a merger for mandatory clearance. The transaction in question concerned an unreported acquisition of sole control on the IT market.

The parties to the concentration appear to have been the two shareholders of Alti, one of the leading distributors of IT equipment in Serbia and a parent company to Win Win, a significant IT retail chain active in Serbia, Montenegro and Bosnia and Herzegovina. The concentration occurred when one of the two equal shareholders, Prointer Solutions, bought out the second shareholder. This means that the quality of control over Alti changed from joint to sole control, triggering a notifiable concentration under the local competition law framework, since the parties to the concentration satisfied the financial thresholds for mandatory notification under the local competition law.

According to publically available information, independent media outlets originally alerted the Commission to the suspected infringement. The Commission appears to have reacted swiftly to the inquiry and to other publically available information, initiating proceedings to investigate the failure to notify in detail and to potentially impose sanctions for the breach of the law.

Interestingly, in 2015 the Commission had cleared, without any conditions, Prointer Solutions' acquisition of the initial 50% share in the company (and the original joint control with the other shareholder, a natural person). However, subsequent changes in the quality of control (including from joint to sole control) were also monitored by merger control rules, and it appears that the acquirer neglected to take this into account in further corporate restructuring.  

The investigation is currently ongoing and the final consequences are yet to be seen. Although the fines for a competition infringement can amount to up to 10% of the total annual turnover realized in the previous business year, it is relatively unlikely that the sanctions will be so severe for a breach of this nature. However, the case unquestionably serves as a warning and highlights the importance of proper clearance in corporate transactions. Likewise it is a demonstration of the willingness of both the Serbian media to report suspected competition law breaches and the Competition Commission to follow through with formal investigations.

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