What is concentration? Is there a concentration?
Each transaction, performed by independent undertakings, which leads to a lasting change in control of the participating undertakings. Art. 22 of Protection of Competition Act observes different hypotheses of concentration. If a transaction planned by us represents concentration according to Protection of Competition Act, then we should continue with the next text.
Who are the participants in concentration?
For the purposes of the assessment of the notified transaction all undertakings participating in the concentration must be identified, which includes direct (concerned undertakings) and indirect participants.
- Direct participants are the undertakings which take part in the implementation of the concentration directly. Depending on the legal form of concentration direct participants are:
- Merger – the transforming undertakings
- Acquisition of sole control over an entire company – the acquiring control and the acquired undertaking; Acquisition of sole control over a part of a company (assets, trademark etc.) – the acquiring control undertaking and the acquired part/s of the target company
- Acquisition of joint control over an existing undertaking – the persons who are going to exercise control jointly and the undertaking which is the object of that control
- Creating of a new joint undertaking – its founders, the so-called mother undertakings.
Important: in cases of acquisition of sole control over existing companies or their parts the seller is not included when identifying the concerned undertakings.
- Indirect participants are the undertakings which are part of the group of undertakings to which the direct participant belongs. The group of undertakings to which each of the direct participants belongs includes:
- The undertakings controlled directly or indirectly in accordance with Art. 22, subparagraph 3, Protection of Competition Act, by the participating undertaking
- The undertakings controlling directly or indirectly in accordance with Art. 22, subparagraph 3, Protection of Competition Act, the participating undertaking
- Other undertakings controlled directly or indirectly in accordance with Art. 22, subparagraph 3, Protection of Competition Act, by an undertaking exercising control over the respective participating undertaking
- Undertakings which are jointly controlled by the undertakings described in a) – c).
When identifying the concerned undertakings in different transactions one must have in mind Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings
Turnovers of participating undertakings
The second test which is to be taken is the question about the total turnovers of the participating undertakings on the territory of Republic of Bulgaria. They must exceed the thresholds described in Art. 24, subparagraph 1, Protection of Competition Act:
- Thresholds:
- BGN 25 million for the previous financial year and
- The turnover of each of at least two undertakings participating in the concentration is over BGN 3 million or the turnover of the acquired undertaking is over BGN 3 million.
- Calculation of turnovers
For the purposes of calculation of the turnover, the economic group to which the participating undertaking belongs is regarded as a concerned undertaking. The turnover of the participant in the concentration is calculated in compliance with the provisions of Art. 25 of Protection of Competition Act:
- One must include all revenues from sales of goods and services generated from ordinary activities for the previous financial year reduced with the trade discounts, rebates and VAT. Revenues from sales between the undertakings of the economic group are also to be deducted.
- When acquiring part/s of an undertaking one must take in mind only the turnover of the respective part/s
- The total turnover of the participant is calculated as a sum of the respective turnovers of the participating undertaking; the undertakings controlled directly or indirectly by the participating undertaking; the undertakings controlling directly or indirectly the participating undertaking; other undertakings controlled directly or indirectly by an undertaking exercising control over the respective participating undertaking; the undertakings which are jointly controlled by the undertakings controlled or controlling the participating undertaking.
- When calculating the turnover of credit and other financial institutions and insurance companies there are some specific points which are described in Art. 25, subparagraph 3, point 1 and 2 of Protection of Competition Act.
