By far the most interesting development in the competition law of Bosnia and Herzegovina was the first conditional merger clearance in the history of the country’s national competition authority – the Competition Council.

Relevant market: The NCA shows inconsistency – and admits it

According to the Bosnian Competition Act, the Competition Council may clear a transaction conditionally, in which case in the clearance decision it shall set out the conditions and time limits under which the transaction can be implemented. Despite this possibility, the NCA has not used this in practice – until 2019.

In 2019, the Competition Council cleared conditionally the takeover of the telecom operator Elta Kabel by MTEL, a leading provider of telecom services in Bosnia and Herzegovina, controlled by Serbia’s telecom incumbent – Telecom Serbia. Since both operators are present predominantly in Republika Srpska, a critical issue was how the NCA would define the relevant market.

Concerning the product element of the relevant market, there were no surprises. Considering the activities of the parties to the concentration, the Bosnian NCA defined four relevant product markets (all on retail level): 1) fixed telephony, 2) mobile telephony, 3) internet access, and 4) distribution of radio and TV program.

The NCA’s assessment of the relevant geographic market was much more interesting. In the past, the NCA has not been consistent concerning the way it looks at the geographic element of the telecom markets, especially regarding the distribution of radio and TV program – in different cases, the NCA has been defined such markets on local, regional, and national level, respectively.

Concerning MTEL’s takeover of Elta Kabel, the Bosnian NCA considered the geographic market to be national for all four product markets. The NCA justified this approach by inter alia finding that the parties had national telecom licences, that in the EU as well the geographic market for such transactions was national, and that telecom operators determine prices on the national level.

In the conditional clearance, the NCA admitted its inconsistency when it comes to the relevant geographic market, but emphasized that it defines the relevant market for each case separately, as each transaction is specific in terms of the parties, the legal basis, and other circumstances affecting the Council’s assessment.

The conditions under which the transaction was cleared remain a secret

Unfortunately, the published clearance decision does not reveal the conditions(s) under which the transaction was cleared, as it considered this as confidential. Hopefully, more information about this will be available once the NCA publishes its annual report for the previous year.

What to expect in 2020?

Since Bosnia and Herzegovina has more reasonable merger filing thresholds than some other countries in the Western Balkans (you can check these thresholds in our online app), there probably will not be a large number of notified transactions. However, some of those that do get notified could turn out interesting, especially in the telecom sector.

Also, we can expect a relatively large number of new antitrust cases, due to the country’s competition law system which could be characterized as quasi-private antitrust enforcement.