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  • Tark Grunte Sutkiene Advises on Sale of Shares of Ecoservice

    Tark Grunte Sutkiene has represented AB City Service, a shareholder of Ecoservice, in a sale of its shares in the company.

    Ecoservice is the biggest waste management company in Lithuania, engaged in the collection, transportation and processing of secondary raw materials and household waste. It was acquired by the Baltcap private equity and venture capital fund through UAB AWT Holding. AB City Service has reinvested part of the funds and retains 25% of shares in UAB AWT Holding.

    AB City Service is a holding company which manages one of the largest corporate groups engaged in facility management and integrated utility services in Europe. The shares of City Service AB have been quoted on the Official List of NASDAQ OMX Vilnius Stock Exchange since 2007.

    The Ecoservice deal was one of the biggest transactions in the utilities sector in recent years and is the first private equity fund investment in the sector in the Baltics. 

  • Hengeler Mueller Advises on Newspaper and Magazine Sale to Funke

    Hengeler Mueller has advised Axel Springer on the sale of regional newspapers, TV program guides, and women’s magazines to Funke Mediengruppe (FMG).

    The German Federal Cartel Office had previously granted approval for the transfer of program guides subject to certain conditions. To comply with these conditions, FMG sold a number of its own program guides and some of the program guides acquired from Axel Springer to the Klambt Media Group.

    In July 2013, Axel Springer entered into an agreement with FMG to sell the Berliner Morgenpost and Hamburger evening paper as well as its TV program guides and women’s magazines for EUR 920 million and to create joint ventures for distribution and marketing. On May 1, 2014, Axel Springer and FMG began co-operating in the fields of marketing and distribution on the basis of mutual service agreements. The creation of joint ventures will require the approval of the relevant merger control and antitrust authorities.

    Axel Springer operates in Russia — as part of a joint venture with Ringier Axel Springer Media – and in Poland, Serbia, Slovakia, the Czech Republic, and Hungary, as well as India, and many countries in Western Europe.

    Hengeler Mueller provided comprehensive advice to Axel Springer on the transaction. The Hengeler Mueller team was led by Partners Christophe Jackle and Karsten Schmidt-Hern, included Partners Nicolas Boehm, Jens Wenzel, and Carsten Schapmann, as well as Associates Vera Jungkind, Annika Clauss, Robert Kilian, Anika Gilberg, and Thomas Meyer. Partners Andreas Austmann was also involved.

     

  • Hengeler Mueller Advises on Fresenius Kabi Joint Venture

    Hengeler Mueller announced that it advised Fresenius Kabi on its creation of a joint venture with CJSJ Binnopharm in Russia and CIS countries, initially reported by CEE Legal Matters on April 29, 2014.

    Fresenius Kabi — the German healthcare company based in Bad Homburg, will own 51% of the shares. Binnopharm is part of  Sistema JSFC — one of the largest companies in Russia — and provides intravenous drugs and infusion solutions and manufactures active pharmaceutical ingredients. The Moscow-based company has two manufacturing facilities, employs more than 350 people, and generated sales of USD 104 million in 2013. Zenitco Finance Management holds a minority stake in the company.

    Fresenius Kabi has been active in the Russian market since 1994, and generated sales in Russia of USD 73 million last year. 

    Hengeler Mueller advised Fresenius Kabi in tax matters in connection with the joint venture. Partners Ernst Thomas, Counsel Mathias Link, and Associate Steffen Horns led the team.

     

     

  • Tark Grunte Sutkiene Advises Baltic Champs on Merger with Agrowill Group

    Tark Grunte Sutkiene has advised Baltic Champs, a major producer of mushrooms, in structuring and implementing a merger with the Agrowill Group agricultural goods producer.

    The total value of the transaction is slightly less than EUR 30 million. After successful closing of the merger, a mandatory tender offer to buy the remaining shares in AB Agrowill Group was launched. TGS describes this as the first mandatory tender offer ever made in Lithuania, during which shares would be purchased on both NASDAQ OMX Vilnius and the Warsaw Stock Exchange.

    After the merger, the total sales of the international group are approximately EUR 40 million, and it holds more than 40,000 hectars of agricultural land in Lithuania and Ukraine. The Baltic Champs Group has around 85% of the mushroom market share in Lithuania, and Agrowill is a leading company in agriculture business. In a statement on the firm’s website, TGS announced that “the transaction involved all classical (but novel to Lithuania) features of true merger: exchange of shares listed in stock exchange, launch of takeover bid in 2 stock exchanges in Vilnius and Warsaw and negotiations of shareholders agreement.”

