GILS Antitrust law: Azerbaijan
AZERBAIJAN
1. Is the mandatory merger control regime in force in Azerbaijan?
The legislation of the Republic of Azerbaijan provides for cases when business entities involved in concentrations are required to obtain approval from the competition authority. These requirements are reflected in the seventh chapter of the Competition Code of the Republic of Azerbaijan, approved by the Law of the Republic of Azerbaijan No. 1051-VIQ of 08 December 2023 (“Competition Code”).
2. Which authority is responsible for the merger control regime in Azerbaijan?
State Service for Antimonopoly and Consumer Market Control under the Ministry of Economy of the Republic of Azerbaijan.
3. What is the definition of concentration?
Concentration - consolidation of one or more business entities, certain segments (areas of activity) thereof, or acquisition of a business entity, its certain segments (areas of activity, shares, stakes) and rights, or creation of a joint business entity in accordance with the procedure established by the Competition Code.
4. Is pre-merger filing or post-merger filing required?
If at least one of the cases specified in Article 27 of the Competition Code occurs prior to the concentration, but whichever of them occurs earlier, after the conclusion of the concentration agreement, adoption of the decision, announcement of the offer, disclosure of the intention to make an offer to acquire shares (stakes), as well as after the parties have otherwise reached an agreement on the concentration, an application shall be submitted to the competition authority within 30 days to obtain consent to the concentration. In case participating in public procurement,tenders and other competitions, legislation establishes specific rules for calculating the time frame.
5. Examples of key concentration types caught by merger control rules in Azerbaijan.
Economic entities participating in concentration shall apply to the antimonopoly authority for consent under the following circumstances:
- one of the economic entities participating in the concentration holds a dominant position in the market;
- if one party or all parties to the concentration exceed the minimums established by law with respect to the turnover of the parties.
There are specific articles for determining the level of impact of potential concentrations on the Azerbaijani market.
6. What are the notification thresholds, which a concentration must trigger for a merger control filing to be required?
- The turnover of the economic entity participating in the concentration or the economic entity that will emerge after the concentration exceeds AZN 25 million;
- The total turnover of economic entities participating in the concentration exceeds AZN 35 million;
- The turnover of one of the economic entities participating in the concentration in the last reporting year exceeds AZN 15 million within the country, and the turnover of another within the country in the last reporting year exceeds AZN 5 million;
- In cases when the total turnover of economic entities participating in the concentration in the last reporting year is less than the amounts set forth in the local legislation, the total turnover of the economic entities participating in the concentration in the last reporting year is more than 20% of the total turnover of the market.
7. Does the authority have any discretion to review transactions that do not meet the notification thresholds?
In addition to controlling the thresholds, the Competition Authority focuses on reviewing the concentrations that lead to or may lead to the establishment or reinforcement of a dominant position, thus restricting or potentially restricting competition in the relevant market or other markets within the country, across the entire country's territory or in a specific part, and they are not allowed.
Furthermore, if the turnover of the Parties is less than the amounts stated in the legislation but more than 70% of these amounts, the Parties should inform the Competition Authority within 30 days from the concentration.
8. Do the merger control rules apply to foreign-to-foreign transactions taking place outside Azerbaijan?
The Antimonopoly Authority of Azerbaijan controls mergers and acquisitions, which also covers transactions between foreign companies, if these transactions may cause restriction of competition in the Azerbaijani market.
9. Are there specific merger control rules relating to the notification thresholds (e.g., specific merger control notification thresholds for specific sectors; different rules to calculate turnover for specific industry sectors such as banks and insurances or retail, specific rules relating to foreign subsidies, companies, etc.)?
When it comes to financial institutions, there are specific criteria for obtaining approval to participate in the financial markets, as well as for calculating total turnover and the total value of their assets. These criteria are determined by the relevant authority in agreement with the Central Bank of the Republic of Azerbaijan and the Competition Authority.
10. Whether Azerbaijan requires the payment of filing fees and if yes, when?
A state fee is charged in the amount determined by the Law of the Republic of Azerbaijan "On State Fee" for examination of applications related to mergers. The State fee and procedure of its payment has not been confirmed yet.
11. Whether there is a filing deadline in Azerbaijan requiring a notification to be filed within a certain period of time following a particular transactional event (e.g., signing a share and purchase agreement)?
Yes, the Competition Code establishes special deadlines for applying/notifying the antimonopoly authority depending on the specifics of the concentration.
12. What information and documents must be disclosed or provided to the authority for the purposes of merger clearance?
In order to obtain the Antimonopoly Authority's approval for concentration, an application must be submitted in the form approved by the Antimonopoly Authority.
In addition to the application, other documents related to the concentration must be submitted.
13. What are the time periods within which the authority must reach a decision on the merger clearance? Is any fast track or simplified procedures available?
The application is examined within 30 working days from the date of its submission, and the reasoned decision is taken by the competition authority as a result.
In cases where more time is required to determine relevant circumstances, the investigation period may be extended twice for 30 working days each time based on the decision of the competition authority.
14. What are the penalties which the authorities may impose for "failure to file" or "late notification"?
According to the Article 77.1 of the Competition Code a financial sanction in the amount of up to 3% of the total turnover of that economic entity in the financial year preceding the year in which the decision was made by the competition body is applied to the business entity that committed violations of the law.
15. Have there been any recent developments regarding the merger control regime in Azerbaijan?
Given that the Competition Code entered into force on 1 July 2024, there are certain gaps in the practical application of the Code. At present, some of the bylaws are under development.
Author: Fidan Vahabova