Slovakia: Changes in merger control of JVs

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In May 2021 the Slovak Parliament adopted a new Slovak act No. 187/2021 Coll. on protection of economic competition (New Act) which is effective since 1 June 2021.

The New Act introduced number of changes in various areas. Turnover tests for mandatory notification of transactions for merger control were partially changed as well. In particular the former explicit test for notification of joint ventures (JVs) was abandoned and notifiability of JVs shall be further reviewed by different turnover tests.

Under the New Act the duty to notify JVs in Slovakia shall be assessed under two turnover tests: (i) the general turnover test (Section 8(1)(a) of the New Act) and also (ii) the specific turnover test for acquisition of joint control (Section 8(1)(b)(2.) of the New Act)

The general turnover test provides that any concentration is subject to control by the Slovak Authority (if the given concentration does not have the EU dimension) provided that the combined turnover of the undertakings concerned in Slovakia is at least EUR 46 million and at least two of the undertakings concerned achieved in Slovakia a turnover of EUR 14 million each.

The general turnover test applies on establishment of both greenfield and brownfield JVs. In case of this test the JV does not need to have any specific local nexus to Slovakia. For instance, this test would be fulfilled if two undertakings with qualified local turnover in Slovakia (each of the two undertakings with the Slovak turnover exceeding EUR 14 million and combined Slovak turnover of both undertakings exceeding EUR 46 million) would establish a JV outside of Slovakia (e.g. in Asia) even if such JV would not have any planned activities in Slovakia.

The second turnover test applicable on JVs is the turnover test which addresses acquisition of (joint) control. This test provides that that any concentration is subject to control by the Slovak Authority (provided, of course, that the given concentration does not have the EU dimension) if the total turnover achieved by the target (or at least one of the targets) in Slovakia is at least EUR 14 million and at the same time the worldwide turnover achieved by any other of the undertakings concerned is at least EUR 46 million.

The application of the above test on JVs is actually new. Contrary to the first test this second test seems to apply only on brownfield JVs. Moreover this test requires local nexus of respective JV to Slovakia. The nexus is established by the fact that the assets which are being contributed to the JV (which represent the target under the above second test) must have Slovak turnover exceeding EUR 14 million.

Abolishment of explicit turnover test for JVs in the New Act reduced the volume of foreign JVs which fall under the mandatory merger control in Slovakia. However, this change has not entirely excluded all foreign JVs from mandatory merger control review in Slovakia. There are still cases when foreign JVs would be subject to mandatory merger control notification in Slovakia. For example if two companies with larger presence in Slovakia create greenfield JV outside of Slovakia (e.g. outside European Union).

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