Merger Control in Slovenia is regulated by provisions of Part 3 and Chapter 3 of Part 5 of the Prevention of Restriction of Competition Act (Slovenian: Zakon o preprečevanju omejevanja konkurence (ZPOmK-2); hereinafter: Competition Act), which, pursuant to its publication in the Official Gazette of the Republic of Slovenia, No. 130/2022, is applicable as of 25 January 2023.

The Competition Act replaced the previous valid act in the field of competition law, whereas the substantive provisions regarding merger control remained unchanged.

The new Competition Act, inter alia, transposes into Slovenian law the Directive (EU) 2019/1 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (the so-called ECN+ Directive) as well as other new notions, of which the simplified concentration notification procedure is especially relevant from the aspect of merger control.

Decree on the concentration of companies notification form (Official Gazette, No. 36/09, 3/14, and 130/22) specifies the content of the concentration notification form, and shall remain in use until the new bylaw, the adoption of which is required pursuant to the Competition Act, enters into effect. The key innovation of the new form will be the regulation of the simplified concentration notification, introduced into Slovenian legislation by the Competition Act.

Additional applicable restrictions and conditions for mergers are laid down in sector-specific legislation within the fields of media, electronic communications, finance, and energy.

Additionally, a foreign direct investment regime is also in force, the content of which had been substantially changed with the enactment of amendments of the Investment Promotion Act, which now regulates the field of foreign direct investment as of 1 July 2023.

The competent authority for the implementation of merger control, as well as other competition law rules in the Republic of Slovenia is the Slovenian Competition Protection Agency (Slovenian: Agencija za varstvo konkurence; hereinafter: Agency).

Notification is mandatory when the legal and economic condition is met, i.e. when the relevant transaction involves a concentration in the sense of a lasting change in control over a company and when the annual turnover and/or market share thresholds, as defined by law, are reached.

Notification to the Agency is not required only in cases where the conditions for notifying the transaction to the European Commission under Regulation No. 139/2004 are met.

A breach of obligation to notify the concentration results in the voidness of all actions, which constitute gun jumping, and a risk of administrative sanctions.

Completion or closing are prohibited until the clearance is obtained. The Competition Act establishes a stand-still obligation, meaning that the companies shall not exercise their rights and obligations arising from a concentration subject to notification, until the issuing of a decision on the compatibility of the concentration with the competition rules.

Derogation is possible only in exceptional cases – upon Agency’s approval, an early implementation of the concentration is permitted. Upon a company’s request, the Agency may issue a decision, allowing the execution of the concentration to a certain extent or under certain conditions before the relevant decision is issued, provided that the company demonstrates (i) that such execution is necessary to preserve the value of the investment or (ii) for the provision of services of general interest. In this case, the Agency takes into account, in particular, (i) the effects of delaying the execution of the concentration on one or more undertakings concerned or on third parties and (ii) the risk that the concentration poses to the efficiency of competition.

There are no specific provisions in Slovenian legislation regarding a carve out. If a carve-out involves the exclusion of certain assets or activities that could raise certain competition law-related concerns before the transaction itself, it is, inter alia, necessary to observe the rule according to which two or more transactions carried out by the same persons or companies within a two-year period are treated as one concentration that occurs on the date of the last transaction. Additionally, a carve-out may also meet the criteria for a standalone notification.

The compliance of a carve-out – in terms of implementing a transaction outside of Slovenia, where clearance has not yet been obtained – with the competition law rules would be more challenging; however, it depends on the structure of the transaction in each specific case.

The notifying companies or person need to notify a concentration that represents a lasting change in control over a company or a part of a company and occurs in one of the following ways:

i. In the merger of two or more previously independent companies or parts of companies.

ii. By acquisition of sole or joint control or by changing the nature or quality of control (change from joint to sole control and vice versa and change in the number or identity of companies with joint control) over a company or a part of a company.

