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Dimitrov, Petrov & Co. has advised the venture capital fund NEVEQ II with regard to its investment in the BIODIT corporation, which specializes in designing and manufacturing access control and identification systems based on biometric patterns. The Arochi & Lindner law firm advised on Spanish matters. Biodit was advised by the Dontchev, Zamfirova, Marinova law office.

DPCo. reports that BIODIT “has the potential to become one of the leading manufacturers and suppliers of innovative biometric solutions for various industries such as security in the automobile sector, home automation, banking and access control. The investment will be directed to the commercialization of the company’s ground-breaking products on the local and international market and for the continuation of its R&D program.”

The firm reported conducting “a comprehensive due diligence exercise, carrying out negotiations on behalf of NEVEQ II, and preparing the transaction documents, including a convertible loan agreement.” According to DPCo., the loan agreement in particular “is considered unusual for the Bulgarian market since the loan can be repaid or converted at the lender’s option without being related to issuance of convertible bonds.” 

The firm’s team was led by Partner Hristo Nihrizov, supported by Partners Zoya Todorova and Plamena Georgieva.

The DZM team was led by Partner Todor Dontchev.

MDM Legal, representing KLM Royal Dutch Airlines, has notified the European Council of an inconsistency between the English and Romanian versions of Regulation (EC) no. 2612004 of the European Parliament and of the Council, which directly affected its client and other airline operators. As a result of the firm’s notification, the linguistic error was rectified in April 2016.

The specific issue, according to MDM Legal, was that, while the terms of “air carrier” and “operating air carrier” were well defined in both languages — “an air carrier that performs or intends to perform a flight under a contract with a passage or on behalf of another person, legal or natural, having a contract with that passenger” — the Romanian version of the EC Regulation used the term of “air carrier/operatorul de transport aerian” instead of “operating air carrier/operator efectiv de transport aerian,” whereas all the other language versions of the Regulations use the definition for “operating air carrier.”

In arguing the need for the regulation to be updated, MDM instructed the European Council to: “Note that the current provisions of the Romanian form of the Regulation are misleading for the public and may lead to erroneous interpretation, which may cause damages to the interested parties when invoking such provisions.”

Commenting on the case, MDM Partner Cristian Bacanu said: “We are proud to have been given the opportunity to represent KLM Royal Dutch Airlines in this important matter, affecting not only all aviation operators present in Romania but also all the passengers who will now know to directly address the effective flight operators rather than the flight operator.”

Bacanu led the MDM Legal team with the support of Associates Andreea Gheorghiu and Alexandra Gheorghiu.

The Competition and Regulation team at BASEAK — the Turkish arm of Dentons — has successfully represented Yemek Sepeti Elektronik Iletisim Tanitim Pazarlama A.S. (“Yemek Sepeti”) in a hearing before the Turkish Competition Authority. The hearing was the final stage of the Authority’s ongoing investigation into Yemek Sepeti.

Yemek Sepeti, the leading online food delivery platform in Turkey processes more than three million orders each month across its markets. In addition to operating in its domestic market, the company is active in neighboring countries where its platforms provide food ordering services. The company was acquired in 2015 by Delivery Hero, the global leader in online and mobile food ordering, for USD 589 million (as reported by CEE Legal Matters on May 6, 2015).

According to BASEAK, “established 15 years ago, Yemek Sepeti is an exemplary company with a strong e-commerce business model as Turkey’s first online food ordering platform. The investigation, in which the most-favored customer clauses available in the company’s agreements with the restaurants are examined, will be regarded as a precedent-setting investigation as this is the first time the Turkish Competition Authority has investigated these clauses.”

During the oral hearing of the investigation, BASEAK team delivered a keynote presentation. The team emphasized the dynamics of innovative markets referring to the international best practices and asserted that the practices of Yemek Sepeti do not violate the Turkish Competition Act by referring to the economic rational of these clauses and compliance efforts of the company. In addition, the Co-Founder and the CEO of Yemek Sepeti, Nevzat Aydin, delivered a speech about the company’s  innovative business model.

The BASEAK team was led by Senior Partner Sahin Ardiyok, supported by Senior Associate Belit Polat, Associate Baris Yuksel, and Consultant Emin Koksal.

Editor’s Note: After this article was published CEE Legal Matters learned that, in fact, the Turkish Competition Authority had in fact concluded that one of the several allegations of anticompetitive behavior on the part of Yemek Sepeti had a factual basis. According to a source within BASEAK who requested anonymity: “The Turkish Competition Authority has initiated an investigation at the beginning of 2015 with four allegations and the Board decided that our client had involved in only one anticompetitive behavior. Additionally although we haven’t seen the reasoned decision yet, we believe we have managed to convince the Board that the infringement lasted less than a year and there were some mitigating factors in the case as well. For all these reasons the penalty is far less than most cases of this sort in Turkey. Consequently [the news we reported] takes the matter for the benefit of the client, and [this recent update] focuses on solely whether the client is sanctioned or not.”

Sytnyk & Partners has advised JT International Holding B.V. (Amstelveen, the Netherlands) on obtaining merger clearance from the Antimonopoly Committee of Ukraine in connection with acquisition of shares in Santa Fe Natural Tobacco Company Germany GmbH (Hamburg), Santa Fe Natural Tobacco Company Japan K.K. (Tokyo), Santa Fe Natural Tobacco Company Italy S.r.l. (Rome), and SFR Tobacco International GmbH (Zurich), that confer more than 50% of the voting rights in the highest management body of each company.

In May 2016 Sytnyk & Partners reported advising JT Holding on obtaining merger clearance from the Antimonopoly Committee in connection with its acquisition of shares in La Tabacalera, S. A. (as reported by CEE Legal Matters on May 18, 2016).

The Santa Fe companies develop, design, manufacture, packaging, label, and/or produce tobacco and tobacco-related products for delivery, sale, resale, distribution, marketing, and/or promotion under the NAS brand outside the United States.

The Sytnyk & Partners team advising on the project was led by Managing Partner Denys Sytnyk and consisted of Senior Associate Liudmyla Gorodnycha and Associate Anna Synytsya.

The Competition Act No. 183/2012 (Act No. 183) (which transposes the EU competition acquis in Moldova) entered into force in 2012, and its last provisions came into force at the beginning of 2015. At first glance, one would think that this period would suffice for local players to start playing by the rules. In practice, however, some decide to learn the hard way.

Two recent investigations by the Competition Council showed how one should not react when investigated, as fines can start pouring in faster than you realise if you do not abide by the rules. Things definitely get more interesting when such cases are brought to court.

Outset

Through the Competition Council’s Plenum Decision No. 7 dated 4 March 2015, an investigation into the market of consumer electronics (household appliances) was initiated. As a result, two physical investigations took place at undertakings operating under the trademarks “Alina Electronic” and “Bomba”. On the same day the representatives from the Competition Council presented themselves on site, inter alia demanding access to information, documents and IT infrastructure.

Things You Should Never Do

As the publically available court and Competition Council’s materials show, in both cases the investigated undertakings behaved in a way that later was identified as constituting a refusal to be subjected to investigation by the Competition Council, thus, breaching Act No. 183. In particular, the behaviour obstructing the investigation included:

• applying delay tactics precluding the investigation from commencing, by refusing to communicate the location of offices of the general manager, commercial manager and accounting, the undertaking in question allowed itself additional time to possibly destroying or alter pertinent evidence;
• refusing to present solicited information which by law should be kept at the seat of the enterprise;
• disconnecting the commercial manager’s computer (working station) from the enterprise’s server;
• attempting to remove certain materials from the accounting office; and
• continuing to work at a computer (by responsible person(s)) after receiving verbal requests from Competition Council representatives to cease operating such computer and phone.

This behaviour was treated by the Competition Council as refusal to be subjected to investigation and was thus sanctioned.

How Much is the Fine?

According to Act No. 183, refusal to be subjected to investigation is regarded as a serious breach and the fine quantum can range between 0.15 % and 0.45 % of the total turnover from the previous financial year of the undertaking in breach. Furthermore, a series of multipliers are in place which can increase or decrease the fine quantum depending on the time length of the breach in question.

In the cases at hand, each of the undertakings’ refusals to be subjected to investigation received a fine of 0.4 % of their respective turnovers from the previous financial year. Consequently, one undertaking was ordered to pay approximately MDL 1.3m (approx EUR 58,000), and the second almost MDL 1m (EUR 45,000). These are the highest fines the Moldovan competition domain has ever ordered to be paid for refusal to disclose information. In addition, under Moldovan tax rules, such fines are not tax deductible for local undertakings.

Can you Challenge?

