BulgariaNikolai Gouginski and Miglena Ivanova

Djingov, Gouginski, Kyutchukov & Velichkov

The statutory act setting out the legal framework for merger con-trol is the Law on the Protection of Competition (LPC) (promul-gated on 28 November 2008 and effective as of 2 December 2008).The LPC aims to harmonise the domestic regulatory frameworkwith Council Regulation No. 1/2003 and Council Regulation No.139/2004.

Primary responsibility for enforcement of the LPC rests with theCommission for Protection of Competition (the Commission) anindependent state body consisting of five members, elected by theNational Parliament for a term of five years. The Commission hasdecision-making powers with regard to the investigation, grant ofapproval or blocking of concentrations. The LPC grants to the CPCbroader investigative powers to impose structural and behaviouralremedies required to restore effective competition or to impose com-mitments on undertakings or both.

Further information about the Commission and its activities canbe found on its website, www.cpc.bg.

The regulatory framework is supplemented by secondary leg-islation issued by the Commission, including: the Methodology onInvestigation and Assessment of the Market Position of Undertakingsin the Relevant Markets (the Methodology); the Methodology forSetting of Fines under the LPC; the Merger Notification and Proce-dures Guidelines (Notification Guidelines); and the concentrationsnotification form, etc.

2 What kinds of mergers are caught?

The LPC applies to the following types of transactions:• mergers of two or more independent companies;• acquisitions of control over a company by persons who already

control one or more other companies; and• creations of a full-function joint venture company.

The following are not considered notifiable concentrations:• portfolio investments made by banks, non-banking financial

institutions and insurance companies, provided that those insti-tutions do not exercise their voting rights to influence the com-petitive behaviour of the company, and only if the investment hasbeen made with a view of preparing the disposal of the equityinterest within one year of the date of acquisition;

• exercise of control by a trustee or a liquidator of a company;and

• exercise of control by a financial holding company with the solepurpose of maintaining the full value of the investment in thesubsidiary.

3 Are joint ventures caught?

The LPC treats as a concentration the creation of a joint ventureperforming on a lasting basis all the functions of an autonomouseconomic entity. Accordingly, a concentration will be found if theestablishment of a joint venture leads to long-lasting changes in thestructure of the controlling undertakings - that is, the parent com-panies should transfer to the joint venture the whole activity relatedto, or respectively retain only a minimal presence on, the relevantmarket.

4 Is there a definition of 'control' and are minority and other interests

less than control caught?

Control, within the meaning of the LPC, may be acquired by way ofobtaining legal rights, entering into contracts, or in any other waythat, either separately or jointly, and having in mind considerationsof fact or law, provides for the exercise of decisive influence over anundertaking, in particular by:• the acquisition of the title of, or right to use, all or part of the

assets of an undertaking; or• the acquisition of the rights or the conclusion of contracts that

confer a decisive influence with regard to the composition,exercise of voting rights and the decisions of the organs of anundertaking.

The Commission has further specified that a shareholder would exer-cise control where such shareholder:• owns more than half of the share capital or assets of an

undertaking;• has the right to exercise more than half of the votes of an

undertaking;• has the power to appoint more than half of the members of the

management bodies of an undertaking;• has the power to appoint the legal representative of an undertak-

ing; or• has the right to otherwise manage an undertaking.

The Commission has explicitly stated that a minority shareholdercan exercise control, provided that such shareholder's equity interestentitles it to exercise decisive influence over the competitive behav-iour of an undertaking. To establish whether the decisive influencetest is met, the Commission would look at considerations of fact andlaw, such as rights provided by the charter or other corporate docu-ments, shareholders' or other agreements. The Guidelines and thecase law of the Commission have adopted the test provided by theEC Jurisdictional Notice to determine which veto rights of a minor-ity shareholder should be considered to confer joint control over anundertaking and which are normally accorded to minority sharehold-ers to protect their financial interests and do not relate to strategicdecisions on the business policy of the joint venture.

