Restrictive clauses are common in commercial lease agreements. Such clauses can limit a landlord's ability to lease property to other tenants, restrict a tenant's business activities to a certain geographical area or control the subleasing of property. Restrictive clauses in lease agreements may appear to be problem-free and reflective of the contractual freedom of the parties, which forms one of the pillars of civil law. However, when certain restrictive clauses are scrutinised, a number of issues can become apparent.
The squeeze-out of minority shareholders in closely held companies is a controversial issue made more complex by the large number of Romanian companies with minority shareholders. Historically, state-owned companies were privatised through the management-employee buy-out method, which allowed employees to receive shares in former state-owned companies. As such stakes were often granular, many minority shareholders are dormant or even unaware of their participation in these companies.
The corporate functioning rules for joint stock companies have been repeatedly altered by Romanian legislation, especially in relation to the governing structures of companies, such as shareholders' assemblies and management bodies. However, some situations create problems in practice or generate inconsistencies within jurisprudence. One such example is the use of secret voting in general shareholders' meetings.
Creditors and investors assess the level of a company's net assets when deciding whether to grant a loan to or invest in that company. Further, the Companies Law requires companies to maintain a certain level of net assets. However, an increasing number of companies on the Romanian market are struggling with low net assets to total asset ratios. Luckily, such companies can redress their situation through a share capital increase, which is a straightforward procedure.
The government recently exempted the state-owned national electricity provider and an energy company from having to fulfil merger control obligations before their intended merger. According to the relevant government decree, the concentration was of national strategic importance, as it facilitated affordable energy supply for consumers. This exemption is not unprecedented under Hungarian competition law.
In July 2015 the Competition Agency received an initiative to initiate proceedings against Ytong porobeton (YP) for alleged abuse of its dominant position. YP rejected all of the assertions against it, arguing that the relevant market had been incorrectly determined. Based on expert opinions, the agency concluded that YP was not dominant on the relevant market and thus that it had not abused its dominant position.
The Hungarian Competition Authority recently imposed one of its highest-ever fines on the Hungarian Banking Association for the anti-competitive exchange of information. Evidently, even activities in which market participants regularly engage and which they regard as lawful may help to reduce uncertainty in the market. This update provides an insight into anti-competitive information exchanges in order to minimise this risk.
Hungarian labour law provides employers with the right to monitor employees' behaviour and actions, provided that such monitoring pertains exclusively to employees' work. The law affords employers a significant degree of flexibility in this regard, but careful consideration of the company's needs and thoughtful legal analysis are required before implementing surveillance systems.
In a recent case the Competition Agency for the first time accepted the proposed commitments in a case conducted under the qualification of a prohibited agreement, even though all the characteristics of a prohibited horizontal agreement limiting competition were present. By accepting the commitments, the agency abandoned its previous position in favour of a more lenient one.
The Hungarian Competition Authority (GVH) recently launched a promotion campaign for its leniency programme, emphasising that "a cartel will not stay hidden, but one may get away with a leniency application". In light of these great efforts on the GVH's part, it is crucial to examine the benefits and drawbacks of the leniency programme from the undertaking's perspective.
In a recent ruling by the Croatian Competition Agency (CCA), a decision by the Croatian Insurance Bureau to revoke the power of an insurer to issue motor certificates was found not to constitute a prohibited agreement. Irrespective of this, the CCA noted that it is not the role of undertakings to control the operation of their competitors, and that the parties involved should have reported the insurer if they thought it had breached the law.
Swift, simple and less burdensome proceedings with a 10% reduction in fines – these are the benefits that the Hungarian Competition Authority chose to emphasise in its recent notice on the settlement procedure. Although the notice generally aligns with the relevant EU rules, it contains noteworthy deviations which may fundamentally affect its application.
The use of temporary agency workers is particularly popular among employers whose workforce needs fluctuate or which require employees for short-term or seasonal jobs. As a general rule, employers may employ an unlimited number of agency workers for any job position, for a period of up to five years. However, the law imposes certain restrictions and prohibitions on the use of temporary agency workers.
The 2012 Labour Code introduced significant changes concerning the compensation to be paid by employers in the event of unlawful dismissal. As the previous regime put an unreasonably high burden on employers, the new Labour Code introduced a new penalty regime for unlawful dismissal. The Supreme Court has now issued an opinion addressing the most important questions relating to this new regime.
The Competition Agency is improving its track record in competition law enforcement. One recent decision concerned a cartel of marina operators which exchanged information on future pricing policies for berthing services. Although the parties agreed not to raise the prices of their services (or to raise them minimally), the information exchange was deemed sufficient for the agency to render a statement of objections.
The Competition Agency recently considered whether Gemicro abused its dominant position on the market by allegedly tailoring and concluding 'non-poaching' agreements with the leasing companies which were its buyers, thereby restricting competition and creating significant barriers to entry into the relevant market. This is the first time that the agency has examined this type of agreement as problematic.
In a recent case the Croatian Competition Agency stated that infrastructure that is essential for reaching customers and conducting business should be treated as an 'essential facility'. The agency determined that a bus station owned by Autotrans was not the essential facility for conducting road passenger transport by Slavonija Bus, as there were two further accessible stations with passenger boarding areas in the area.
The Competition Agency recently concluded another proceeding dealing with resale price maintenance, as prohibited under Article 8 of the Competition Act. Although the full decision has not yet been published, the agency's stance on resale price maintenance can be inferred from the announcement and earlier decisions in similar resale price maintenance cases in the food and retail sectors.
In recent years the Competition Agency has discovered several cartels operating within associations of undertakings, which were exploited as a framework to provide logistical support to the cartels and facilitate their illicit existence. In most cases the associations merely followed the plans of their main members. However, a recent decision confirms that associations themselves can also initiate price-fixing cartels.
The Competition Agency has experienced high levels of media attention, following two recently completed merger control proceedings. The agency's conditional clearance of HT's acquisition of control over Optima in pre-bankruptcy settlement proceedings is novel in terms of both the means of acquiring control and the scope of accepted remedies.