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MERGERS: AMO SR stopped an administrative proceedings in the matter of a merger of undertakings Conti Tech Techno-Chemie GmbH and dk Beteiligungsgesellschaft mbH
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On 27 August 2020 the Antimonopoly Office of the Slovak Republic, the Division of Concentrations, (hereafter “the Office”) on the basis of the Article 32 Paragraph 2 Letter (c) of the Act on Protection of Competition (hereafter "the Act") stopped an administrative proceedings in the matter of a merger notified as the creation of a joint venture Joinplas GmbH, Germany (hereafter "JV") jointly controlled by the undertakings Conti Tech Techno-Chemie GmbH, Karben, Germany and dk Beteiligungsgesellschaft mbH, Greven, Germany on the grounds that the joint venture does not permanently perform all the functions of an independent economic entity pursuant to the Article 9 Paragraph 5 of the Act.
The administrative proceedings in the matter of the merger in question was initiated on 7 July 2020. The subject of the Office's assessment was primarily the question of the full functionality of the JV, i. e. whether the JV will permanently perform all the functions of an independent economic entity. A joint venture is considered to be fully functioning, inter alia, only if it does not achieve a substantial part of its turnover internally. Another important question is whether, the joint venture, notwithstanding this sale, is factually oriented on playing an active role in the market and whether the sale to parental companies will be made on the basis of market rules.
In this case, the Office has noted that the JV, taking into account mainly the absence of an active trade policy, the possibility of intervening in pricing by mothers, the long start-up period and the rate of consumption by mothers compared to the production placed on the market to third parties, combined with the non-application of market distance, it will not participate in competition as an undertaking to such an extent that the Office could consider this venture as fully functional.
So the Office found out that on the basis of an agreement on the establishment of the JV, a joint venture will be created. It will be jointly controlled by two undertakings, but it will not constitute a venture, which permanently performs all the functions of an independent economic entity. Therefore, the transaction in question does not constitute a merger.
The decision came into force on 11 September 2020.
The administrative proceedings in the matter of the merger in question was initiated on 7 July 2020. The subject of the Office's assessment was primarily the question of the full functionality of the JV, i. e. whether the JV will permanently perform all the functions of an independent economic entity. A joint venture is considered to be fully functioning, inter alia, only if it does not achieve a substantial part of its turnover internally. Another important question is whether, the joint venture, notwithstanding this sale, is factually oriented on playing an active role in the market and whether the sale to parental companies will be made on the basis of market rules.
In this case, the Office has noted that the JV, taking into account mainly the absence of an active trade policy, the possibility of intervening in pricing by mothers, the long start-up period and the rate of consumption by mothers compared to the production placed on the market to third parties, combined with the non-application of market distance, it will not participate in competition as an undertaking to such an extent that the Office could consider this venture as fully functional.
So the Office found out that on the basis of an agreement on the establishment of the JV, a joint venture will be created. It will be jointly controlled by two undertakings, but it will not constitute a venture, which permanently performs all the functions of an independent economic entity. Therefore, the transaction in question does not constitute a merger.
The decision came into force on 11 September 2020.