Concentrations between undertakings are subject to mandatory pre-merger notification where:• the joint turnover of all undertakings concerned in Bulgaria for

the year preceding the year of the concentration exceeds 25 mil-lion levs; and

• the turnover of each one of at least two of the undertakings con-cerned in Bulgaria for the year preceding the year of the con-centration exceeds 3 million levs or the turnover of the targetin Bulgaria for the year preceding the year of the concentrationexceeds 3 million levs.

For the purpose of turnover calculation the Commission would takeinto account the entire turnover of the undertakings concerned inBulgaria. When an undertaking belongs to a group of companies,the Bulgarian turnover of the group as a whole must be taken intoaccount. In this respect, the Commission applies criteria analogousto the ones provided by article 5(4) of Council Regulation (EC) No.139/2004 on the control of concentrations between undertakings(ECMR).

Turnover figures are calculated on the basis of revenues fromsales of products and services derived during the financial year pre-ceding the concentration. When the concentration involves acquisi-tion of control over part of one or more undertakings, regardless ofwhether or not such part constitutes an independent legal entity, onlythe turnover of the respective part that is subject to acquisition shallbe taken into account.

Similar to the rule of article 5 (3) of the ECMR, in concentrationsof banks and non-banking financial institutions, turnover figuresshall be calculated on the basis of income according to the financialstatements for the last financial year after deducting all taxes. Theturnover of insurance companies is calculated on the basis of insur-ance premiums, less all taxes, statutory contributions and fees.

So far the Commission has not referred any case below the abovethresholds to the European Commission.

6 Is the filing mandatory or voluntary? If mandatory, do any exceptionsexist?

Filing is mandatory, provided that the jurisdictional threshold hasbeen met. There are neither exemptions from filing nor simplifiednotifications or fast-track proceedings.

7 Do foreign-to-foreign mergers have to be notified and is there a localeffects test?

The LPC applies to all undertakings engaging in business activitiesin Bulgaria, or outside its territory, if such undertakings explicitly ortacitly impede, restrain, limit or are in a position to impede, restrain,or limit competition within the territory of Bulgaria. Foreign-to-foreign mergers are therefore caught, provided that they realiseturnover in Bulgaria and meet the jurisdictional threshold discussedin question 5.

8 What are the deadlines for filing? Are there sanctions for not filing andare they applied in practice?

The LPC establishes a pre-merger notification system. Undertak-ings must notify following the execution of an agreement, publicannouncement of the tender offer or acquisition but prior to theimplementation of the transaction. In certain cases, and upon therequest of the notifying party, the Commission may initiate an inves-tigation prior to the execution of an agreement or public announce-ment of the tender offer, provided that the notifying undertakingspresent sufficient evidence demonstrating their intent to execute the

respective agreement or where they have made public their intent toaccept a tender offer.

The Commission may impose on undertakings fines in theamount of up to 10 per cent of their combined turnover for failure tonotify a notifiable concentration. Together with the decision impos-ing a fine for filing violations, the Commission may also order ade-quate measures to preserve effective competition. This may includean order for divestment of the combined capital, shares or assets, andan order for termination of joint control.

The Commission has a record of imposing pecuniary penaltiesfor filing violations. The constant practice of the Commission is toimpose sanctions on the undertakings concerned for failure to notifya notifiable concentration, even where the transaction is cleared inthe same proceedings. The enforcement record of the Commission sofar shows that sanctions are imposed in the context of both domesticand foreign-to-foreign concentrations.

9 Who is responsible for filing and are filing fees required?

In cases of acquisition of control, the obligation to notify restswith the entity acquiring control. In mergers and cases involvingthe establishment of joint ventures, the filing must be made by allthe undertakings concerned - direct participants in the merger andshareholders in the joint venture.

A two-tier fee system in merger control proceedings, consisting ofa flat filing fee of 2,000 levs, payable at the time of filing, and a clear-ance fee, payable in the event that the concentration is approved. Theclearance fee is equal to the amount equivalent to 0.1 per cent of thecombined turnover of the undertakings concerned in Bulgaria, witha cap of 60,000 levs. No clearance fee is due where the Commissionfinds that the notified transaction does not constitute a concentrationwithin the meaning of the LPC, or where the Commission blocks theconcentration.

