Category: Uncategorized

Dorda reports that antitrust law expert Heinrich Kühnert, previously a partner at bpv Huegel in Austria, is joining Dorda and will head the firm’s Competition & Antitrust Desk. His predecessor, Stephan Polster, is ending his partnership with the firm on his own request and the firm reports that it and he remain on friendly terms.

Kuhnert became a Partner at bpv Huegel in 2014, after joined the law firm in 2011. Between 2005 and 2011 he worked at Freshfields Bruckhaus Deringer in Vienna and Washington, DC – first as an Associate, then as an Attorney. He has also previously worked for the European Commission’s Legal Service in Brussels (2004-2005). Kuhnert is a graduate of the University of Vienna (2001 Mag. iur., 2004 Dr. iur.) and the University of Oxford (2004 M.Jur.). He assumes responsibility for a team of seven practitioners.

Polster worked at Dorda for some 20 years and headed the firm’s antitrust and regulatory law team as a Partner since 2001. Polster will continue his practice in competition and regulatory law elsewhere.

“We regret that Stephan Polster will no longer be working for Dorda,” said Thomas Angermair, Managing Partner at Dorda. “At the same time, we are delighted to be gaining Heinrich Kuhnert, a renowned antitrust law expert. With his international training and professional experience, his specialist legal knowledge and extensive transaction expertise, he is a perfect fit for our team of lawyers.”

BPV Grigorescu Stefanica, acting alongside global counsel Gibson Dunn, provided advice on Romanian elements of Ningbo Joyson Electronic Corporation’s USD 920 million acquisition of Key Safety Systems from Hong Kong-based private equity firm FountainVest Partners — which received international law advice by Simpson Thacher Bartlett.

The transaction, which is expected to be completed in the first half of this year, remains subject to regulatory filings, approvals and other customary closing conditions. Other investors, including the Canada Pension Plan Investment Board and the New York-based private equity firm Crestview Partners, may also exit from KSS.

For Chinese law matters, Joyson was advised by the Grandall Law Firm on M&A aspects and the Han Kun Law Offices on antitrust matters. FountainVest was advised on China law matters by Allbright Law Offices.

China’s Joyson Electronics, one of the world’s leading suppliers of automotive components, acquires Key Safety Systems, a US-based manufacturer of security systems for the automotive industry, such as airbags, steering wheels, and seat belts. Key Safety Systems operates in 32 locations around the world, including Romania, where it is present with facilities in Arad and Hunedoara. It is predicted that the transaction will result in a company with annual sales of USD 3 billion and employing approximately 20,000 people. Going forward, KSS will operate as an independent unit headquartered in Michigan, with current CEO Jason Luo retaining his post under Shanghai-listed Joyson.

In Romania, the bpv Grigorescu Stefanica team advising Joyson Electronics was led by Partner Anca Albulescu and included Managing Associates Nicolae Ursu and Cristina Randjak and Associate and Sonia Vigdorovits. According to a firm press release, its team “conducted a legal due diligence exercise in relation to all corporate, commercial, real-estate and employment aspects and advised on various aspects of the transaction.” This marks the second time bpv Grigorescu Stefanica has provided the necessary legal services for Joyson Electronics’ transactions in Romania, following its advice in 2014 on the acquisition by Joyson and its German subsidiary, Preh, of Quin, a German manufacturer of decorative elements for car interiors, which operates a factory in Brasov, Romania.

The Gibson Dunn team was led by Beijing-based Partner Fang Xue, who was supported by London-based Partner Jeffrey Trinklein, Washington D.C.-based Partner Michael Collins, Los Angeles-based Partners Maurice Suh, Daniel Weiss, and Scott Kruse, and San Francisco-based Partner Peter Modlin. 

The Simpson Thacher team was led by Partner Leiming Chen.

The vast majority of provisions of the new Law on Corporate Income Tax in the Federation of Bosnia and Herzegovina will not be applied until the arrival of the period for calculating corporate income tax for 2016. However, the application of provisions on withholding tax already began on 5 March 2016, when the new law entered into force.

