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On approval the procedure on submission and consideration of notification about concentration

Unofficial translation

Order 30/09-4

of the Chairman of LEPL Competition Agency

On approval the procedure on submission and consideration of notification about concentration

30 September 2014 Tbilisi

Based on article 111 (2), Article 171 (4) and Article 34 (61) of Law of Georgia ,,On Competition”, I

Order:

Article 1

Attached ,,Procedure on submission and consideration of notification about concentration” shall be approved.

Article 2

The order shall come into force from October 1, 2014.

Chairman of the Agency Giorgi Barabadze

Procedure on submission and consideration of notification about concentration

Article 1. General provisions

  1. Procedure on submission and consideration of notification about concentration (hereinafter “Rule”) is elaborated according to the Law of Georgia ,,On Competition” (hereinafter referred to as – “Law”).

2. The purpose of the present Rule is:

a) Assessment of the concentration in the relevant goods market, determination of the marginal number of the concentration subject to notification and determination of the notification and review procedures.

b) The prohibition of the concentration of economic agents, which restricts effective competition in the relevant market;

c) Determination of submission of forms;

d) Ensuring the transparency and objectivity of the process of consideration of notification about concentration.

3. The present Rule sets up:

a) The defining of the marginal number of criteria and rules of calculation of preliminary obligatory notification (hereinafter referred to as - notification) of concentration to the LEPL Competition Agency (hereinafter referred to as - agency);

b) Procedures and rules of submission for consideration of notification.

Article 2. Concentration subject to notification

1. Implementation of concentration, which is subject to notification, shall be allowed only on the positive decision of the agency on it is in conformity with the normal competitive environment.

2. Negative decision issued by the agency იn accordance with legislation shall be the basis for the refusal on the registration of an economic agent.

Article 3. Criterions for definition of concentration which is subject to notification

Concentration shall be subject to preliminary written notification to the agency if the involved economic agents meet one of the following conditions:

a) Joint annual turnover on the territory of Georgia exceeds 20 million GEL, and herewith, annual turnover of at least two members of concentration from each economic agents exceeds 5 million GEL;

b) Joint value of operating assets on the territory of Georgia exceeds 10 million GEL and herewith, value of operating assets on the territory of Georgia of at least two members of concentration from each economic agents exceeds 4 million GEL.

Article 4. Calculation of annual turnover of economic agents

  1. Joint annual turnover shall include joint incomes of parties to the concentration based on the data of notification from the previous financial year received from sold product, good, service excluding value added tax, other taxes received from this incomes and discounts.

2. If concentration is related to acquiring the share or shares of one or several companies, notwithstanding they are independent units or not, only relevant turnover of the shares of these companies, which are subject to concentration, shall be taken into consideration in calculation of annual turnover of parties to concentration, based on methodical instructions of analysis of the relevant market.

3. The following units shall be taken into account in calculation of the turnover of the company’s annual turnover:

- Entity party to the concentration;

- Companies directly or indirectly controlled by or directly or indirectly

controlling the company involved in concentration;

- Other companies, which are controlled by the company, implementing control on the company involved in merger;

- Companies, which are under joint control of the companies involved in merger;

4. Only operations conducted on the territory of Georgia shall be taken into account during a calculation of joint turnover of foreign companies implementing concentration, which are party to the concentration.

Article 5. Person who submits notification

Obligation to notify shall be imposed to:

a) In case of acquisition, the acquirer (acquirer of controlling rights);

b) In case of merger/amalgamation all parties to the concentration – separately, or jointly by the relevant authorized person;

Article 6. Time frame for notification

  1. The parties to the concentration shall be obliged to notify after the announcement of competition/auction, but no later than factual implementation of concentration (before the registration in the registry body).

2. The parties to the concentration shall be obliged to notify after entering into relevant agreement.

3. If gaining of control, provided in Article 11 (3) of the Law, happens of more than one transaction, within continuous three calendar years the economic agent owning the control will be obliged to notify before implementation of the transaction, which is used to gain control.

Article 7. Rule on submission of notification

  1. Person should submit written or electronic notification with properly filled application in accordance with Annex №1, which contains information about the subjects participating in the concentration, characteristics of the participants of the concentration, general information on concentration, the detailed description of the concentration, additional notes.
  2. The Annex №1, which is determined in the first paragraph of this article, contains the following information:

a) All economic agents, which participate in the concentration and/or enterprises owned by the controlling entity, as well as a list of the enterprises in which they have any financial interest;

b) The volume of produced in a recent financial year, bought and sold goods/services according to the assortment of each participant company of the concentration;

c) The latest data on the concentration of each fiscal year, regarding the main suppliers of the company and purchasers/users.