10 What are the waiting periods and does implementation of thetransaction have to be suspended prior to clearance?

The undertakings concerned are under an obligation to suspendimplementation until receipt of clearance by the Commission. Thesuspension obligation applies to both phase I and phase II investiga-tions. Exceptions are provided for certain transactions that take placeon a regulated stock exchange.

The LPC does not explicitly address the question of whether inthe context of foreign-to-foreign concentrations, foreign closing priorto Bulgarian merger control clearance would constitute a breach ofthe LPC. To date, the Commission has not objected to undertak-ings by parties that early closing outside Bulgaria is made subject tolocal suspension until Bulgarian merger control approval has beenobtained.

11 What are the possible sanctions involved in closing before clearanceand are they applied in practice?

See question 8. Parties that implement a transaction prior to clear-ance run the risk of the Commission subsequently blocking the con-centration, or attaching conditions or obligations to the approval.Failure of the parties to comply with such a decision of the Com-mission carries a penalty in the amount of up to 10 per cent of theircombined turnover. Apart from monetary sanctions, closing priorto merger control clearance may result in an order by the Commis-sion for the restitution of the pre-merger status, including restitutionby way of divestment of the combined capital, shares and assets ortermination of joint control.

We are not aware of any recent measures undertaken or sanc-tions imposed by the Commission to undertakings for violation ofthe suspension obligation.

12 What solutions might be acceptable to permit closing before clearance

in a foreign-to-foreign merger?

So far the Commission has never blocked a foreign-to-foreign merger,however, It has ordered measures to remedy local issues in foreign-to-foreign mergers.

Divestiture or keep-separate undertakings could possibly beapplied where the participants have a local corporate presence andthe transaction entails a local transfer of shares or assets. In caseswhere the participants do not have a local corporate presence theCommission may seek to remedy the negative effects associated ~ithpost-concentration integration of distribution or supply networks,or both, by requiring arm's-length dealing or the provision of accessto competitors.

13 Are there any special merger control rules applicable to public

takeover bids?

The LPC does not envisage any special merger control rules appli-cable to public takeover bids, save for the exception concerning sus-pension obligation. As discussed in question 10, the obligation tosuspend the implementation of the transaction until a clearance isgranted shall not apply in cases of acquisition of control by means ofpublic tender offer or series of transactions with securities admittedfor trade on regulated markets in financial instruments, where theacquiring control person or entity acquires the securities from differ-ent sellers, provided that the Commission has been notified withoutdelay for the transaction and the acquirer does not exercise its votingfights save for preserving the value of the initial investment.

14 What is the level of detail required in the preparation of a filing?

The LPC and the Notification Guidelines require that a pre-mergernotification contains detailed information about the undertakingsconcerned; the legal and economic structure of the concentration'the relevant markets; the companies over which the undertaking~concerned exercise control; the joint market share and joint turnoverof the undertakings concerned; market entry barriers; the principalcompetitors, suppliers and customers of the undertakings concerned;and written explanations as to whether the proposed concentrationraises serious concerns that it will create or strengthen a dominantposition on the relevant markets.

In addition to the submission of a notification containing all thenecessary information listed above, the Commission requires the sub-mission of a number of supporting documents, including documentsrelating to the personal and corporate status of the undertakingsconcerned, financial statements from the year preceding the concen-tration, business plans and other documents pertaining to the con-templated transaction. Where the documents are in a language otherthan Bulgarian, such documents have to be supplied with a certifiedBulgarian translation. Official documents issued by non-Bulgarianauthorities need to be legalised in accordance with the applicablerules.

The Commission will not declare a notification complete andinitiate review proceedings until it is satisfied that all relevant sup-porting documents have been submitted.

