Concentrations

Merger control (control of concentrations of undertakings) is based on a mandatory preliminary authorisation system. The authorisation of the GVH is required for the merger of any undertakings with a turnover higher than the threshold determined by the Competition Act. The application for authorisation must be submittted - with the simultaneous payment of the procedural fee - by using the form which can be found on this site. If the undertakings fail to apply to the GVH for the authorisation of their merger, the GVH may launch a proceeding ex officio.

The purpose of these provisions is to put under competition supervision every merger, takeover and acquisition of other kind which is significant from an economic point of view. The GVH may not refuse to grant authorisation for a concentration where the concentration does not create or strengthen a dominant position, which would impede the formation, development or continuation of effective competition on the relevant market or on a substantial part of it. Otherwise - based on the consideration of the concomitant advantages and disadvantages - the concentration may be prohibited. In order to reduce the detrimental effects of a concentration, the GVH may attach to its decision pre- or post-conditions and obligations. It may, in particular, demand by its decision the divestiture of certain parts of the undertakings or certain assets or the relinquishment of control over an indirect participant, setting an appropriate time limit for the carrying out of these requirements.

As far as the effect on competition is concerned, it is fundamental for the assessment of the restrictive effect whether the merger in question is between competitors (horizontal) or between a seller and a buyer (vertical). In general horizontal mergers directly create a change in the structure of the market while vertical mergers may have negative effects on connected markets. Some of the transactions cannot be classified as horizontal or vertical because they have the characteristics of both types. In some cases there is no market on which both participants of the concentration are present, but these concentrations may nevertheless have harmful effects on competition. Portfolio effects can be expected when manufacturers/distributors of complementary products (i.e. participants of neighbouring markets) become members of the same group. Conglomerate effects arise where a concentration results in an overall improvement in the property status, financial strength and profitability of an undertaking with strong positions on the market of a product, which enable this undertaking to apply restrictive strategies (e.g. tying) on the market of another product.

Separate legal norms may determine additional rules concerning the control of concentrations of undertakings (e.g. lower thresholds, other type of guarantees), which are enforced by the GVH (e.g. Act on Medicines) or the sectoral supervisory authority (Act on Credit Institutions, Act on Radio and Television Broadcasting).