Control is established through rights, contracts, or other means that separately or collectively, and considering the circumstances or regulations, allow for the exercise of decisive influence over that company or part of a company, i.e. especially (i) ownership of capital, (ii) rights to use all or part of the company’s assets, and (iii) rights or contracts that ensure decisive influence over the structure, voting, or decisions of the company’s bodies.

A decisive influence exists when a company has the ability to make strategic decisions regarding the economic policies of another company (e.g. business plans, budget, significant investments, management).

Control over a company can be exercised either (i) directly, i.e. the control is acquired by individuals or companies who are holders of the rights or granted to them based on contracts, or (ii) indirectly, by individuals or companies who have the actual ability to enforce rights arising from contracts, even though they are not holders of rights or entitled thereto based on such contracts.

For the interpretation of the concept of control, the practice, and guidelines pursuant to EUMR are also utilized (including Commission’s Consolidated Jurisdictional Notice).

iii. By incorporating a full-function joint venture, i.e. a company under joint control, which performs all the functions of an independent entity and is established for a longer period of time.

Companies, as well as individuals (natural persons), who already control at least one company are obliged to act in accordance with the rules on merger control.

An exception applies to banks, insurance companies, savings institutions, and other financial companies whose ordinary activities include trading in securities to their own account or on behalf of others, under the following conditions:

i. The acquisition of business interests in the company is only temporary and intended for their subsequent sale.

ii. It is prohibited to exercise voting rights arising from these business interests in order to influence the competitive behaviour of that company.

iii. It is allowed to exercise voting rights solely to prepare the sale of these business interests, whereby such a sale must be completed within a year from the acquisition of the business interests. The Agency can extend the one-year time-limit, if the company demonstrates it was not possible to conduct the sale properly, within the prescribed timeframe.

Likewise, an internal reorganization within a group of companies is not considered a concentration.

The acquisition of a minority business interest should be notified, if it is possible to attribute (sole or joint) control, either on a legal or factual basis, to the holder of the minority business share.

The holder of a minority business share shall acquire control on a legal basis, if they have special rights which enable them to exert decisive influence over the strategic decisions of the company.

Control can be attributed to the holder of a minority business share on a factual basis in case of a significantly dispersed capital structure of the company and the non-intensive exercise of voting rights by other shareholders, based on an analysis of the company’s bodies past decision-making.

Turnover threshold:

A concentration must be notified if:

The combined annual turnover of the undertakings concerned, including other group companies, in the previous financial year in the market of the Republic of Slovenia exceeded 35 million euros, and

The annual turnover of the acquired company, including other group companies, in the previous financial year in the market of the Republic of Slovenia exceeded 1 million euros, or

In case of establishment of a full-function joint venture, the annual turnover of at least two participating companies, including other group companies, in the previous financial year in the market of the Republic of Slovenia market exceeded 1 million euros.

Regardless of the concentration threshold reached, there is no need to notify the concentration, if it is assessed by the European Commission pursuant to Regulation 139/2004/EC.

Market Share Threshold:

Even if the concentration does not meet the turnover threshold, the undertakings concerned must notify the Agency about the concentration if they, together with other group companies, hold a 60+ percent market share in the relevant market in the Republic of Slovenia. Alternatively, the Agency can request these undertakings to submit a notification.

Based on the notification of the undertakings concerned, the Agency may request the companies to notify the concentration, and then decide on the content of the concentration.

To calculate the turnover or market share, it is first necessary to determine which are the undertakings concerned and their group companies and apply the rules for calculating turnover/market share.

Undertakings concerned:

The undertakings concerned include (i) merging companies, (ii) the companies acquiring control over another company, (iii) acquired companies, and (iv) companies establishing a joint venture.

Group companies:

Group companies include:

• The undertakings concerned,
• Their subsidiary companies (i.e. companies, in which the undertakings concerned hold directly or indirectly (i) over a half of total capital or business interests, (ii) a majority of voting rights, (iii) the right to appoint or recall the majority of the management or supervisory board members, or (iv) the right to manage business based on a partnership agreement or other legal arrangement),
• Their controlling companies (i.e. companies holding interests and/or rights from the previous paragraph),
• Subsidiary companies of controlling companies, and
• Companies, in which one or several companies from the previous paragraphs – either individually or together with one or several other companies – hold interests and/or rights from the second paragraph.

Turnover:

Turnover comprises net revenue from the sale of products and provision of services, minus net revenue from the sale of products and provision of services between group companies. In the process, the total annual turnover in the market of the Republic of Slovenia is considered. If several companies jointly control another company, the turnover of that company is evenly distributed among controlling companies. In case of subsidiary companies, the entire turnover of the relevant subsidiary company is generally considered regardless of the actual share held in the subsidiary by the participating company.

When a concentration is the result of acquisition of control over a part of a company, the seller’s annual turnover related to the part, subject to the concentration, shall be considered, regardless of whether or not such part has the legal status of a separate entity.

Special rules apply to the calculation of turnover of credit and financial institutions, as well as insurance companies.

Market Share:

In practice, the determination of market share for companies is significantly more challenging than calculating a company’s turnover. This is due to the fact that it often relies on the (accurate) identification of the relevant market. Identifying the relevant market can be a complex task and may lead to different solutions due to various methods and approaches employed.

There is no prescribed specific exchange rate.

An establishment of a joint venture must be notified when a full-function joint venture is being established, and the following conditions are met (similar to those under EUMR):

• There is joint control over the joint venture (which is evident from equal business interests, equal voting rights, equality in appointment of decision-making bodies, joint decision-making on strategic matters, and similar factors);
• The joint venture has sufficient resources for independent and autonomous operation in the market (including funds, staff, and assets),
• The joint venture has its own access to the market or is present in the market and conducts activities that go beyond a specific function of the parent companies,
• Except during the initial (start-up) period, the joint venture should not rely entirely on sales to its parent companies or purchases therefrom, and
• The joint venture is established for an extended period.

The full-function criterion is applied also when joint control is acquired over an existing company. This approach is confirmed by recent Agency’s practice.

The rule is that two or more transactions carried out by the same individuals or companies within a two-year period are considered as a single concentration that occurs on the date of the last transaction.

The thresholds are applied uniformly to all transactions, regardless of whether it is a foreign-to-foreign transaction, and regardless of whether the target/joint venture has any nexus to the jurisdiction. For foreign companies it is sufficient to exceed the turnover thresholds in the Slovenian market, while they are not required to be organized in any specific legal form within the Republic of Slovenia.

Considering that the notification is conditioned by the undertakings concerned undertakings’ generation of revenue in the market of the Republic of Slovenia, in practice, notifications cover all transactions which could potentially impact competition within the Republic of Slovenia.

N/A

In accordance with the Competition Act, concentrations which substantially restrict effective competition in the territory of the Republic of Slovenia or a significant part thereof are prohibited, especially when this is the result of creation or strengthening of a dominant position. A company holds a dominant position when it can act independently of competitors, customers, or consumers to a significant extent.

The assessment criterion is therefore aligned with the so-called SIEC (Significant Impediment to Effective Competition) test pursuant to Regulation No. 139/2004. This means that the prohibition of competition focuses on the effects on competition, where a dominant position is not a condition for prohibition of competition but rather a form of restriction of competition. The described rule is general and applies to all sectors.

The assessment of competitive effects of concentrations is conducted pro futuro by comparing the competitive conditions after the concentration with the competitive conditions that would exist without such concentration. In this context, the law lists factors which the Agency considers when assessing concentration, namely: (i) market position or market share of the companies involved in the concentration, (ii) their access to funds, (iii) market structure, (iv) choices available to suppliers and users, as well as their access to supply sources or market access, (v) presence of any legal or actual entry barriers, (vi) movement of supply and demand in the relevant markets, (vii) benefits to intermediate and final consumers, and (viii) if the concentration is in the interest of consumers and does not hinder competition in the light of technical and economic development.

The Agency may consider factors which are not of a competitive nature and are also foreseen by the Competition Act, i.e. technical and economic development, which may be taken into account only if they are in the interest of consumers and do not hinder competition.

The Competition Act establishes a presumption, according to which it is deemed that the Agency’s decision, determining compliance of concentration with the competition rules, includes restrictions which are directly inter-related and necessary for the implementation or execution of the concentration. Such restrictions correspond to the concept of ancillary restraints under the EUMR. At the same time, it is the obligation of the notifying party to include ancillary restraints in the notification. This is also foreseen in the relevant section of the form which outlines the notification content.

A concentration must be notified within 30 days from the conclusion of the agreement, publication of the public offer, or acquisition of control, as applicable. If multiple of these events occur, the deadline begins on the first of these events.

A concentration can also be notified based on the good faith intention to conclude an agreement or – in case of a public bid – when companies publicly announce their intention to publish such a bid. Such intention is deemed sufficiently demonstrated by the conclusion of a non-binding document, e.g. a letter of intent. However, participants in the intended concentration are required to provide the expected dates of all significant events related to the concentration implementation. If circumstances in the relevant market substantially change between the notification of the concentration and its implementation, the concentration must be re-notified to the Agency.

The Agency is available for pre-notification discussions in specific cases, e.g. concerning the question of meeting the conditions for notification, but it does not issue legally binding opinions regarding the obligation to notify a concentration, which would provide legal certainty to companies. The company which acquires control over another company must itself assess whether the obligation to notify a concentration has been met, while the Agency assesses this only when reviewing compliance of concentration with the competition rules.

The process of the Agency’s concentration review is divided in two phases.

During the phase I, within 25 business days from receiving a complete notification, the Agency shall issue one of the following:

• A decision that the concentration is not subject to the provisions of the Competition Act,
• A decision of compliance with the competition rules (clearance),
• A decision of compliance with the competition rules subject to specific conditions (remedies), or
• a decision initiating a more in-depth review of the concentration (i.e. phase II) in case of a serious suspicion concerning the compliance of the concentration with the competition rules.

In the phase II, the Agency renders a decision within 60 business days from the issuing of the decision, initiating phase II. During this phase, the Agency can issue one of the following:

• A decision on the concentration’s compliance with the competition rules (clearance),
• A decision on the concentration’s compliance with competition rules subject to specific conditions (remedies), or
• A decision on the concentration’s non-compliance with the competition rules.

By their nature, the deadlines for completing the first and second phases are indicative, i.e. there are no sanctions for exceeding them, nor do they affect the Agency’s right to issue a decision and, in particular, they do not establish a presumption that the concentration complies with competition rules. On the contrary, exceeding the deadline during the phase I implies the fiction of an issued decision on initiation of the phase II, while exceeding the phase II deadline establishes the fiction of an issued unfavourable decision to the notifying party, which can be challenged before the Administrative Court of the Republic of Slovenia.

The Agency may initiate the concentration review process ex officio, by issuing a decision to initiate the review when there is a likelihood that a concentration, subject to the provisions of the Competition Act, has occurred and has not been notified by the companies. In this case, the deadlines start upon the issuance of such a decision to initiate the proceedings.

The deadline of 25 business days for the Agency to issue a decision in the phase I only starts from the date of the complete notification. Furthermore, if the notifying party fails to rectify the deficiencies and complete or supplement the notification within the given deadline, it is deemed that the concentration has not been notified.

The Agency’s deadline for issuing a decision can be extended by 15 working days, if the notifying party proposes corrective measures (remedies) to the Agency which would eliminate a serious suspicion regarding the concentration’s compliance with the competition rules.