15 What is the timetable for clearance and can it be speeded up?

The Commission should register a notification within three days ofsubmission, provided that the notification is complete. Upon regis-tration of the notification, the Commission has 25 business days tocomplete an accelerated (phase I) investigation. The review periodwill be suspended where additional information is needed until it isfurnished. Notifying undertakings may request for an extension ofup to 10 business days in order to contemplate proposals for changein the structure of the concentration, propose remedies, or both.

Where the notifying undertakings have made such proposals, thedeadlme for review will automatically be extended by an additional10 business days to allow assessment of the proposed changes by theCommission, regardless of whether the deadline has already beenextended upon the request of the notifying undertakings.

Upon the completion of the investigation the Commission in aclosed session may issue any of the following decisions:• declare that the proposed concentration does not fall within the

scope of the merger control rules of the LPC;• approve the concentration;• approve the concentration subject to structural changes offered

by the notifying undertakings; or• initiate a full scope (phase II) investigation.

A phase II investigation would be initiated where the proposed con-centration raises serious concerns that it will create or strengthen adominant position, and that the effective competition on the relevantmarkets will be impeded, restricted or otherwise limited. The Com-mission has a four-month period to complete the investigation andissue a decision. The term may be extended by 25 business days incases of factual and legal complexity, and by an additional 15 busi-ness days where approval by the Commission is made subject to com-mitments and remedies.

Upon the collection of sufficient information for the assessmentof the proposed concentration the Commission holds a closed sessionwhere it may either grant an approval to the concentration, or adopta statement of objections. If a statement of objections is adopted, thenotifying undertakings and third parties, which may be constitutedas parties in a phase II investigation, would be given not less than14 days to review the collected materials and evidence by the Com-mission and to submit a written statement. The Commission wouldthen hold a public hearing with the participation of the notifyingundertakings and other parties to the proceedings. By such decisionthe Commission may:• approve the concentration;• approve the concentration subject to remedies and conditions;

or• block the concentration.

The Commission usually makes use of the whole review period tocomplete stage I investigations.

16 What are the typical steps and different phases of the investigation?

Following the submission of the notification to the Commission, thechairperson appoints a member of the Commission as a supervisingmember, who is primarily responsible for the respective case. Thesupervising member is assisted by a case handler and a case teamfrom the Commission administration. In conducting the investiga-tion the primary sources of information used by the Commissionare state agencies, such as the National Statistics Institute customsand administrative authorities, public registries, ete. The Co:Umissionwould also contact and collect information from third parties suchas customers, suppliers, competitors, distributors, and professionaland trade associations.

The Commission has broad investigative powers to order the sub-mission of documents, agreements and information. It may requestwritten and oral explanations and documents from the participantson the market. Individuals and legal entities, including undertakings,associations of undertakings, governmental and local authoritiesare under obligation to cooperate with the Commission. In mergercontrol investigations the Commission has the authority to conductdawn raids pursuant to an authorisation from the Sofia Administra-tive Court. In the context of ECMR, the Commission may requestinformation and cooperation from the European Commission andfrom the other national competition authorities.

17 What is the substantive test for clearance?

The substantive test for assessment under the LPC is whether the con-centration will result in the establishment or strengthening of domi-nant position, which would significantly impede competition on therelevant markets. The LPC does not provide for specific market sharethresholds regarding the existence of dominant position.

Pursuant to the LPC an undertaking shall be considered domi-nant if such undertaking, in view of its market share, financialresources, access to the market, technological level and businessrelations with other undertakings, may hinder competition withinthe relevant market due to being independent of its competitors, sup-pliers or customers. However, the Methodology seems to establisha presumption that combined market share of less than 15 per centon the relevant market where the undertakings concerned are com-petitors and market share of less than 25 per cent on the respectiverelevant markets where the undertakings concerned are not com-petitors may not impede or restrict competition. The Methodologyfurther suggests that market share of less than 40 per cent is unlikelyto impede or restrict competition.

