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Tag: EU and competition

The Legal 500 EMEA 2023 rankings

[vc_row][vc_column][vc_column_text]BDV proudly shares its recognition in The Legal 500 (Legalease) EMEA 2023 rankings as TIER 1 firm. The Legal 500 analyses the capabilities of law firms across the world, with a comprehensive research programme revised and updated every year to bring the most up-to-date vision of the global legal market. BDV has been recognized across 5 categories: (i) Commercial, Corporate and M&A, (ii) Banking, Finance and Capital Markets, (iii) Dispute Resolution, (iv) EU and Competition, and (v) Real Estate and Construction. Legalease highlights the BDV team as “responsive, efficient, and knowledgeable” … “composed of highly competent and resourceful young professionals, with a wealth of experience in handling complex and challenging matters”. BDV tax department received special praise for its “tax structuring expertise” (Commercial, Corporate and M&A) and “tax controversy” mandates (Dispute Resolution). Legal 500 also recognized all BDV partners individually: Laurenz W. Vuchetich as “contact for M&A work”…“eloquent, thorough, reasonable and very pleasant to work with”, Ivan Dvojkovic as “very calm and objective, even in the most stressful situations” and “contact on both the buy and sell-side of M&A transactions”, and Vladimir A. Batarelo as “talented, excellent and trustworthy lawyer” who “provides additional value to clients by dint of his tax structuring expertise”. Marko Bohaček is praised as a Rising Star and is recognized for his exceptional work in Banking, Finance and Capital Markets. Tomislav Sadrić is recognized alongside Laurenz Vuchetich for his pivotal experience in Real Estate and Construction and highlighted for “abundant knowledge and experience in real estate-related matters”. Additionally, Tomislav is recognized in the EU and Competition, alongside Ivan Dvojković. BDV has also proven its expertise by being recognized in Dispute Resolution, regarded as an “experienced and knowledgeable team”. We thank our clients for entrusting us with their complex mandates. Detailed information about the rankings can be found at the following link: [/vc_column_text][/vc_column][/vc_row]

New Tendencies in Public Procurement – a way towards levelling playing field or a glimpse of protectionism?

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Our attorney Tomislav Sadrić participated on a conference “COMPETITION LAW (IN PANDEMIC TIMES): CHALLENGES AND REFORMS“, with his presentation on the topic „New Tendencies in Public Procurement – a way towards levelling playing field or a glimpse of protectionism?“. Conference was organised by Jean Monnet Module for Competition Law of Faculty of Law and Faculty of Economics in Osijek in cooperation with the Croatian Association for Competition Law and Policy.
  On 8 May 2021, less than a year after the White paper on levelling the playing field as regards foreign subsidies was released, the EU Commission published the Proposal for a Regulation on foreign subsidies distorting the internal market. The Proposal is intended as an EU response to the market distortions, caused by foreign subsidies used by companies with third country background, in order to achieve advantageous position on the internal market over their EU-based competitors.   The Proposal is designed to tackle foreign subsidies generally, and in particular in the fields of concentrations and public procurement. According to the Proposal, a foreign subsidy shall be deemed to exist where a third country provides a financial contribution which confers a benefit to an undertaking engaging in an economic activity in the internal market and which is limited, in law or in fact, to an individual undertaking or industry or to several undertakings or industries.   In case the estimated value of individual procurement is equal or greater of EUR 250 million, the Proposal envisages obligatory notifications of foreign subsidies for all economic operators submitting a tender. The Commission may request the notification even if the estimated value of the procurement is under the threshold if it suspects that an undertaking may have benefitted from foreign subsidies.   Only foreign subsidies granted during the three years prior to the notification shall be taken into account. In its notification, an economic operator should provide information on subsidies received by itself, but also on subsidies received by its main subcontractors and main suppliers. Notifications are to be submitted to a contracting authority conducting a procurement, and without delay forwarded to the Commission. The Commission shall initiate a preliminary review procedure, followed with an in-depth investigation if the results of a preliminary review show sufficient indications of the existence of a foreign subsidy distorting the internal market. If initiated, an in-depth investigation should result in the Commission adopting one of the following decisions:  
  1. a no objection decision, if it finds that the preliminary assessment as set out in its decision to initiate the in-depth investigation is not confirmed, or if a distortion on the internal market is outweighed by positive effects;
  2. a decision with commitments, if it finds that a foreign subsidy distorts the internal market and the undertaking concerned offers commitments that fully and effectively remove the distortion on the internal market;
  3. a decision prohibiting the award of the contract, if it finds that a foreign subsidy distorts the internal market, and the undertaking concerned does not offer commitments or where the Commission considers that the commitments offered are neither appropriate nor sufficient to fully and effectively remove the distortion.
  The Proposal should now enter the ordinary legislative procedure within the EU institutions. If adopted, it could result in a significant increase of the administrative burden on undertakings wishing to participate in large-scale public procurements procedures in EU.[/vc_column_text][/vc_column][vc_column width=”1/4″][vc_column_text]