If the Agency submits a request to the notifying party to submit information from Article 71 of the Competition Act, the deadlines for issuing the Agency’s decisions are suspended during the notifying party’s delay in responding to the request for submission of information.

The Agency has the power to annul an issued decision it such a decision is based on incorrect, incomplete, or misleading information, or if the company fails to fulfil its obligations related to corrective measures. In such cases, the Agency can make a new decision regarding the compliance of the concentration with the competition rules.

The merger control regime does not provide for a possibility to shorten the deadlines. However, the pace of case resolution may be affected by submitting an as complete notification as possible, or by promptly supplementing the notification upon the Agency’s request.

A concentration must be notified by a person or company who or which acquires control over all or a part of one or more companies.

A concentration which is the result of a merger or acquisition of joint control must be jointly notified by the merging companies or companies acquiring joint control. All entities whose position has qualitatively changed as a result of the concentration must participate in the notification, i.e. including those which already exercised control prior to the notified concentration.

The content of notification is determined by the form, the content of which is prescribed by the government’s Decree on the concentration of companies notification form. The form includes, inter alia, detailed information about the transaction, parties involved in the concentration, their ownership and control, personal and financial connections, prior acquisitions, definition of relevant markets, market information, and ancillary restraints.

The set of required market data is smaller, if the combined market share of the undertakings concerned is below 15% in case of horizontal overlaps or below 25% in case of vertical overlaps.

Similarly, a smaller set of required information is expected when filing a so-called simplified notification, although the updated form for this purpose has not been adopted yet. Therefore, at the moment, the scope of information required for simplified notification remains the same as for regular notification.

The notification must be in Slovenian. However, the Agency can accept attachments in a foreign language.

Along with the notification, the notifying party also needs to submit to the Agency (i) a power of attorney for representation, (ii) transaction documentation, (iii) annual reports and financial statements, when not available in public records maintained by the Republic of Slovenia, (iv) analyses, reports, or studies prepared for the company’s decision-making bodies, assessing or analysing the concentration in terms of market and competitive terms, (v) documentation which serves as the basis for defining the markets and market shares.

When notifying a concentration to the Agency, an administrative fee of 2,000.00 EUR must be paid.

Upon prior written consent of the notifying party, the Agency publishes information about the notification on its website, including details about (i) the undertakings concerned, (ii) the date of notification, (iii) the case reference number, and (iv) the economic sector, in which the undertakings concerned operate.

The notifying party may, due to well-founded reasons, especially when this concerns the protection of trade secrets during the intended concentration, refuse their consent for publication of information about the concentration.

The purpose of such a publication is primarily to provide interested individuals with an opportunity to enter the registration process. A third party, demonstrating their legal interest or wishing to participate in the process as a party to protect their legal interests needs to submit a request for participation in the procedure within 30 days from the date of the publication of information on the initiation of the procedure on the Agency’s website.

During the investigative procedure, the Agency has the following means at its disposal to collect data and information from third parties:

• Information submission request (Article 52 and 71 of the Competition Act), which the Agency can send to various entities in an informal form or in the form of an official decision with the threat of administrative sanctions, and
• Collecting of information (Article 53 and 72 of the Competition Act) from various entities who may have relevant information.

The Agency frequently collects data and information about market conditions from competitors through questionnaires or surveys, while it also solicits responses from competitors regarding the proposed corrective measures (remedies).

Based on submitted notifications, the Agency publishes on its website (http://www.varstvo-konkurence.si/): (i) the undertakings concerned, (ii) date of notification, (iii) case reference number and (iv) economic sector in which the undertakings concerned operate.

Additionally, the Agency publishes redacted versions of its decisions issued in merger control proceedings. Such redacted versions include the decision content with concealed trade secrets and confidential information, the concealment of which can be reasonably and justifiably requested by the parties to the proceedings.