Further to the March 2015 fines, the two undertakings attempted to have them annulled before the Moldovan courts. However, both the Chisinau Court of Appeal (first instance court for such matters) and the Supreme Court of Justice (as recourse instance) entirely dismissed the complaints. These were however dismissed on procedural grounds and not on merits. As irrevocable decisions of the Supreme Court indicate (pronounced on 13 April 2016 and on 20 April 2016 respectively, for the second case), claimants omitted to file their statements on time. Pursuant to Act No. 183 (as opposed to Act 793/2000 on Administrative Courts) there is no need to file any preliminary complaint to the issuing authority, but to file a statement of claims challenging the Competition Council’s decision regarding the fine directly with the court. Such statements will not be accepted by the court when submitted 30 calendar days after the decision is communicated to the challenging person.

The two undertakings received the Competition Council’s decisions in March 2015, but did not file any statements to court before May, as a result, the statutory 30-day term was not adhered to.

Important: Application of the above fines will in no way affect the continuation of the investigation by the Competition Council.

Conclusion

Until today, the question remained whether the Competition Council was in fact going to stringently apply those sanctions as set by Act No. 183. Practice shows that it will. In consequence, local players are recommended to pay special attention to Act No. 183 and recent practical examples in this respect. Furthermore, local players are advised to implement internal rules regarding behaviour in relation to the Competition Council, and are also advised to have proficient legal advisors at hand for cases similar to the above and also throughout the investigations.

By Vladimir Iurkovski, Attorney at Law, Schoenherr

Aivar Pilv has reported that the Estonian Supreme Court has refused to proceed on the cassation appeal of Kadri Paas, Katariina Krjutskova and Vaba Kiri OU, meaning that lower court rulings of the Harju County Court and the Tallinn Circuit Court against them in claims made by entrepreneur (and Aivar Pilv client) Alexander Kofkin have become final and entered into force.

According to Aivar Pilv, Kofkin demanded that the defendants refute incorrect data published in a book they published entitled “Andrus Ansip – Halva Iseloomuga Tark Poiss” (in English: “Andrus Ansip — Ill-Natured Clever Boy”). Following the Supreme Court’s decision, the authors of the book are obliged within 10 days from the enforcement of the decision to publish a specific notice admitting that they published “incorrect data (alleged facts)” about purported connections between Alexander Kofkin and his enterprise Estkompexim with the KGB in the Postimees, Paevaleht, Eesti Ekspress, Ohtuleht newspapers and the Delfi Internet portal, as well as on the Facebook page of the book. According to Aivar Pilv, “the authors of the book are also obliged to eliminate from publicly accessible and electronically distributed e-books the sentences that include claims about the successful activities of A. Kofkin and Estkompexim in the 1980s as a KGB shadow company. The allegations that A. Kofkin had been sent by the KGB to study at the law faculty of the University of Tartu are also incorrect.”

Aivar Pilv reports that the court decisions that entered into force recognized that the information published about A. Kofkin was incorrect and ruled that “inappropriate value judgments” were published in the book. The defendants are subject to pay compensation in the amount of EUR 5,000 to Kofkin for non-proprietary damage and to cover his procedural costs. 

Kofkin was represented in the proceeding by Aivar Pilv Partner Pirkka-Marja Poldvere and Associate Marko Pilv.

Redcliffe Partners has announced the launch of a full-service Compliance practice, led by new Counsel Ario Dehghani, who joins the Ukrainian firm in Kyiv from Hogan Lovells in Munich.

According to a Redcliffe press release, its Compliance practice “includes US and EU-qualified lawyers, as well as Ukrainian associates and litigators, and supports international clients doing business in Ukraine, as well as Ukrainian companies seeking foreign investments.”

At Hogan Lovells, Dehghani practiced law for over seven years, focusing on several fields in compliance, including the Foreign Corrupt Practices Act (FCPA), the UK Bribery Act, anti-corruption, and internal compliance investigations.  

The Redcliffe Compliance team also includes Partner Rob Shantz and Partner Sergiy Gryshko, both of whom joined the firm last December (as reported by CEE Legal Matters on December 7, 2015).

Balcioglu Selcuk Akman Keki (BASEAK) — the Turkish arm of Dentons — has advised Bridgepoint on its acquisition of Peyman, the Turkish packaged dried fruit, nuts and seeds producer, from its founders and Esas Holding for an undisclosed sum. Pekin & Bayar advised the sellers.