By taking steps such as the adoption of the Law on Corporate Income Tax, the Parliament of the Federation of Bosnia and Herzegovina continues to perform the obligations set out in the Reform Agenda and in the Stabilisation and Association Agreement. The new law addresses numerous deficiencies that have surfaced during the implementation of the Law on Corporate Income Tax adopted in 2008. Compared to the old law, according to which tax for 2015 will be calculated, the new law regulates almost every aspect of the mechanism of taxation in far greater detail. The government intends to extend the tax base (which now covers more taxable revenues) and to provide for more categories of taxpayers, aiming to increase public revenues and to combat tax evasion. The new law now expressly prescribes fines ranging from 3,000 to 100,000 BAM for taxpayers for each individual breach of most obligations in the new law.

The new law specifically defines the notion of the taxpayer, which now expressis verbis can include any branch of a legal entity incorporated in the Republic of Srpska and the Brcko District as well as the business unit of a non-resident. Adjustments to both expenditures and revenues have been itemized and explained in more detail than before. The same holds true for the procedure that enables the avoidance of double taxation. On the other hand, provisions on tax loss carryforward have remained virtually unchanged. One novelty is the taxation of income acquired during bankruptcy proceedings.

Withholding Tax

The old law contained only one article on withholding tax; its application proved to be a “tax nightmare”. In contrast, the new law has a lot more to offer in terms of both quality and quantity. First of all, the list of payment types subject to withholding tax has been expanded to include new items such as inter alia rent and fees for consulting services. On the other hand, some items from the list of exemptions were struck, so interest paid on corporate bonds and interest on deposits inter alia are no longer exempt from withholding tax. One novelty is the provision regulating withholding tax levied on the sale or transfer of property, equity capital and industrial property rights. Regarding procedure, the deadline for filing tax returns and paying withholding tax has been extended and is no longer limited to ten days from the date of payment of the remuneration; the deadline is now ten days from the end of the month in which the remuneration was made.

Tax Incentives and Exemptions

The area of tax incentives has been significantly altered. That taxpayers who generate more than 30% of revenue from the export of goods and services are no longer exempt from paying corporate income tax has already attracted significant media coverage. The only exemption retained in the new law applies to taxpayers who, in a period of five consecutive years, make investments totaling 20 million BAM. However, those taxpayers are no longer fully exempt. Instead, their tax obligation has been reduced by 50%. As for the new incentives, they are reserved for taxpayers who invest their own resources in production equipment and taxpayers with newly employed personnel.

Transfer Pricing

Transfer pricing is also being regulated with greater scrutiny. This includes defining the principle “at arm’s length” as well as a detailed explanation of the terms “affiliated persons” and “comparable transactions”. The law, for the first time, prescribes the methods to be applied when assessing whether a transaction has been concluded in accord with this principle. A list of the most appropriate methods includes a CUP method, cost plus method, and resale price method. In addition, the obligation to maintain documentation on transfer pricing, which contains an analysis confirming that the transaction has been concluded in compliance with the arm’s length principle, poses a new burden for taxpayers who participate in transactions with affiliated persons.

***

The Federal Minister of Finance has a period of six months to adopt measures to implement the new law, i.e. the Rulebook on the Application of the Law on Corporate Income Tax and the Rulebook on Transfer Pricing. It is expected that these rulebooks will regulate the matter in more detail than the rulebooks currently in force – and thus leave less room for different interpretations, both on the part of taxpayers and tax collectors. 

By Jasmin Omerdic, Associate, Wolf Theiss

 

The past year was an exciting one for the Serbian competition community. Not only did the Competition Commission step up its enforcement activity when it comes to the number of antitrust cases decided, but it also brought a number of new cases. As an indicator of what was in the Serbian Commission’s focus last year, and what to expect in the coming period, it may be useful to briefly turn to the main points of the authority’s antitrust activity in 2015.

