On May 13, 2022, the Assembly of Kosovo passed Law No. 08/L-056 on Protection of Competition, replacing the previous law that had been in effect since October 2010. The new law aims to align the legal framework with EU rules and enhance the efficiency of the Kosovo Competition Authority (KCA). In the context of mergers, acquisitions, and other forms of concentration, the KCA aims to scrutinize concentration filings to assess potential threats to competition in the Kosovo market.
One significant change introduced by the new law is the substantial reduction in the threshold for obtaining approval for concentrations. Under the new law, participants in a concentration must meet one of the following criteria: 1) have a combined total turnover exceeding EUR 20 million in the international market, with at least one participant having a turnover of over EUR 1 million in the domestic market, or 2) have at least two concentration participants with a turnover of over EUR 3 million in the domestic market.
This lowered threshold has resulted in an increase in the number of mergers and acquisitions that require approval from the KCA, whether they result from local transactions or international transactions, which trigger a need for notification in Kosovo. Considering the new threshold and the increased number of concentrations that need to file for approval, the KCA has started to exercise its ex officio powers to investigate cases of gun jumping where merging parties failed to notify the concentration to the KCA, implemented the merger during mandatory waiting periods, or coordinated their competitive behavior prior to closing. Just in the first quarter of 2023, the KCA issued three conclusions for starting investigations towards parties that have filed the notice of concentration and are seeking approval from the authority.
To address non-compliance with notification requirements by companies indirectly promoting anti-competitive practices, the new law stipulates fines as penalties for Kosovar or international companies who have generated income in Kosovo. While these penalty provisions differ slightly from those under the previous law, they align with EU regulations on the matter.
The new law gives the KCA the authority to decide on the penalties which are imposed on the companies involved, depending on the type of breach. In the case of serious offenses by the companies, the KCA has the right to impose penalties of up to 10% of the total worldwide turnover realized in the last financial year. This is mostly applied by the KCA in cases where such concertation might have a significant impact on the market. Although the party found in breach cannot appeal the KCA’s decision which obliges them to pay immediately the fine, the party can initiate an administrative dispute through a lawsuit against the KCA’s decision in the competent court in Kosovo
It should be noted that the KCA was non-functional for a period in Kosovo, so many of the transactions which triggered notification in Kosovo passed without any revision. As such, with the change in the law and the restarting of operations by the KCA, the country authority is keeping a more detailed eye on concentration filings and non-filings to prevent the creation or reinforcement of market dominance of companies.
By Kushtrim Palushi, Partner, and Blerina Ramaj, Senior Associate, RPHS Law
This article was originally published in Issue 10.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