The right to access the documents in a specific case handled by the Agency is granted to the parties involved in the proceedings and any appointed experts.

The Agency collaborates with the European Commission and the national competition authorities in European Union member states as a part of the European Competition Network (ECN).

Additionally, the Agency participates in the International Competition Network (ICN), European Competition Authorities (ECA), and the Organisation for Economic Co-operation and Development (OECD).

The Agency adopts those remedies which can, according to its judgment, eliminate a serious suspicion of the concentration’s non-compliance with the competition rules, given the nature, scope and likelihood of successful and timely implementation.

In terms of content, the remedies are similar to those under the EUMR; either structural, which include, in particular, the sale of a company or part of a company, or behavioural, which include, in particular, non-discriminatory and cost-oriented access to goods, networks, technology or IP rights, maintaining contractual relationships, equal treatment of co-contracting parties, etc.

In practice, behavioural (non-structural) measures are the most commonly adopted remedies and are usually issued during the phase I of the proceedings.

The merger control regime does not include specific provisions governing the process leading to the issuing of Agency’s decisions with remedies.

The notifying party can propose remedies, if the Agency has a serious suspicion of concentration’s non-compliance with the competition rules. The notifying party is informed of this either informally or through the initiation of the phase II of the proceedings. The notifying party can propose remedies at any time, either during the first or the second phase. The Agency does not have the unilateral power to impose remedies.

The Agency includes the remedies in its decision along with the obligation to ensure their compliance and monitoring, as well as a deadline for their implementation.

If a company intentionally or negligently fails to notify the concentration (in a timely manner) or prematurely implements the rights and obligations arising from such concentration (gun jumping), the Agency has the power to impose an administrative sanction in the form of a one-time monetary fine, which can amount to a maximum of 10% of the annual turnover of the undertaking concerned, together with other group companies, generated during the previous financial year.

Moreover, the responsible person of the company or sole proprietor is subject to a fine ranging from EUR 5,000 to EUR 10,000, while a natural person who already controls at least one company is subject to a fine ranging from EUR 3,000 to EUR 5,000.

If the committed offense is particularly serious due to the extent of the damage caused, unlawful financial gain, or due to the perpetrator’s intent or aim of personal gain, the responsible person of the company or sole proprietor shall be fined from EUR 15,000 to EUR 30,000 euros, while a natural person controlling at least one company shall be fined from EUR 10,000 to EUR 15,000.

If a company intentionally or negligently submits incomplete or misleading information, the Agency has the power to impose an administrative sanction in the form of a one-time monetary fine, which can amount to a maximum of 1% of the annual turnover of the undertaking concerned during the previous financial year, if it has been determined that such actions were intentional or negligent.

The Agency’s decisions may be challenged through judicial review before the Administrative Court of the Republic of Slovenia. An action must be filed within 30 days from the date of service of the Agency’s decision. The proceedings before the Administrative Court are governed by the Administrative Dispute Act.

In 2022, the Agency examined a total of 62 cases. It did not find a violation of the competition rules in any of these cases. However, two notifications were approved conditionally with included corrective measures (remedies).

Out of 62 cases, 42 complied with the competition rules and ended with the issuing of a first-instance clearance, while 2 were conditionally approved. In 6 cases, the proceedings were suspended, one application was dismissed, and 10 cases were pending for resolution in 2023.

All cases were examined within the statutory time limit, i.e. within 25 business days from the receipt of a complete notification.

Based on publicly available information on the Agency’s website, in 2023 there were a total of 21 notifications filed up to September 25, 2023. This marks a slight drop in the number of notifications compared to the previous year.

Considering the adoption of the new Prevention of Restriction of Competition Act, which entered into force on January 26, 2023, additional amendments of the law itself are not currently anticipated.

However, an amendment of the bylaw is expected, along with the form, specifying the notification content of the notification, so that it will also regulate the content of the simplified notification, which was introduced under the new Competition Act.