Established in 1995 and headquartered in Istanbul, Peyman is a leading FMCG player in the Turkish snacks market focusing on the highest growth sub-segment — dried fruits, nuts and seeds (‘DFNS’) — which a Bridgepoint press release describes as “an essential part of Turkish diet and culture.” According to Bridgepoint, Turkey is amongst the largest producers and consumers of DFNS globally, with the segment estimated to be worth over EUR 2 billion a year in Turkey alone.

Bridgepoint reports that “Peyman has a well-established brand presence in independent convenience stores, Turkey’s traditional retail channel, and a growing presence in supermarket chains. It has built brand awareness through innovative product initiatives, such as introducing zip-lock packaging, thereby contributing to a consumer shift from unpackaged, bulk product to branded package consumption in the DFNS segment. Peyman also exports to more than 30 countries, primarily in the Middle East, Balkans and Central Asia.”

Martin Dunn, the Partner responsible for Bridgepoint’s investment activities in Turkey, said: ‘Peyman is a rapidly growing market leader capable of transforming into a larger and broader snack brand. With fresh capital and additional consumer expertise from Bridgepoint, Peyman will be able to accelerate growth, both in its traditional convenience store marketplace and by developing new brands and innovative products.”

The Dentons team working on the corporate side of the deal consisted of Partners Galip Selcuk and Associates Selahattin Kaya, Idil Tumer, and Onur Yorgun, while the firm’s competition team consisted of Partner Sahin Ardiyok, Senior Associate Belit Polat, and Associates Elif Duranay and Hakan Demirkan. 

Pekin & Bayar did not reply to our inquiry about its work on the matter.

White & Case, acting with the Swedish Lindahl law firm, has represented AXIS Communication, a Swedish manufacturer of network cameras for the physical security and video surveillance industries, on its acquisition of 2N from its shareholders. The Czech Republic’s JSK Law Office represented the sellers on the deal.

According to an AXIS press release, “2N is the number one player in the field of IP intercom, and also operates in other areas, for example IP audio and IP lift intercom. The company has well-established sales channels through electricians and telecom installers as well as lift manufacturers, which can serve as a complement to Axis present global sales channels. At the same time 2N will benefit from Axis’ strong market position and R&D resources.”

Axis reports that “2N develops and provides solutions for ICT and physical security industry and has a leading market position when it comes to IP audio and IP intercom (Door and Emergency IP Intercoms). 2N has about 200 employees, and has its HQ in Prague, Czech Republic.”

The Prague-based White & Case team consisted of Partners Damian Beaven and Alena Naatz, with support from Associates Jakub Mencl and Jan Stejskal.

The JSK team was led by Partner Tomas Dolezil, and included Of-Counsel Nick Johnson, Senior Associates Helena Hailichova and Patrik Muller, and Junior Lawyers Barbora Safarikova and Michaela Krajickova.

Dimitrov, Petrov & Co.’s lawyers have successfully represented Pharmhold AD before the Bulgarian Supreme Administrative Court (SAC) in its appeal of a decision by Bulgaria’s Financial Supervision Commission.

According to DPCo., on December 28, 2015 the Financial Supervision Commission issued a decision refusing to approve the prospectus for admitting an issue of Pharmhold shares to trading on the regulated market. Acting on behalf of Pharmhold DPCo. appealed that decision, arguing that, “despite the broad and to some extent unclearly formulated supervisory powers of the Financial Supervision Commission,” it was nonetheless obligated to carry out its supervisory duties “strictly within the limits defined by law.” According to the firm, “in any case, those limits shall be interpreted in compliance with the principles of organization and operation of the capital markets, including such principles that are established in the EU law provisions. Trespassing those limits leads not only to disadvantages for the issuers, but also to violation of investors’ interests, having an overall negative impact on transparency, predictability and trust in the capital market. In general, it shall be beyond the Commission’s discretion to assess the risks of the issuer’s investment, provided that those risks are realistically explained in detail to the investment community in the prospectus of the issuer.”

On May 19, 2016, DPCo. reports, “the SAC upheld Pharmhold’s appeal and returned the case to the FSC, “giving mandatory prescriptions regarding the interpretation and applying of the law with respect to the matters above.”

The decision of SAC’s three-member panel is not final, and the FSC may appeal.  

The Dimitrov, Petrov & Co. team consisted of Partner Metodi Baykushev and Senior Associate Dimitar Karabelov.