The Commission, however, has the discretion to approve a con-centration that leads to the establishment or strengthening of a domi-nant position, if it is expected to result in positive effects that wouldoutweigh on balance the negative impact. Such positive effects shouldrelate to: the modernisation of a business, a branch of the economy,or the national economy as a whole; the structural improvement ofthe market; the attraction of investment; new job openings; and bet-ter satisfaction of the interests of consumers.

18 Is there a special substantive test forjoint ventures?

No, the LPC has not established, and the Commission has not devel-oped, a special test for joint ventures.

19 What are the 'theories of harm' that the authorities willinvestigate?

The LPC defines a dominant position as the position of an under-taking which, with view of its market share, financial resources,access to the market, technological level of development and busi-ness relations with other enterprises, can hinder the competition onthe respective market, because such enterprise is independent fromits competitors, suppliers or customers. Nevertheless, the Commis-sion has authorised concentrations where one of the undertakingsconcerned has already enjoyed a dominant position in the relevantmarket prior to the transaction and the other undertaking has no,or an insignificant, market share, thus the concentration would notlead to a de facto change in the market structure.

The Commission would also investigate the possibility for co-ordinated or conglomerate effects, or both, even where the relevantmarket itself is not characterised by an oligopoly structure. Particu-lar attention is paid to the number of competitors on the marketand their market power, from which the Commission usually drawsinferences as to potential disciplinary effects on the undertakingsconcerned.

20 Towhat extent are non-competitionissues (such as industrial policyorpublic interest issues) relevant in the reviewprocess?

The LPC provides an opportunity, and the Commission does occa-sionally consider, broader policy considerations, in particular whenit weighs the positive effects of a concentration against the negativeimpact associated with the establishment or strengthening of a domi-nant position (see question 17).

21 Towhat extent does the authoritytake into account economicefficiencies in the reviewprocess?

The Commission considers all possible effects (positive and negative)when assessing a concentration. It may approve a concentration if thebenefits (as a whole) of such concentration on balance outweigh thenegative impact associated with the establishment or strengtheningof a dominant position. In a number of cases, the Commission hastaken into account the economic efficiencies of the proposed concen-tration and has based its decisions on such considerations, despite therelatively high market shares of the undertakings concerned.

Remedies and ancillary restraints

22 What powers do the authorities have to prohibitor otherwise interferewith a transaction?

The Commission may block the concentration, approve the con-centration subject to remedies and conditions or impose pecuniarysanctions. The Commission may impose on undertakings fines in theamount of up to 10 per cent of their combined turnover for inter aliathe following violations of the LPC:• failure to notify a notifiable concentration, or non-compliance

with remedies imposed with a decision of the Commission;• implementation of a concentration that has been blocked by the

Commission;• early implementation of a concentration in violation of the sus-

pension obligation; or• non-compliance with a decision of the Commission.

Together with a decision imposing a fine for merger control viola-tions, the Commission may also order adequate measures to preserveeffective competition.

Periodic penalty paymentsThe Commission may impose on undertakings periodic penalty pay-ments of up to 5 per cent of their average daily turnover for eachday of delay to comply with or implement an order or decision ofthe Commission:• for termination of an infringement, including where behavioural

or structural remedies are imposed; or• for approval of commitments and remedies.

The Commission may impose on undertakings periodic penalty pay-ments of up to 1 per cent of their average daily turnover for eachday of delay following the expiry of the deadline provided by theCommission, where undertakings fail to provide assistance to theCommission, or where undertakings fail to provide information orprovide incomplete or misleading information to the Commission,or where undertakings obstruct a dawn raid.

Penalties for individualsThe Commission does not provide for criminal sanctions. However,individuals who assisted the commitment of a violation of the Com-mission's orders, where such behaviour does not qualify as a crime,may receive a penalty of up to 50,000 levs. Individuals who fail toassist an investigation of the Commission may receive a fine of upto 25,000 levs.

