Enhancing Local Nexus Requirements and Their Impact on Merger Filings in Albania

In recent years, the Albanian Competition Authority (ACA) has intensified its enforcement efforts, demonstrating an unwavering commitment to promoting free and effective competition within the Albanian market.

This commitment is evident in the ACA's 2024 Annual Report, presented to the Albanian Parliament in June, which summarizes the ACA's activities in 2023. Key statistics include:

• 93 decisions by the Competition Commission, predominantly on mergers (76 in total), with 5 fines for competition-related violations. The ACA approved 54 mergers, 43 of which were foreign-to-foreign deals with limited or no potential impact on the Albanian market.
• Fines totaling ALL 22,514,566 (approx. EUR 220,000) were imposed across 3 decisions.
• 15 monitoring sessions in consumer-impacting markets such as mobile services retail, diesel fuel & gasoline wholesale, and banking services, alongside 8 concluded investigations.

A notable case in 2023 was the "Durrës Marina and Yachts" strategic investment project, set to be one of Albania's largest strategic investments, aiming to redevelop the Durrës port area waterfront with residential and commercial spaces. The project, estimated at €2 billion, will be executed by a Joint Venture (JV) named DURRËS MARINA SHA, with the Albanian Government holding 33% through the "Albanian Seaports Development Company" SHA, and "Eagle Hills Real Estate Development" SHPK (a foreign strategic investor) holding the remaining 67%.

Prior to the JV's formation and the implementation of the investment, the Albanian Competition Commission issued strategic directives in October 2022 for the "Durrës Marina and Yachts" initiative. These included a mandate for the Ministry of Infrastructure and Energy to approve cost-oriented port service fees and operational guidelines for the marina to ensure fair treatment and a "first-come, first-served" policy. Additionally, the ACA advised the Albanian Investment Development Agency (AIDA) to monitor the strategic investor's compliance with competition laws post-JV formation.

In January 2023, the ACA received notification of the JV's establishment, and in April 2023, the Competition Commission authorized the JV, with a stipulation that Durrës Marina SHA strictly adhere to competition law, particularly in maintaining a competitive yacht marina service market.

The ACA's recent Annual Reports indicate a surge in merger control activity, a trend that has continued into 2024 - from January to June the ACA issued 21 new merger clearances.

With the uptick in notifications and merger clearances, it seems reasonable to consider, de lege ferenda, the introduction of an appropriate local nexus to limit notifications for foreign-to-foreign transactions with limited potential of negative effect on the national markets.

The local nexus currently required by Albanian law for merger control filings compels foreign companies to notify even transactions that do not affect the Albanian market and pose no antitrust concerns. The ACA asserts jurisdictional authority based on meeting certain thresholds:

• A combined worldwide turnover exceeding ALL 7 billion (approx. €67 million) with at least one entity having a turnover in Albania over ALL 200 million (approx. €1.9 million); or
• A combined turnover in Albania exceeding ALL 400 million (approx. €3.8 million) with at least one entity having a domestic turnover over ALL 200 million (approx. €1.9 million).

These thresholds can trigger filings even when the target of the notified transaction has no assets or sales in Albania, resulting in numerous foreign-to-foreign transaction notifications.

This approach, necessitating foreign-to-foreign transactions to seek clearance from the authority even when the Albanian market is ostensibly unaffected, is notably stringent. It not only involves complex procedures that can delay multinational transactions and inflate regulatory costs for the involved parties but also imposes a significant administrative burden on the ACA.

By revising the notification criteria to give precedence to the local assets or turnover of the transaction parties or the target, rather than global figures, Albanian legislation would align with international best practices and OECD recommendations. Such a modification would permit the exclusion of transactions unlikely to impact competition in Albania substantially from the mandatory notification requirement, thereby relieving both businesses and the competition authority from investing time and resources in proceedings inconsequential for the purpose of protecting competition in Albanian markets.