Merger Control Proceedings Initiated In Borderline Case

The Competition Protection Office recently initiated ex officio merger control proceedings against the Federation of Slovenian Retired Persons' Societies. According to the office, the federation had acquired control over Vzajemna Zdravstvena zavarovalnica dvz, a Slovenian mutual health insurance company, but failed to notify the concentration within the statutory 30-day time limit.

Facts

The detailed facts are not yet publicly available as the procedure is still pending, but the excerpt from the decision published on the initiation of proceedings reveals that the case is unique.

The federation is a non-profit, non-governmental organisation which pursues the aims of ensuring the quality of life of retired persons and of inter-generation solidarity. Vzajemna is a health insurance company organised as a mutual company (ie, its capital is not divided into standard (transferable) shares; rather, the policy-holders become members of the company and hold equal fractions of the aggregate voting rights).

The federation had organised a public voting proxy collection from the members of Vzajemna for the purpose of voting at the general meeting held by Vzajemna on July 26 2010. At the general meeting the representatives of the federation held 17,540 out of the total 18,997 votes (92.4%). The representatives submitted a counter-proposal to the scheduled items of the meeting and appointed their own nominees to the Vzajemna board.

The Competition Protection Office concluded that in so doing, the federation acquired control over Vzajemna and failed to notify the acquisition in a timely manner.

Issues

The case gives rise to several questions. First, the Slovenian Competition Act applies only to concentrations between 'undertakings' (defined as entities engaged in economic activity, regardless of their legal and organisational form and ownership status). As the federation is a non-profit organisation (and, as such, should not engage in economic activity, at least in principle), the Competition Protection Office will have to prove that it qualifies as an undertaking within the meaning of the act.

Second, the act defines a 'concentration' as a lasting change in control. While it can safely be said that the federation acquired control over Vzajemna at the...