23 Is it possible to remedy competition issues, for exampie bygivingdivestment undertakings or behavioural remedies?

The Commission may attach conditions or obligations to its clear-ance decision, provided that such remedies are directly related to theimplementation of the concentration, and that they are strictly aimedat guaranteeing the preservation of competition in the affected mar-ket. Unlike EU Competition Law, where only the participants in theconcentration may offer undertakings, the 2008 LPC provides that

the Commission may also unilaterally impose remedies for elimina-tion of the competition concerns on the respective relevant markets.During a phase I investigation the Commission may only approveremedies offered by the notifying undertakings. During a phase IIinvestigation the Commission may approve proposed remedies but ithas discretion to devise and impose remedies on its own initiative.

The Commission has not yet accepted or devised remedies underthe currently effective LPC. Examples of the imposition of structuralremedies before the end of 2008 under the abolished Law on Protec-tion of Competition (abolished LPC) were rare.

The Commission has applied behavioural remedies, including,inter alia, conditions that the undertakings concerned would:• preserve certain lines of supply over a specific period of time upon

implementation of the concentration;• discontinue manufacturing of certain products by the target;• preserve certain assets for a specified period of time and ensure

the arm's-length access of competitors or customers to an essen-tial facility;

• ensure that clients will have continuing non-discriminatory accessto services, which are not tied in service packages;

• make certain investments in the target; or• not apply certain types of rebates in dealing with customers.

24 What are the basic conditions and timing issues applicable to adivestment or other remedy?

In contrast to the ECMR, the LPC does not envisage a final deadlinefor the parties to propose commitments modifying the concentration.However, having in mind the specified deadlines for phase II inves-tigation, as well as the time period required by the Commission toassess the proposed commitments it could be reasonably concludedthat the parties shall submit such commitments before the publichearing with the participation of the notifying undertakings.

Whenever remedies are imposed, the Commission retains con-tinuous jurisdiction, determines the deadlines for their implementa-tion and monitors their implementation. The Commission decisionsordering discontinuation of an infringement, including throughimposition of structural and behavioural remedies, are subject toprompt implementation.

25 What is the track record of the authority in requiringremedies inforeign-to-foreignmergers?

So far the Commission has required specific undertakings in onlyone foreign-to-foreign merger in 2005. As the concentration in thatcase was related to a possibility for market foreclosure due to con-trol over a package of intellectual property rights, the Commissionauthorised the transaction on the condition that the undertakingsconcerned should transfer several of the intellectual property rightsto third parties.

26 In what circumstances willthe clearance decision cover relatedarrangements (ancillaryrestrictions)?

No specific rules are envisaged in the LPC or the Guidelines in thisregard and the practice of the Commission is limited. Where ancil-lary restraints are present the Commission applies the rules of theEuropean Commission Notice on restrictions directly related to andnecessary for concentrations.

27 Arecustomers and competitors involvedin the reviewprocess andwhat rights do complainants have?

Customers and competitors may petition the Commission wherea concentration has been implemented in breach of merger regula-tions; however, the Commission would open an investigation on its

initiative. However, in the context of pending investigations, thirdparties may request to be constituted as parties to the proceedings atthe phase II investigation. In their capacity as parties they enjoy simi-lar rights to those granted to the undertakings concerned - right ofaccess to the materials of the investigation, submission of commentson a statement of objections and participation in public hearings heldby the Commission during phase II investigations.

Even if they are not constituted as parties to the proceedings,third parties have the right to submit written comments with regardto the proposed concentration. In a phase I investigation written com-ments are accepted within seven days of publication of a notice onthe website of the Commission for opening of an investigation. Inphase II investigations the term for submission of written commentsby third parties is 30 days upon the publication of a notice on theCommission's website. Also, as noted in question 16, as part of thereview procedure the Commission will always approach competitorsand customers to get their views, including with regard to the effectsthat the implementation of a concentration will have on competitionin the relevant market.

