During the past year, the competition enforcement activities of the Albanian Competition Authority (ACA) have seen a considerable increase. The ACA approved 99 decisions, a record since its establishment 17 years ago, and fines during the year were the highest imposed in the last five years. Most of the ACA decisions were related to approvals of merger transactions, followed by decisions on market conduct investigations.
Merger control activities: Foreign-to-foreign transactions account for the vast majority of cases cleared by the ACA in 2022. Very few filings (approximately 5%) concerned transactions directly involving Albanian companies.
This trend, which is not new, is likely due, on one hand, to the lack of awareness of filing obligations by Albanian investors and, on the other, to the low value of applicable turnover thresholds. The high volume of foreign-to-foreign transaction filings may have also exhausted the administrative resources of the ACA in investigating unfiled domestic mergers.
Similarly to EU law, Albanian competition law uses the turnover of the undertakings participating in a merger as a key criterion for a merger control filing. However, Albanian competition law applies the turnover threshold criteria regardless of the domestic presence or of the size of the business activities of the target in Albanian territory. For a merger control filing, it is sufficient if the acquirer alone meets the required turnover thresholds.
Back in 2010, the turnover thresholds relevant for merger control filings were deemed too high for the size of the domestic economy, and an amendment to Albanian competition law was passed, significantly reducing the values of the required worldwide and domestic turnover thresholds.
Despite the fact that the aim of the legislative intervention was to increase the number of domestic filings, the reduction of the value of the applicable turnover thresholds, coupled with the absence of a specific domestic turnover requirement for the target, has caused a spike in filings of foreign-to-foreign transactions that have marginal or no effect in the domestic market.
Considering that the turnover values provided by the Albanian competition law are very low compared to Western economies, it is common for foreign companies acquiring foreign targets with no domestic turnover to be obliged to file in Albania, despite that a merger control filing might not be required in the relevant jurisdictions or at EU level.
Several foreign investors in Albania have raised concerns regarding this situation; however, to date, there is no initiative for legislative amendments giving specific relevance to the domestic turnover of the target for the purpose of a merger control notification. Nevertheless, in practice, notified foreign-to-foreign transactions are swiftly cleared by the ACA following simplified notification procedures.
Investigation proceedings: During 2022, the ACA was particularly active in competition rules enforcement. It had initiated 11 new investigations in sensitive markets directly affecting the Albanian consumer, such as the market of wholesale of diesel fuel and gasoline, the market of wholesale of international call termination, the market of drugs and medical devices, which has grown significantly during the COVID pandemic, the market of import, production, and wholesale of vegetable oil, the market of non-banking financial entities, etc.
Two of the procedures initiated by the ACA regarding the existence of restrictive agreements or abuse of dominant position have been terminated, with fines imposed on the investigated parties. The first investigation concerned the market of import of wheat and import, trade, and production of flour and the other – the market of import and wholesale of chemical fertilizers. Two other fines were issued by the ACA in 2022 to companies failing to comply with previous decisions issued by the ACA or failing to provide the ACA with the information requested by it during investigation proceedings.
Announced amendments to the competition act: During the month of December 2022, the ACA organized a conference and a roundtable where it presented also certain amendments to the Competition Law. The aim of the proposed amendments was to grant the ACA the competence of investigating public procurement procedures in cooperation with the Albanian Public Procurement Commission. However, the proposed amendments have not yet started the formal legislative approval process.
By Shpati Hoxha, Partner, and Selena Ymeri, Senior Associate, Hoxha, Memi & Hoxha
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.