     

     

     

  • White & Case Advises Indian Infrastructure Company on Divestment of Istanbul Airport

    White & Case has advised GMR Infrastructure, an Indian infrastructure company, and its group companies, on the sale of their 40 percent stake in Istanbul’s Sabiha Gokcen (ISG) International Airport, one of the fastest-growing airports in the world.

    The stake was acquired by an affiliate of Malaysia Airports Holdings Berhad (MAHB), an existing shareholder in ISG, for EUR 209 million.

    “We worked with GMR to conclude an agreement initially with another buyer but also planned for the exercise of a right of first refusal by the existing shareholders of ISG,” said White & Case lead Partner Nandan Nelivigi. “Ultimately, MAHB exercised its right of first refusal, and the sale closed after receiving approvals from ISG’s lenders and government agencies at a great speed in spite of intervening elections in Turkey.”

    Along with Nelivigi, the White & Case team included Partners Sebastian Buss in Istanbul, David Eisenberg and Dipen Sabharwal in London, and Jonathan Olier in Singapore, as well as Counsel Amiko Sudo in New York and George Cyriac in Singapore, and Associates Luke Bowers and Rian Matthews in London and Ciara Yeo in Singapore. GMR was advised on Turkish law issues by a team from Cakmak Avukatlik Burosu — White & Case’s arm in the Turkish capital, Ankara — consisting of Associates Naz Bandik, Ayse Eda Bicer, Ozlem Kizil Voyvoda, Hakan Eraslan.

     

     

  • Oleg Makarov Also Named a Ukrainian Top Manager

    Vasil Kisil & Partners has announced that Oleg Makarov has also been included on the Ekonomika Publishing House’s 2014 list of Ukraine’s “Best Top-Managers”, joining Michael Kharenko (as reported previously).   

    Makarov, the Vasil Kisil & Partners Managing Partner, makes the list for the sixth year in a row. In a statement released by VKP, the firm explained that “this year Ekonomika Publishing House compiled a single overall ranking of top managers without separating them into industry ratings, and also improved the rating methodology, evaluating nominees based on the criteria such as business capabilities, the frequency of mentions in the media, online voting on Investgazeta website and overall management style. The rating results confirm the dynamic development and leading position of Vasil Kisil & Partners on the Ukrainian legal market.”

     

  • Fort Represents Plaintiffs in Dispute with Lithuania Deposit & Investment Insurance Company

    The Lithuanian office of the Fort law firm is representing 262 plaintiffs in a class action against the state-run Deposit and Investment Insurance Company (DIIC).

    On behalf of its clients, Fort attorneys are seeking a ruling by the Vilnius district court that funds deposited by the plaintiffs for a non-registered share capital increase of Lithuania’s Snoras Bank — which went into bankruptcy in November, 2011 — should be treated as deposits deserving of protection from the DIIC. The claim amounts to a total of EUR 1.7 million.

    According to Andrius Mamontovas, Fort’s Managing Partner in Vilnius, “our clients were put into an awkward situation, where their funds collected for a new emission of shares of Snoras (which was ultimately refused by the Bank of Lithuania) were not returned back to them, nor were the shares issued in exchange of such payments. Therefore, we seek to prove to the court that from the moment the Bank of Lithuania refused to grant permission for the registration of Snoras’ share capital increase, the funds deposited as payment for the shares should be treated as funds in the bank account subject to deposit insurance up to EUR 100,000.”

     

  • Competition in Estonia: Estonian Parliament Considers Decriminalizing Abuse of Dominance and Increasing Fines for First Offenders

    Competition in Estonia: Estonian Parliament Considers Decriminalizing Abuse of Dominance and Increasing Fines for First Offenders

    Like EU law, Estonian Competition Law prohibits abuse of dominance, i.e. unilateral abusive or harmful practices by companies who hold significant market power. Estonian law assumes that a company is dominant in a particular market and is subject to specific obligations vis-à-vis its conduct (including non-discrimination, bans on excessive or predatory pricing, etc.), if it holds more than 40% of turnover in a given market. 