The LPC provides a fairly broad definition of the term 'inter-ested party', which includes any person, undertaking or associationof undertakings whose interests may potentially be affected by a vio-lation of the LPC. Furthermore, as noted in question 31, decisionsof the Commission can be appealed to the Supreme AdministrativeCourt (the SAC) by any 'interested party'. In its interpretation of theLPC, the SAC has also confirmed that a competitor in the relevantmarket affected by the concentration would have standing to appeala decision of the Commission.

28 What publicityis givento the process and how do you protectcommercial information,includingbusiness secrets, from disclosure?

The LPC explicitly provides that all merger control decisions that closean investigation and decisions for the initiation of phase II investiga-tion shall be published in the Public Registry of the Commission avail-able on its official website. Moreover, the Commission shall announcein the Public Registry the notices for opening of investigations andfor issuance of clearance decisions. Upon the request of the notify-ing party however and only in well justified cases (eg, when publiclytraded companies are merging) the Commission might refrain frompublishing a notice for opening of investigation on its website.

Commercially sensitive information is subject to full disclosureto the Commission. Addressees of a request for information fromthe Commission cannot call upon protection of business secrets torefuse to provide to the Commission a particular piece of confiden-tial information. The LPC requires competition officials to protectany information identified by the undertakings concerned as businesssecrets. Moreover, documents and information may only be used bythe Commission for the purposes of the LPC. Any information identi-fied as a business secret is erased from the official version of the deci-sion which is published in the Public Registry of the Commission. Thenotifying parties shall comply with the special Rules on the Access,Use and Storage of Documents Constituting Production, Trade orOther Protected Secret adopted by the Commission.

29 Dothe authorities cooperate with antitrust authorities in otherjurisdictions?

The Commission is a member of the International CompetitionNetwork, the European Competition Network and the EuropeanCompetition Authorities, and has access to information regardingmulti-jurisdictional notifications. It has developed close workingrelations with the European Commission and a number of nationalcompetition authorities, including on the basis of cooperation agree-ments. In some cases involving foreign-to-foreign mergers, the Com-mission has requested information about the status of proceedingsfrom other national competition authorities.

In 2009 there was a decrease, as compared to previous years,in the total number of proceedings and decisions adopted by theCommission in the field of merger control. In 2009, however,theCommission was active in investigating filing violations and imposingpenalties for such violations as well as in initiation of in-depth (phaseII) investigations in certain cases.

Updates In penallslng filing violationsAlthough the Commission had practice in imposing fines on bothBUlgarianand foreign undertakings for filing violations, suchfines under the abolished LPCwere rare. In contrast, in 2009 theCommission delivered 12 decisions imposing pecuniary sanctionsfor failure to notify. Most of the fines were determined as apercentage of the Bulgarian turnover of the undertaking; however,the exact percentages were kept confidential. Some of the fineswere determined as an amount corresponding to the amount of theclearance fee that the acquiring undertaking should have paid if thetransaction had been duly notified. It should be noted, however,that

30 Are there also rules on foreign investment, special sectors or otherrelevant approvals?

There are no special rules for merger control that apply to foreigninvestment. However, as noted above, the Commission may view thefact that a certain transaction attracts foreign investment as a positiveresult to be weighed against the potential negative impact associatedwith the establishment or strengthening of a dominant position.

In some sectors there are special regulations that would applyto mergers and acquisitions in addition to the merger control rulesof the LPC. The Law on Credit Institutions and the Insurance Code,for example, require approval by the respective regulatory authorityfor acquisitions of stakes in banks and insurance companies exceed-ing certain statutory levels. The Law on Public Offering of Securi-ties requires the disclosure of interests in listed companies. Furthersector-specific regimes regulate telecommunications and energy, whereoperators act under licence and the respective regulatory authorityis vested with the power to authorise any transfer of shares of suchlicensed operators. Similarly, as a matter of practice, state and munici-pal authorities that privatise public assets impose an obligation on thebuyer that the subsequent transfer of shares of privatised enterprisesexecuted within a certain period of time may take place only with theprior approval of the respective privatisation authority.

