Category: Bulgaria

Kambourov & Partners has successfully defended Lidl in two proceedings before the Bulgarian Commission on Protection of Competition (CPC) pertaining to alleged infringements of the novel Art. 37a of the Bulgarian Protection of Competition Act (PCA), which prohibits abuse of stronger bargaining position.

In the first case the CPC found that the alleged conduct did not fall into the temporal scope of Art. 37a PCA. In the second case the CPC concluded that Lidl was in no stronger bargaining position vis-a-vis the applicant and the conduct of Lidl did not amount to abuse.

These two proceedings, according to Kambourov & Partners, are only the second and third decisions ever applying Art. 37a PCA, following the CPC’s May 2016 sanction of Siemens. Тhe two decisions of the CPC in the proceedings against Lidl are, the firm reports, “the only ones so far to find no infringement of Art. 37a PCA by the respondent.”

The Kambourov & Partners competition team was led by Managing Partner Stefan Tzakov and included Associates Elena Apostolova and Plamen Yotov,

Dimitrov, Petrov & Co. is reporting that, after almost two years of litigation, the 5-member panel of Bulgaria’s Supreme Administrative Court has issued its final decision in favor of firm client Medicus Trade – a company from the Mareshki medicines retail chain repealing provisions of the country’s Ordinance No. 4 on the terms and conditions for prescribing and dispensing of medicines.

According to Dimitrov, Petrov & Co., the firm’s team “had successfully applied for competition advocacy before the Commission for the Protection of Competition and in parallel proceedings before the Supreme Administrative Court for challenging unlawful and anti-competitive provisions of Ordinance No. 4 concerning the dispensing of medicines.” According to the firm “this is yet another case of a successful repeal of provisions aimed at limiting the competition on the medicines retail market.”

The Dimitrov, Petrov & Co. team was led by Partner Metodi Baykushev and Senior Associate Donka Stoyanova.

Tsvetkova Bebov Komarevski has advised Bulgarian electricity power distributor Energo-Pro Varna EAD on its issuance of seven-year bonds with a yield of 3.5% p.a. on the Bulgarian market in a total volume of EUR 130 million, which represents the biggest ever bond sale in Bulgaria. The Balkan Advisory Company IP, which was sole lead manager on the deal — and which was advised by Boyanov & Co. — reports that the bonds were placed among institutional investors from Bulgaria, Austria, Central and Southeastern Europe. The bondholders trustee, United Bulgarian Bank, was advised by its in-house legal team. 

Energo-Pro Varna, one of the three energy distribution companies in Bulgaria, is a subsidiary of Energo-Pro A.S., Czech Republic, an integrated energy company with a long history in private electricity distribution, power supply, and generation of electricity from renewable energy sources. Energo-Pro Varna is engaged in distribution, end-supply and free market electricity trading. It is the sole license holder for distribution and end-supply (regulated) in northeastern Bulgaria and is a leading free market supplier (non-regulated) in Bulgaria. The company will use the proceeds to invest in its distribution network, as well as for repayment of its outstanding indebtedness.

The Black Sea Trade and Development Bank (BSTDB) — an international financial institution established by Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine, and headquartered in Thessaloniki, Greece — invested EUR 40 million in the debut bond issue. This subscription marks the first time BSTDB has acted as an anchor investor on a primary bond issue. 

“Energo-Pro Varna is particularly pleased to have BSTDB as an anchor investor alongside other international and local commercial banks, pension funds, asset managers and corporate treasuries,”  said Momchil Andreev, Chief Executive Officer of Energo-Pro Varna Momchil Andreev. “The terms and size of the issue, which is by far the largest for the Bulgarian market, provide solid footing for our medium term investment plans.”

According to Tsvetkova Bebov Komarevski (TBK), the firm advised Energo-Pro on “the entire process and documentation — starting with [its] transformation to a joint-stock company, working on the concept of the issue, including the vast majority of the terms and conditions, organizing the offering circular drafting, negotiating with the bondholders trustee, coordinating the security package negotiation, and assisting the issuer and the lead manager with the subscription process.” In addition, the firm reports, “we procured the registration of the issuer with the Central Depository (the central securities depository) and, after the issuance, the post-issuance matters, such as getting the security package signed and perfected.”

The TBK team, overseen by Partner Nikolay Bebov and led by Senior Associate Damyan Leshev, included Senior Managing Associate Venelin Dimitrov and Managing Associate Angel Bangachev. According to Bebov, “the bond issue is a private placement transaction, but it is intended that the bonds will be listed on the Bulgarian Stock Exchange [in] Sofia within the next several months. This is why the full list of details of the bonds is not in the public domain at present; it will be after the listing.”

The Boyanov team consisted of Partner Damian Simeonov and Senior Associate Georgi Drenski.

Dobrev & Lyutskanov has announced that former Senior Associate Katerina Gramatikova has been promoted to Junior Partner.

Gramatikova joined Dobrev & Lyutskanov in 2006 and was made Senior Associate in 2011. She heads the firm’s Competition Law, Energy, and Public Procurement and Concessions departments, while also working in the areas of Environment and Utilities and Infrastructure, Litigation and ADR, and Transport and Communication.

She is a lecturer at the Krustyo Tzonchev Center for Continuing Legal Education and is President of the National Committee of Union Internationale des Avocats (UIA) for Bulgaria. She graduated from Sofia University St. Kliment Ohridski (LL.M. 2003), specializing in Jurisdiction and Public Administration.

The firm also announced that Vyara Ivanova and Gergana Ilieva were promoted to Senior Associates and Lyuben Todev was made Lawyer.