First Dawn Raids Conducted

Perhaps the highlight of the Commission’s 2015 activity is that the authority began conducting dawn raids. The Commission has had the authority for such inspections for several years, but until last year it had refrained from using this tool.

The Commission’s first dawn raid took place in July last year and concerned the market for distribution of electronic cigarettes. The Commission conducted the raids upon suspicion of resale price maintenance (RPM) arrangements between certain e-cigarette suppliers and their retailers. The authority is examining the existence of illegal RPM in two separate cases (both were brought in July 2015 and remain pending).

Perhaps encouraged by the outcome of its first dawn raid, the Commission soon deployed this instrument once again. At the end of November, Commission staff conducted unannounced inspections on the premises of the Serbian subsidiaries of Philip Morris and British American Tobacco, respectively. The raids were part of the Commission’s investigation against several tobacco companies, which is still pending.

A Rise in the Number of Infringement Decisions

During 2015, the Serbian Commission rendered two infringement decisions. This is up from only one case decided in 2014 and no infringement decision in 2013. Based on the number of new proceedings the Commission initiated in 2015 (six), we can expect that this number of infringement decisions will continue to rise.

What is interesting about the two infringement decisions the Commission rendered in 2015 is that both concerned cartel-type cooperation in bid rigging. Such a focus on bid rigging is not really a surprise, especially considering the significance of public procurements for the Serbian economy and that in 2011 the Commission published a special guidance for detecting bid rigging. 

In both of the cases where it established an infringement, the Commission fined the undertakings involved. In addition, in one of the two cases it also banned the infringers from taking part in public procurements for a period of 18 months. That was the first instance that the Commission used the authority to impose such measure, given to it by the “new” Law on Public Procurement from 2012.

The Number of New Investigations Doubles

Another indicator of the rise in the Commission’s enforcement activity is that the number of new cases the Commission initiated during 2015 doubled compared to 2014 (from three to six). Three out of the six new cases are related to dawn raids the Commission conducted in 2015, which indicates that the Commission’s determination to bring new cases and to collect evidence through dawn raids goes hand in hand.

Commitments: The Practice Develops

A modern-looking commitments system was introduced into the Serbian antitrust system in 2013. This system includes market testing of the commitments proposal offered by the investigated company. The Commission used this instrument to suspend infringement proceedings for the first time in 2014, in a case against the Serbian incumbent Telekom Serbia.

With such experience under its belt, the Commission continued to use the commitments tool in 2015, suspending proceedings against the Serbian state railway company. The Commission published the commitments offered by the railway company in December 2015, and following a market test, in January 2016 the Commission adopted a decision accepting the commitments and suspending the proceedings.

In an opinion published in May last year, the Commission made it clear that the commitments procedure is not appropriate for the most serious competition infringements such as cartels. The authority noted that for such cases the proper instrument is leniency, which is also available in the Serbian antitrust system.

Individual Exemptions: Joint Bidding Leaves the Spotlight

One of the traits of the Serbian antitrust system is that individual exemptions are granted based on pre-notification of the agreement to the Commission. Based on such notifications, the authority usually exempts from prohibition around a dozen agreements each year.

Judging from the decisions available on its website, during 2015 the Commission afforded an individual exemption to 12 agreements in total. That number is the same as the previous year. However, the structure of the decided cases has changed – while half of the agreements exempted during 2014 represented joint bidding arrangements, only two agreements exempted in 2015 were related to joint tendering.

This change can perhaps be explained by a shift in the Commission’s stance towards joint tendering: while it previously held the opinion that all horizontal consortium agreements needed to be submitted for exemption in order to escape prohibition, the Commission now recognises that, other conditions being satisfied, there is no need to seek an exemption if the consortium members are not able to bid individually.

***

The Commission’s activity in 2015 shows that, following several years of low levels of enforcement, antitrust is back on its list of priorities. And if the trends started last year continue, we can expect 2016 to be an even more eventful year from the antitrust perspective – the Commission has clearly shown it no longer hesitates to use the full scope of its statutory powers to go after suspected infringers and now has the experience of dawn raids as well.