    Currently, abusive conduct can be addressed by the Estonian Competition Authority (ECA) in an administrative, misdemeanor, or criminal investigation. The first is used when the ECA wants to adopt cease-and-desist orders and/or impose remedies – for instance, making a company’s offer to alter its pricing practices binding upon it – which the ECA can later enforce by imposing (periodic) penalty payments. A misdemeanor procedure, a sort of a fining procedure, is used when the firm involved is a first time offender – including both those who have never committed an abuse of dominance and those who have but who paid fines more than a year ago – but the ECA wants to impose fines either on top of any remedies or when remedies are no longer available. If a company is a repeat offender – that is, it has been found guilty of an abuse of dominance and less than a year has passed from paying the resulting fine – then a criminal investigation will be initiated and, if the company is found guilty, a criminal fine will be imposed by the court. This criminal fine can reach EUR 16 million for companies, whereas individuals acting for the company are exposed to a criminal fine (up to 500 days average income) or a prison term of up to 3 years.

    On December 9, 2013, the Estonian parliament started formal legislative proceedings aimed at adopting legislation, introduced by the Ministry of Justice, that would decriminalize abuse of dominance offenses. The specific piece of legislation has passed the 1st reading (three in total are needed) and is currently being discussed in the Legal Affairs Committee. If adopted, the law would mean that in the future abuse of dominance cases will be handled under either the administrative or misdemeanor procedures and no criminal investigation or criminal fines could be triggered even for repeat offenders. That would mean a significantly lower overall level of exposure to fines and legal costs for dominant firms – criminal defense is not cheap –  as well as their senior management and key staff. That’s because neither legal entities nor individuals would be exposed to criminal liability in the future (as they are now).

    But, there’s also a flip side to this reform. Namely, there is a significant increase of potential fines for first time offenders of the ban on abuse of dominance written into the current draft. Today, first time offenders (again, including those who were found to have abused a dominant position and paid a fine over a year ago) are exposed to a fine of up to EUR 32,000 – which is, as most would agree, modest. The new ceiling for fines for abuse of dominance would be EUR 400,000, which is around twelve times higher than under current law.

    Another practical implication of decriminalization would be that fines for abuse of dominance would be imposed exclusively by the ECA and never by a court. Currently fines of up to EUR 32,000 can be imposed by the ECA and up to EUR 16 million by the court in a criminal procedure. In the future fines for abuse of dominance of up to EUR 400,000 could be imposed by the ECA (though they could be appealed in a court of law). That means that the authority which investigates a case and decides upon the necessity of fines will also set the exact amount of those fines in all abuse of dominance cases (not only those of first time offenders).     

    By Rene Frolov, Head of Competition in Estonia, Tark Grunte Sutkiene

    This Article was originally published in Issue 2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

     

  • Competition in Slovakia: Envisaged Substantial Changes to Slovak Competition Law

    Competition in Slovakia: Envisaged Substantial Changes to Slovak Competition Law

    The Slovak Parliament is currently deciding on substantial amendments to the Slovak Competition Act (the “Amendments”), prepared by the Slovak Competition Authority (the “AMO”). If approved in time, the Amendments will be effective as of July 1, 2014. Below, we provide an overview of the most significant changes. 

    The most significant of the Amendments are aimed at providing higher efficiency and speed for merger filing procedures. Following on the 2-phase procedure implemented in 2012, the new Amendments introduce a simplified form of merger notification in cases involving: (i) the acquisition of sole control instead of joint control by the acquirer; (ii) no horizontal/vertical overlap in the activities of the parties to the concentration; or (iii) overlap in activities not exceeding 15% (horizontal overlap) or 30% (vertical overlap) of the respective market. This approach has been long desired by practitioners. Parties would retain the existing right to apply for permission to submit a reduced amount of the otherwise statutorily-required documentation in support of the notification where, for example, a full and formal submission is unnecessary and compliance would be onerous or impossible.

    In addition, while the current waiting period for an AMO decision does not begin until the AMO confirms that it has received complete notification, under the Amendments the waiting period for the AMO’s decision would start running from the first submission of merger notification – thus making the duration of merger control proceedings more predictable. However, when the AMO believes that a filing is incomplete, a request that the parties complete the notification would stop the clock until all required documents/information have been submitted. 

    The deadline for an AMO decision regarding exemptions from the requirement that parties delay implementation of a merger pending AMO clearance would be shortened to 20 business days. As before, exemptions from this obligation could be granted only in exceptional cases and for particularly urgent actions (e.g. the conclusion of a seasonal agreement).

