Acquisition of portfolios of non-performing loans (NPLs) has been commonplace in Serbia for several years already. And an accompanying issue has been whether such acquisitions need to be filed to the Serbian national competition authority (NCA) for merger examination. Now, the NCA has resolved that issue, by issuing an opinion on the matter.
Why would an NPL acquisition trigger Serbian merger filing thresholds?
Serbia’s merger filing thresholds are set very widely and catch a lot of transactions where the target did not generate any turnover on the Serbian market during the relevant period. What is more, due to the way the filing thresholds are set, it is possible that a transaction be notifiable even if the target did not generate any turnover anywhere in the world.
Specifically, for a merger filing obligation in Serbia to exist, it is sufficient that, in the previous year, the combined worldwide turnover of the parties exceeded EUR 100 million, whereas the Serbian turnover of at least one party (it suffices only the acquirer’s) exceeded EUR 10 million.
It is not necessary that the target is a company – a notifiable concentration could also arise in the case of acquisition of assets which can represent an independent economic unit. For instance, the Serbian NCA has held that the notification obligation also exists in the case of acquisition of real estate, and even in the case of lease of a single retail store.
Due to such situation, it was not surprising that undertakings were not certain whether their acquisition of an NPL portfolio could also trigger a merger filing obligation in Serbia. Finally, the Serbian NCA has issued an opinion clarifying its stance on the issue.
What was the question before the NCA?
Against this background, an unnamed applicant turned to the Serbian NCA with the question whether acquisition of a portfolio of NPLs granted to legal persons and sole traders, which the bank would sell to another company for the purpose of collection of individual claims, would represent a concentration within the meaning of the Serbian competition law.
What was the standpoint of the NCA?
In its response, the Serbian NCA found that this type of transaction would not represent a transaction within the meaning of the Serbian competition law, as it would not represent acquisition of control of the whole or parts of one or more other undertakings. Based on this, acquisition of NPLs would not have to be filed to the Serbian NCA, even in the presence of such low merger filing thresholds.
Each year, the Serbian NCA examines a high number of mergers – for instance, in 2018 it rendered more than 150 merger decisions. Despite the NCA’s strict interpretation of the merger filing thresholds, interested parties may at least count that the Serbian NCA will not look at their acquisitions of NPLs as something they need to file (and pay a merger filing fee for) in Serbia.