- the sale of the second largest media conglomerate in Bulgaria, Nova Broadcasting Group AD (owner of Nova TV), to PPF Bidco (owned by Czech businessman Petr Kellner); and
- the sale of CEZ's assets in Bulgaria, which include its energy distribution business, trade business and some small renewable energy parks to a Bulgarian company, Inercom, which maintains three solar power stations in the country.
Both decisions concerned politically sensitive sectors (media and energy) and were widely criticised for lacking valid economic arguments. Further, in its decisions the CPC limited its legal arguments to several paragraphs and failed to clarify how acquiring non-competitors (or at least non-major competitors) could strengthen the resulting group's dominant position and thus impede competition.
In both prohibited concentrations, the horizontal and vertical market overlap was non-existent or almost non-existent. Further, both concentrations concerned acquisitions of large undertakings in Bulgaria (with market shares in certain relevant markets that were close to or exceeded 40%), while the acquirers' market shares were insignificant (up to 5%).
In the first prohibited concentration, the parties' activities overlapped only in the e-commerce market, where both the acquirer and the target held a market share of up to 5%. The Nova Broadcasting Group held a market share of approximately 40% in the TV distribution and TV advertising markets. However, the acquirer was inactive in these markets in Bulgaria and thus had no market share.
Despite the lack of actual threatening horizontal or vertical overlapping, the CPC considered that:
[The] significant amount of mass information means, which would be accumulated by the concentrated group, would lead to its significant advantage over the other participants in the media market. Thus, the participants in the concentration would have the incentive and actual possibility to change their trade policy (e.g. by limiting the access, price increases or changes in the terms of the concluded agreements).
In its second decision prohibiting the sale of CEZ, the CPC identified a horizontal overlap between the participants' activities in the market concentration for the production and wholesale supply of electricity from photovoltaic power plants. The CPC also stated that the concentration generated vertical effects on downstream markets – namely, the markets for distributing, supplying and trading electricity.
The CPC did not identify the participants' market shares on these markets (none of them held a significant market share). However, the commission explained the potential threat to competition by analysing legislative changes in Bulgaria concerning the buy out of electric energy produced by small plants with capacities exceeding four megawatts (under the new regime sales are made on energy exchange stock, while under the former regime the energy of small plants was purchased under preferential prices). Given that nothing would substantially change following the concentration, the CPC's analysis failed to explain why it would have a detrimental effect under the new regime.
It remains unclear why the CPC has unconditionally approved recent concentrations with almost identical factual backgrounds and markets as the Nova TV and CEZ concentrations. The commission's latest decisions may be appealed before the Supreme Administrative Court in the second instance.
This article was first published on International Law Office.
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