    As regards cartels, the Amendments are aimed at bringing the Slovak Competition Act closer to EU Competition law. The leniency and settlement provisions (introduced in law for the first time although already applied in practice) would be regulated by secondary legislation enabling the AMO to react more flexibly to new developments in the law (such as new decisions by courts) in the future. As an alternative, it would be possible to end infringement proceedings through commitments offered by undertakings, too. In addition to testing such commitments, the AMO could ask for the appointment of an independent trustee to the costs of undertakings, who would be in charge of supervising the fulfillment of these commitments. 

    In this respect, a new weapon for combating cartels – already existing in Hungary and the UK – will be created. An individual who first discloses the existence of a cartel to the AMO would be entitled to a monetary reward in the amount of up to 1% of the aggregate amount of the fines imposed by the AMO on the cartel members. The maximum amount of the reward would be EUR 100,000. The “whistleblower” could, if he or she wishes, remain anonymous. The whistleblower can be neither an entrepreneur nor an employee of the leniency applicant. It cannot be avoided that this opportunity might be abused by former “hostile” employees wishing revenge upon their employer. 

    The Amendments also propose more severe sanctions for administrative offenses committed in the course of dawn raids carried out by the AMO. A fine of up to 5% of an undertaking’s worldwide turnover could be imposed where it fails to grant AMO officials access to its premises or in cases where the undertaking damages a seal of the AMO. For similar reasons, an individual could be fined up to EUR 80,000 as a result of dawn raids in private premises.

    The powers of the AMO are also redefined. The Amendments distinguish between a general investigation by the AMO in a particular area of business aimed at “market” research into a competition situation and an investigation to discover if there are reasons for the commencement of an administrative proceeding. The new dawn raid regulation specifies the essential criteria for obtaining authorization to carry out the inspection, whereby an inspection in other or private premises must be accompanied by a court order (separate authorization by the AMO shall be no longer necessary).  

    Finally, the AMO has searched for a balance between the protection of proprietary/confidential information and ensuring the defense rights of the parties. Such protected information could be provided, under exceptional circumstances, to another party (with the consent of the affected party) or to its representative (in the absence of this consent), only for review – i.e. without the possibility to make copies or excerpts and under a confidentiality agreement. Moreover, as regards private enforcement of competition law, the undertakings which successfully apply for immunity would be protected from cartel damage claims provided that the claimant is able to obtain compensation for the damages suffered from the other cartel participants. 

    Even if the Amendments have not been passed in the final form in Parliament yet, the political will to approve them as currently constructed appears to exist.      

    By Lubos Frolkovic, Partner, and Zuzana Slavikova, Senior Associate, Wolf Theiss

    This Article was originally published in Issue 2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • White & Case EMEA Private Equity Team Adds Partner

    White & Case has strengthened its UK Banking practice with the addition of new Partner Colin Harley in the firm’s London office.

    Harley, who joins the firm’s Global Banking Practice, focuses primarily on advising financial sponsors and alternative capital providers on all forms of borrower finance. He joins from Maclay Murray & Spens, and previously worked at Dickson Minto. He brings with him over 12 years of experience.

    “The addition of Colin will enhance our bank finance capability in the UK,” said White & Case Partner Eric Berg, Global Banking Practice Leader. “As a dedicated borrower-side lawyer, Colin will have a particular role to play in our drive to establish a leading pan-European, cross-border private equity practice based in London.”

    “Colin is an energetic, technically astute lawyer with excellent experience,” said White & Case Partner Lee Cullinane, Regional Section Head, EMEA Banking. “He has developed strong borrower-side characteristics to his practice which will help intensify our focus on the representation of sponsors, with clients benefiting from increasingly sophisticated finance advice to support the English, US and local law capability White & Case already provides in all the major jurisdictions in which private equity funds invest or raise finance.”

    In the past year White & Case has expanded its EMEA Private Equity practice with the addition of Partners Ian Bagshaw, Richard Youle, and Ross Allardice in London, as well as the recent hire of Equity Capital Markets Partner Inigo Esteve.

    Since the beginning of 2014 the firm’s Private Equity-related work has included advising Polish mobile telecoms operator Play on its inaugural EUR 870 million high yield bond issue (as reported by CEE Legal Matters on February 7), Innovia Group on its debut floating rate high yield bond issue, Avast Software on its sale of a significant minority stake to CVC Capital Partners (as reported by CEE Legal Matters on February 7), Mid Europa Partners on the sale of T-Mobile Czech Republic to Deutsche Telekom (as reported by CEE Legal Matters on February 12), and DX (Group)’s IPO and admission to the AIM market of the London Stock Exchange.