FOR MORE INFORMATION PLEASE CONTACT

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Tomislav Sadrić

+385 (0)1 5626 001 tomislav.sadric@bdvlegal.com
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BDV is delighted to announce that Tomislav Sadrić has joined our team as an attorney at law

[vc_row equal_columns=”true”][vc_column width=”3/4″][vc_column_text]BDV is delighted to announce that Tomislav Sadrić has joined our team as an attorney at law. Tomislav will strengthen our dispute resolution practice with an industry focus on financial services, energy and transport. Tomislav represents clients in complex litigation proceedings before commercial courts and also advises clients on public procurement matters. Tomislav was previously a team member at a leading national law firm.[/vc_column_text][/vc_column][vc_column width=”1/4″][vc_column_text]

Tomislav Sadrić

+385 (0)1 5626 001 tomislav.sadric@bdvlegal.com
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Rethinking Interim Period Clauses in SPAs: European Commission’s decision against Altice brings new insights into the application of gun-jumping rules

  • Blog
[vc_row equal_columns=”true”][vc_column width=”3/4″][vc_column_text]European Commission recently published its decision by which it imposed a record fine of EUR 124.5 million on the cable and telecommunications company Altice in April earlier this year, for the so-called “gun-jumping” in its acquisition of the Portuguese telecommunications operator PT Portugal. EU merger rules require that companies notify the European Commission of the planned mergers which fall within the scope of the EU Merger Regulation (the “EUMR”) (the “Notification Requirement”) and do not implement them until cleared by the European Commission (the “Standstill Obligation”). The purpose of the standstill obligation serves to preventing the potentially irreparable negative impact of transactions on the market. In accordance with EUMR, the European Commission may impose fines of up to 10% of the aggregated turnover of companies which intentionally or negligently breach such obligations. In its decision, the European Commission found that Altice breached both the notification and the standstill obligations. The Commission concluded that Altice’s contractual rights under the acquisition agreement, combined with pre-closing interaction with PT Portugal, amounted to de facto early implementation of the transaction which is prohibited by the EU merger rules.  

Background

In February 2015, Altice notified the European Commission of its intention to acquire PT Portugal, which was controlled by the Oi, the Brazilian telecommunications operator. The transaction was conditionally cleared by the European Commission in April 2015, subject to the divestment of Altice’s subsidiaries in Portugal at the time, Oni and Cabovisão, since the subsidiaries were competitors of PT Portugal for telecommunications services in Portugal. In May 2017, the European Commission addressed a Statement of Objections to Altice raising its concerns that Altice implemented its acquisition of PT Portugal before obtaining the European Commission’s clearance, and in some cases, even before its notification of the merger.  