By Dragan Gajin, Senior Associate, Karanovic & Nikolic

Karanovic & Nikolic has announced the promotion of Bojan Vuckovic and Milos Jakovljevic to Partner in the firm’s Belgrade office.

Vuckovic is a member of the firm’s Regional Competition Practice, and he is experienced in advising clients on competition law related matters, with particular expertise in the areas of merger control, abuse of dominance, and restrictive agreements. He specializes in telecommunications and fast moving consumer goods, and the firm reports that he has worked “regionally on some of the largest and most complex transactions and competition matters in these sectors.” He joined the firm in February 2006 after working for two years in-house with PKB Korporacija Belgrade and for another three years in the Serbian Ministry of Defense, followed by a brief 4-month stint with Schoenherr. He graduated from the University of Belgrade in 2000.

Jakovljevic heads the firm’s Belgrade Corporate/Commercial Department, and he specializes in mergers and acquisitions, takeovers, joint ventures, privatizations, corporate restructurings, and capital market transactions. According to the firm, he “advises clients in structuring, negotiating and closing complex transactions in a broad range of industries, with particular focus on private equity groups, financial institutions, energy, telecom, and consumer goods industries.” He joined Karanovic & Nikolic in August 2008 after spending 2 years as a Judicial Assistant in the Belgrade Commercial Court. He graduated from the University of Belgrade in 2004.

The firm also announced that Competition lawyer Veljko Smiljanic, Dispute Resolution specialist Ivana Disovic, and litigator Ognjen Bozovic were all promoted to Senior Associate.

According to Karanovic & Nikolic, all five of the lawyers included in the recent promotion round “have been recognized for their hard work and dedication to our values and goals, and we hope this promotion will only increase their drive and commitment in the future.”

Industry related generic Top-Level Domain (“gTLD”) <.insurance> provides new opportunities and new challenges for online activities in the insurance sector.

New gTLDs are Shaping the Internet

Many new generic Top-Level Domains were launched since 2014, allowing the registration of domain names under a variety of Top-Level Domains, in particular industry-related ones, such as <.shop>, <.restaurant> or <.photography>. As per February 2016, almost 14.5 million new Sub-Level domain names have been delegated under such new gTLDs.

Sub-Level domain names under the new gTLD <.insurance> will soon also become available, a development that appears to be of particular interest for the insurance sector, as it will allow domain names such as <[Yourbrand].insurance> or <[Yourproduct].insurance>. The <.insurance> domain names are currently expected to become generally available in June 2016, preceded by a “sunrise period” (ie, a preferred upfront delegation of domain names to owners of registered trademarks before they become generally available to the public) in May 2016.

Not for Everyone

The operator of the <.insurance> gTLD (fTLD Registry Services, LLC) was established in 2011 by a coalition of banks, insurance companies, and financial services trade associations from around the world. Already in 2015 this operator launched the (also restricted) gTLD <.bank>. According to the guidelines of the operator, only verified members of the global insurance community (insurance companies, agents/agencies, brokers/brokerages and other equivalents) shall be able to register domain names under the gTLD <.insurance>.

In the general availability phase in June 2016, <.insurance> domain names will be allocated amongst eligible applicants according to the first-come, first-served principle. However, with a respective entry in the Trademark Clearinghouse (“TMCH”), eligible trademark owners can secure their brands as domain names upfront, in the so called “Sunrise-Phase” starting already in May 2016.

The Trademark Clearinghouse

The Trademark Clearinghouse is a tool allowing trademark owners to benefit from specific services, the most relevant of which are Sunrise-Services (allowing participation in “Sunrise Periods”) and Claims Services (notifications to trademark owners when somebody registers a domain name matching the trademark entered in the TMCH).

However, the services of the TMCH only extend to those registered trademarks that have actively been entered into the TMCH. Moreover, the services of the TMCH only relate to domain names that exactly match the (entire) word elements incorporated in the registered domain names.