Kambourov & Partners has advised Maxima Bulgaria (operator of the T-Market supermarket chain) on its acquisition from the REWE Group of 12 supermarkets in REWE’s Penny chain (which terminated its activity in Bulgaria).

According to Kambourov & Partners, after receiving the green light from the Bulgarian competition regulator, Maxima Bulgaria, part of Lithuania’s Maxima Grupe discount retailer, successfully acquired the 12 supermarkets from REWE and will continue to expand its T-Market network across the country.

The firm claims that, “according to media sources, the deal will make Maxima Bulgaria the 3rd-largest retail chain in Bulgaria by number of stores.”

Kambourov & Partners did not reply to our inquiry about counsel for REWE Group on the deal.

On 20 May 2016 the Bulgarian government resolved to begin open tender proceedings for the concession of the Sofia Airport which has been brought to a halt by the Bulgarian Competition Protection Commission.

With a formal resolution dated 20 May 2016, the Bulgarian government started open tender proceedings for the concession of the Sofia Airport. Official notice of the tender was published in the official journal of the European Union (No 2016/S 105-187282), on the website of the Bulgarian State Gazette (No 2 from 2 June 2016), and in the National Concession Registry on 2 June 2016 (No. A – 000796/2.06.2016). Documentation for participation in the open tender is published on the website of the Ministry of Transport, Information Technologies and Communication (the “Ministry of Transport”) under section “Concession for Sofia Airport”.

Proceedings ceased

On 15 June 2016, Mohamed Abdulmohsin Al Kharafi & Sons Company for General Trading, General Contracting and Industrial Structures W.L.L. (“MAK”) and ADMAK General Contracting Company W.L.L. (“ADMAK”) submitted an appeal against the decision for opening a tender for the concession of the Sofia Airport before the Bulgarian Competition Protection Commission (the “Commission”). The Commission, being the controlling institution of first instance for the lawfulness of acts of state authorities within concession proceedings under the current Concession Act, opened proceedings for the review of the Bulgarian government’s resolution from 20 May 2016 as a result of the appeal.

The appellants (MAK/ADMAK) were assignees under the construction agreement for reconstruction and development of the Sofia Airport’s new runway. In 2011, in their capacity as assignees, they had instituted and won arbitration proceedings before the ICC Court of Arbitration against Sofia Airport. The ICC Court of Arbitration awarded MAK/ADMAK damages in the amount of USD 26,802,343.39 and interest on different parts of the latter sum in the amount of LIBOR plus 1.5 %; and the refund of guarantees in the total amount of USD 10,594,600; as well as payment of all costs. The execution of the arbitration decision was permitted by the Bulgarian civil court, however the decision was then appealed by the Sofia Airport. To date the proceedings are still pending before the highest cassation court.

According to the website of the Commission, the appeal contained a request for interim measures. The Commission does not provide more detailed information about the interim measures requested by the appellants nor the content of the appeal. However, according to the Ministry of Transport, the Bulgarian government’s decision to begin open tender proceedings for the concession of the Sofia Airport, has been brought to a halt.

What could happen next?

The Commission has to decide on the appeal within two months of the date from which they opened the proceedings, which means that a decision might be expected in the second half of August.

The Commission may:

• dismiss the appeal;
• repeal the government’s decision and provide binding instructions to the government regarding opening of the tender proceedings; or
• announce the government’s decision null and void.

Furthermore, the Commission’s decision might be appealed before the Supreme Administrative Court which, in turn, has two months to make a decision. The Supreme Administrative Court decision will be final and binding.

Concession for Sofia Airport

The concession for the Sofia Airport has as its objectives, the management of services of public interest, and the management and maintenance of the Sofia Airport for public use at the risk of the concessionaire. The services are described further in the resolution of the Bulgarian government for the opening of the tender procedure.

According to the resolution, the term of the concession is 35 years. The resolution envisages a lump-sum payment in an amount offered by the concessionaire but not less than BGN 550,000,000 (approx EUR 281,000,000) and due VAT thereon to be paid within two months of the signing of the concession agreement.

Furthermore, the annual concession payment should be fixed as a percentage of the total amount of net revenues derived from all activities in the present year (as offered by the concessionaire). Nevertheless, the amount of the annual concession payment should not be less than BGN 9,957,000 (EUR 5,090,933) and will be corrected every third year with the applicable annual inflation indexes of the consumer prices with accumulation for the respective period. The final amounts of the lump-sum payment and annual concession payment will be fixed with the resolution of the Bulgarian government for appointment of the concessionaire. According to the resolution to begin open tender proceedings, the amounts of both payments offered by the participants will hold the biggest relative weight (55 %) by the complex assessment of the offers.

In addition, the concessionaire will have no obligation to participate in the proceedings pending before the Bulgarian civil court for execution of the decision of the ICC Court of Arbitration on the arbitration case between Sofia Airport and the MAK/ADMAK, nor any obligation to pay the indemnity to MAK/ADMAK under the decision of the ICC Court of Arbitration if its execution is finally permitted by the civil court.

By Alexandra Doytchinova, Managing Partner (Bulgaria), and Mariya Papazova, Attorney at Law, Schoenherr

Georgiev, Todorov & Co. (GTC), working with Sidley Austin, has successfully represented the Russian company Atomstroyexport in a dispute with the Bulgarian National Electric Company (NEC) before a three-member panel of the International Court of Arbitration at the International Chamber of Commerce in Geneva involving the Belene nuclear power plant. NEC was represented by White & Case.

According to the panel’s judgment, NEC is required to pay Atomstroyexport EUR 620 million. GTC reports that, “as the applicable law in the case was Bulgarian law, it also allows for high interest on arrears which can be charged over the claim, as well as for previous periods.”