Article 8. Procedure on consideration of notification

1. After receiving the notification according to the Article 83 of General Administrative Code of Georgia agency examines its conformity with the requirements required by the Article 7 of this Rule.

2. If the notification is consistent with the requirements of the Article 7 of this Rule, agency shall examine its conformity with Law and within one month shall adopt decision on conformity of concentration to competitive environment, or on inadmissibility/prohibition of concentration, in particular:

a) If agency finds out that the planned concentration falls within the scope of the Law, but it does not significantly restrict effective competition on the goods/service market of the country or on its significant part, shall take a decision on declaring such concentration compatible with normal effective competitive environment;

b) Agency shall issue a decision on prohibition of concentration, if it finds out that the planned concentration falls within the scope of the Law and it restricts competition significantly on service or goods market of Georgia (or on its significant part) and which have effect of acquiring or strengthening dominant position.

3. The term specified in point 2 of the present Article, shall be extended for no more than 2 weeks, in complicated cases. A person, who submitted a notification, shall be informed about it in writing no less than in 5 days before the expiration of one-month period. Failure to respond shall constitute the taking of positive decision.

4. The agency shall submit to a registry body a copy of decisions within 5 working days after the adoption of decision, set forth in present Article.

Article 9. Prohibition on implementation of concentration

Economic agents shall be prohibited to implement concentration or participate in such concentration, which falls within the scope of the Law and the agency have not made the decision on its conformity with the normal competitive environment, before the expiry of term provided for in Article 111 (3) of the Law and Article 8 (2) (3) of the present Rule.

Article 10. Right to request information

Agency shall be authorized to request information (no more than once a year) from the economic agent, which obtains dominant position as a result of concentration, pursuant to Article 11(7) of the Law, about transactions, which can significantly restrict the competition on relevant market.

Article 11. Publication of decisions of the agency

  1. The decisions of the agency, which it takes pursuant to the present regulation, shall be subject to publication on official website of the agency within 7 days after its adoption.
  2. The state, commercial, professional and business or tax secrecy, during the publication of the Agency’s decision, shall not be infringed.

Annex №1

Notification on concentration of the economic agent

  1. General Information

Participants

a) The name of economic agent;

b) Identification Code;

c) Legal address;

d) Field of activity;

e) Contact person and his/her contact details (e-mail, Tel)

  1. A general information of the case

The form of concentration

The purpose of the concentration

1 year Plan due to concentration

  1. Characteristics of participants

a) Beneficiaries of the property rights on Economic agents;

b) Economic agents somehow involved with participants;

c) data showing the chart / graph as an attachment mentioned in “ a" and “b" points (please specify the number of attachment);

d) Please indicate which economic agents, mentioned by you, are operating for the announced merger in the relevant market;

e) Please indicate as an attachment the acquired shares of the last 3 years by economic agents from those economic agents operating in the market indicated in the point “d”;

f) Please specify the total turnover of the economic agent of the previous financial year:

  1. "In the domestic market,,
  2. "In the international market” (including the domestic market).

Note: If the person's business activities in the previous fiscal year is incomplete

or has only just begun (less than 12 months) the financial report from the

beginning of the entrepreneurial activities before the

filling up the notification.

  1. Detailed description of concentration

Please specify Exhaustively:

  • Borders of the market (production, in terms of the relevant geographic or time) for these mergers;

  • The method by which you followed in determining the relevant market;

  • With which purpose is implemented the merger and what is planning the economic agent created after merger (his/her business plans of the closest 24 month)?;

  • What will be the consequences of the merger on the market;

  • The information on the positive and negative impacts of concentration;

  • Do you have any kind of legal and economic research that can provide the qualified answer to the above questions (if case study, please attach it to the notification as an attachment);

  • At least five issues, which could affect positively or negatively on the decision, and from your point of view where has to be focused the Agency’s attention.

  1. Additional notes

In addition to the above information indicated, or other available information or the note, which, in your opinion, may be important in the decision-making process.

I hereby certify that all the information submitted in the application is true and I am aware of the legal consequences of the legislation if incorrect information is provided.

Signatures of representatives of participant economic agents:

  1. ----------------
  2. ----------------
  3. ----------------
  4. ----------------

Signature of applicant:

Date: