Merger control constitutes a central component of competition law enforcement in Georgia. It is designed to ensure that structural changes in the market, such as mergers, acquisitions, or the establishment of joint ventures, do not significantly restrict effective competition.
The legal framework governing merger control is established by the Law of Georgia on Competition (the “Competition Law”), which empowers the Georgian Competition and Consumer Protection Agency (the “Agency”) to review and assess concentrations that may affect market competition.
Legal Framework and Institutional Authority
The Competition Law authorises the Georgian Competition and Consumer Protection Agency (GCCA) to monitor market structures, review economic concentrations, and adopt decisions regarding their compatibility with the competitive environment.
The merger control regime aims to prevent transactions that may substantially restrict effective competition in the Georgian market or a substantial part of it. The Agency evaluates concentrations by examining their potential impact on:
- Market structure
- Competitive dynamics
- Consumer welfare
Concept of Concentration
Under Georgian competition law, merger control applies to concentrations between economic agents. Although the law encompasses various structural transactions, concentrations typically arise in the following situations:
- Merger of two or more previously independent undertakings
- Acquisition of direct or indirect control over another undertaking or its assets
- Creation of a joint venture performing on a lasting basis the functions of an autonomous economic entity
These transactions result in a lasting change in control or market structure and may therefore require regulatory scrutiny. The law applies broadly to economic agents, including individuals, legal entities, and other organisations engaged in economic activity, regardless of legal form or residency.
Notification Requirement
Certain concentrations must be notified to the Agency prior to implementation.
A concentration is subject to mandatory notification if:
- The combined annual turnover of the parties in Georgia exceeds 20 million GEL, and
- At least two parties individually have annual turnover exceeding 5 million GEL in the preceding financial year
Notification must be submitted before implementation, ensuring ex-ante review by the Agency. A filing fee of 5,000 GEL is payable for the review of a concentration notification.
While merger control addresses structural market changes, Georgian competition law also regulates the conduct of dominant firms. For more, see abuse of dominance in Georgia.
Preliminary Review of Notification
Upon receipt of a notification, the Agency conducts an initial procedural assessment.
Within 10 working days, the Agency determines:
- Whether the concentration falls within the merger control regime
- Whether the notification is admissible
If the transaction is subject to review, the Agency proceeds with a substantive competition assessment. In regulated sectors (such as telecommunications, energy, or financial services), coordination with sector-specific regulators may also be required.
Substantive Assessment of Concentrations
The Agency assesses whether a proposed concentration is compatible with the competitive environment. The key legal test is whether the transaction would substantially restrict effective competition in the Georgian market or a substantial part of it.
A major factor is whether the concentration creates or strengthens a dominant position. Where dominance is created or reinforced, it is generally presumed to restrict competition unless proven otherwise.
Key analytical factors include:
- Market structure and concentration levels
- Market shares of the parties
- Barriers to entry and expansion
- Competitive pressure from existing or potential competitors
- Impact on consumers and innovation
Conditional Approval and Remedies
Where competition concerns exist but can be mitigated, the Agency may approve a concentration subject to conditions.
Common remedies include:
- Structural remedies, such as divestiture of assets or business units
- Behavioural remedies, such as access commitments to essential infrastructure
- Restrictions on specific market conduct
If remedies adequately address concerns, the concentration may be declared compatible with the competitive environment, subject to compliance obligations.
Georgia’s merger control regime, established under the Law of Georgia on Competition, plays a critical role in safeguarding competitive market structures. By requiring prior notification and review of certain concentrations, the framework ensures that structural changes in the marketplace do not undermine effective competition.