Decisive influence and information exchange

In accordance with the transaction agreement, Altice was granted veto rights over decisions concerning PT Portugal’s ordinary business. Altice exercised its rights in certain cases, for example by giving PT Portugal instructions on how to carry out a marketing campaign. Altice also requested and received commercially sensitive information about PT Portugal. The operational and competitively sensitive information was exchanged between the parties without any confidentiality agreements in place. In its decision, the European Commission states “that having a degree of oversight over agreements which a target can enter into, and the commitments it can make, between signing and closing may be justified in order to preserve the value of a target, for example, to preserve the perimeter of the business or to guard against commitments of such magnitude that the value of the business could be affected. However, the Commission considers that having a veto right over almost all commercial action with a low monetary threshold in the context of the target’s business goes beyond what would be necessary to guard against material changes to a target’s business for the purposes of preserving its value. In particular, the European Commission considers that issues falling within a target’s ordinary course of business are unlikely to be relevant to preserving the value of the target’s business.” The European Commission concluded that the range of agreements and actions over which Altice had a veto right was so broad that it gave Altice the possibility to exercise decisive influence over PT Portugal. The decision demonstrates that certain veto rights, when going beyond what is necessary for the preservation of the value of the target company, may amount to gun jumping. Examples of such veto rights found in this decision are i) veto rights in relation to commercial policy, ii) the possibility to influence the appointment of the target’s senior management staff and iii) veto rights over nearly all commercial action with a low monetary threshold in the context of the target’s business.  

Other merger procedural cases

In May 2017, the European Commission fined Facebook EUR 110 million for providing incorrect or misleading information during the European Commission’s 2014 investigation of Facebook’s acquisition of WhatsApp. The European Commission issued a clearance decision in October 2014, approving the transaction under the EU Merger Regulation. Despite the previous fine, the European Commission gave a clearance since its decision was based on various elements going beyond those linked to the incorrect or missing information. In July 2017, the Commission sent three separate Statements of Objections, alleging breach of EU merger rules: one to General Electric, one to Merck and Sigma-Aldrich for allegedly providing incorrect or misleading information and one to Canon for allegedly implementing a merger before notification and clearance. These investigations are ongoing.  

Conclusion – Implications on SPAs

While the buyers can impose obligations on the sellers with the aim of securing the value of the target company, the stakeholders need to carefully consider the gun jumping rules when drafting the share purchase agreements, disclosing confidential information, as well as during other pre-closing interactions. The pre-closing oversight over agreements which a target may enter into, and the commitments it can make must not go beyond what is necessary for the preservation of the value of a target and cannot result in acquiring decisive influence over the target company prior to European Commission’s merger clearance. With this decision, it appears the European Commission once again safeguarded the EU merger control system, sending a strong message to merging companies of the importance of complying with EU merger procedural rules, which shall also reflect the application of local merger control rules within Member States.[/vc_column_text][/vc_column][vc_column width=”1/4″][vc_column_text]

For more information please contact

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LAURENZ W. VUCHETICH

+385 (0)1 5626 001 laurenz.vuchetich@bdvlegal.com
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ANA LAH

+385 (0)1 5626 001 ana.lah@bdvlegal.com
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Antitrust: Commission fines Google €4.34 billion for illegal practices regarding Android mobile devices to strengthen dominance of Google’s search engine

  • Blog
The European Commission has fined Google €4.34 billion for breaching EU antitrust rules. Since 2011, Google has imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search. Google has engaged in three separate types of practices, which all had the aim of bolstering Google’s dominant position in general internet search. In particular, Google:
  • required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google’s app store (the Play Store);
  • made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices; and
  • has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google ( “Android forks”).
Market dominance is, as such, not illegal under EU antitrust rules. However, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets. Based on the Decision of EC, Google is required to stop and not to re-engage in any of the three types of practices. The decision also requires Google to refrain from any measure that has the same or an equivalent object or effect as these practices. It is Google’s sole responsibility to ensure compliance with the Commission decision. If Google fails to ensure compliance with the Commission decision, it would be liable for non-compliance payments of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company. The Commission would have to determine such non-compliance in a separate decision, with any payment backdated to when the non-compliance started. Finally, Google is also liable to face civil actions for damages that can be brought before the courts of the Member States by any person or business affected by its anti-competitive behaviour. The new Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions enables injured persons from anti-competitive practices to receive damages.