All merger control decisions of the Commission, except for decisionsfor opening of an investigation ex officio and opening of a phase II

the concentrations sanctioned by the CPCin 2009 were carried outin 2006 and 2007 , namely, before the entry into force of the currentlyeffective/.PC When the notification thresholds were different.

Updates In Initiation phase IflnvestlgatlonsThe new LPCintroduced significant changes to the process of carryingout phase II investigations in merger control proceedings. In additionto extending the period for completing the investigation (within fourmontl)s as of the publication of the decision to launch phase IIinvestigation in the electronic register), the LPCalso introduced astatement of objections in phase II investigations. While there wasoniyonephase Ii investigation uMer the abolished LPC, in 2009the Commission initiated phase Uinvestigations in at least twocases. Following$ubstantive analysis of the aqaltional informationaM .evidencecollected In the course of the investigation, one of theproceedings was closed with an unconditional clearance decision andthe second was suspended due to the Withdrawal of the notification bythe notifying party.

investigation, are subject to judicial review. Jurisdiction is vested in theBulgarian Supreme Administrative Court (SAC). Standing to appealis granted to the parties to the proceedings and to any third partywith legitimate interest (see question 27). Appeals must be lodgedwithin 14 days, which for the parties to the proceeding begin as of thedate of announcement of the clearance decision under the provisionsof the Administrative Procedure Code, and for any interested thirdparties, as of the date of publication of the clearance decision on theelectronic Public Registry of the Commission.

The appeal process of decisions of the Commission follows thestandard judicial review procedure for administrative acts. Bulgarianlaw does not provide for any specific time frame and timing largelydepends on the workload of the SAC. The SAC hears competitioncases as a first instance and at cassation. A three-member panel ofsupreme judges hears appeals against decisions and orders of theCommission. The three-member panel acts as a first instance inactions against Commission decisions and as a first and final instancein actions against orders. The review concerns points of both factand law. A panel of five supreme judges hears appeals against judg-ments of the three-member panel (first instance) of the SAC in actionsagainst decisions of the Commission. The five-member panel reviewsthe case on points of law only. Generally, a full-blown review processon two instances may take up to two years.

Djingov, Gouginski, Kyutchukov & Velichkov

Nikolai GouginskiMiglena IvanovaAnton Petrov

nikolai.gouginski@dgkv.commiglena.ivanova@dgkv.comanton.petrov@dgkv.com

10 Tsar Osvoboditel BlvdSofia 1000Bulgaria

Tel: +359293211 00Fax:+359 2 980 3586

www.dgkv.com

33 What is the recent enforcement record of the authorities, particularly

for foreign-to-foreign mergers?

In 2009, the Commission initiated 54 proceedings and handed down58 decisions related to concentrations. Of these decisions, about sixconcerned foreign-to-foreign transactions. The Commission imposedpecuniary sanctions for failure to notify concentrations in 12 deci-sions for a total of 1,833,710 levs. One of the penalised companieswas a foreign entity. The Commission did not block any of thereviewed concentrations in 2009 or impose additional conditions orobligations on the participants directly related to the implementationof the concentrations.

In its 2009 Annual Report the Commission has laid out its prioritiesfor 2010. In the field of merger control the Commission will directits efforts in the following directions:• devising appropriate remedies and imposing measures to restore

effective competition when concentrations have been imple-mented in infringement of the law;

• carrying out ex post control over the fulfilment of the conditionsunder which the Commission has authorised a concentration;and

• taking measures for improving the exchange of informationamong the competition authorities of the ED member states inthe case of concentrations notified in more than one memberstate, including through raising the awareness of the participantsin the concentrations of the possibility to provide declarations ofconsent for disclosing confidential information to other bodies.

For more efficient use of its human and financial resources the Com-mission intends to give priority to cases that are of significant impor-tance for the well-being of consumers and the economy as a whole.In addition, in 2010 the Commission intends to participate moreactively in the process of close cooperation among the members ofthe European Competition Network and the International Competi-tion Network.

35 Are there current proposals to change the legislation?

Currently there are no proposals for changes in the merger controllegislation.