Despite the recent scandals in the Romanian political class 2015 looks for the economy at least being a year to celebrate. Economic activity in Romania is on the increase and therefore M&A business for Romanian law firms will increase.
As though anticipating this last year the Romanian Competition Council (the “Council) revised its merger control rules by amending the Regulation on economic concentrations in force since August 2010. The amendments were brought in by Order no. 438/2014 published in the Official Gazette on 31 October 2014 (the “Rules”). The Rules are in part to lower the administrative cost and requirements for both the applicants and the Council. There is also the acceptance that there should be steps to reduce bureaucracy and therefore reduce the number of applications to the Council
As far as procedures are concerned the new Rules place greater emphasis on the importance and requirement of pre-notification discussions by expressly recommending that the parties to the proposed merger engage in prior discussions with the Council at least two weeks before submitting their notification.
As set out in the previous rules, at least 5 days before the date of the pre-notification discussions (as opposed to the previous period of three days the parties must inform the Council of the names of the proposed merging parties, the markets where they are active, a summary description of the merger; and the manner in which control is exercised. In the case of this simplified notification procedure, where the definition of relevant markets is key to the assessment, the parties must submit information identifying all possible relevant (product and geographic) markets, including all markets on which the merger may have an impact whether direct or indirect.
The new Rules as is to be expected increase the thresholds for the application of the simplified notification procedure (thereby reducing bureaucracy which will apply to mergers between undertakings or the acquisition of either sole or joint control over an undertaking.
The simplified notification may be made to the Council for such transactions, if the parties are i) competitors (horizontal relations) with a combined market share of a maximum twenty percent of the relevant market, and ii) non-competitors in vertical relations with individual and combined market shares of maximum thirty percent of the relevant market.
Where the parties are operating in a market where they are closely related an economic concentration may be excluded from the application of a simplified notification procedure where one or more of the parties hold an individual market share of at least thirty percent in the relevant market even where the parties are not in a vertical or horizontal relationship.
As mentioned above filing of the merger control application form has been made easier by increasing the thresholds. This means in practice that fewer parties will be required to indicate the affected markets and the markets which may be significantly impacted by the merger.
Often in merger discussions, the parties overlook the potential anti-competitive effects of mergers and the new rules provide for the obligation (and not for the mere option) of the Council to publish notice of every notified merger falling under the law.
As the Romanian economy expands there will be consolidation and concentration in many fields and therefore these changes to the merger rules are welcome and it is hoped will stimulate further economic recovery and business.
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