Trademark Portfolio Strategy

The functionality and benefits of the TMCH trigger domain name and trademark portfolio-related questions, as well as brand enforcement considerations:

• Which trademarks are to be entered into the TMCH to fit into the overall domain-portfolio and (online) brand (enforcement) strategy?
• Does the current trademark portfolio contain trademark registrations suitable for the desired purpose, or might the portfolio require adaptations?
• Are preventive steps to be taken in order to prevent third parties from registering potentially critical domain names?
• Consider setting up additional domain name monitoring in order to be able to act quickly against further possibly problematic domain names.
• The fact that the TMCH is dependent on a valid trademark registration further requires a close link to the trademark administration docketing system. 

Schoenherr consistently provides advice on strategic aspects and organises the entry of trademarks into the TMCH for clients.

By Michael Woller, Attorney at Law, Schoenherr

Herbst Kinsky has advised Graz-based Leder & Schuh AG, one of Europe’s leading shoe retailers (with brands such as Humanic, Dominici, Jello, Shoe4You, and Stiefelkonig), on the sale of its Shoe4You and Jello stores in Germany to Kienast Holding GmbH & Co. Leder & Schuh was advised on German matters by P+P Pollath, and Kienast was advised by the Luther Law Firm in Hannover. Additional details were not disclosed by the parties.

The Herbst Kinsky team advising Leder & Schuh consisted of Wolfgang Schwackhofer, Christoph Moser, Sonja Hebenstreit, John Frank, Bianca Moeller, Alexander Weber, and Tanja Lang.  

The P+P Pollath team was led by Partner Georg Greitemann. 

The Luther team was led by Partners Thomas Halberstadt Kamp and Jens Rohrbein.

Image Source: lsag.com

Clifford Chance has advised Wikov Industry a.s., a Czech mechanical engineering company ultimately owned by Martin Wichterle, on the purchase of the Detail CZ group of companies.

Prague Corporate Partner David Kolacek, who led the Clifford Chance team advising on the transaction, commented that: “We are immensely satisfied with the smooth progression of this transaction and are, of course, delighted to have once more had the opportunity and pleasure of working with the Wikov management team with whom we have established a strong relationship and mutual respect over the past two years.”

Associate Aneta Sosnovcova acted as executive lawyer on the Clifford Chance team, which also included Finance Associate Jan Bílek, Finance Junior Associate Tereza Rehorova, and Real Estate Junior Associate Eliska Chalupova.

Turkey’s Moral Law Firm has advised DGD Engineering — a subcontractor of AKFEN Real Estate Investment Trust — in its provision of turn-key construction services in the Novotel Karakoy city hotel project.

Located in the Karakoy neighborhood of Istanbul, the new 5 star Novotel has an impressive view of the peninsula and Bosphorus. 

The Moral Law Firm advised and represented DGD throughout the project on real estate, labor law, commercial law, and criminal law matters, and “assisted DGD by drafting sub-contract agreements, preparing legal opinions in day-to-day business matters, and in the negotiation process.” The firm also successfully represented DGD in resolving disputes related to employment matters.

The firm’s team was led by Partner Kadir Sezai Moral and included Senior Associate Aslihan Hoser and Lawyer Ozgur Pamuk.

Dimitrov, Petrov & Co. has advised Trakya Glass Bulgaria EAD, the Bulgarian subsidiary of Turkey’s Sisecam Group, on the restructuring of its Bulgarian business.

The Sisecam Group is Turkey’s largest glass producer, the second largest manufacturer in its field in Europe, and third largest in the world. The group exports to 140 countries and has established 6 glassware production plants worldwide. 

According to Dimitrov, Petrov & Co., its team “provided comprehensive advice to the Turkish giant in the course of one of the most complex restructurings among similar exercises in the country. It is a large-scale project, including analysis of restructuring in a number of jurisdictions. Taking into account the nature and volume of the business, it covers almost every area of law, including spin-off, tax, and legal regulatory requirements.”

The Dimitrov, Petrov & Company team was led by Managing Partner George Dimitrov, and included Partners Zoya Todorova and Boyana Milcheva.