On 17 October, the Communications Commission ruled that Caucasus Online sold its shares unlawfully and must revert its shareholding to the pre-sale status quo. According to the Georgian legislation, authorised entities must inform the Commission about any intentions to sell more than 5% of their shares and obtain the Commission’s approval. Caucasus Online sold its shares without informing the Commission, thereby violating the legislation. The company must revert its shareholding to the pre-sale status quo within three weeks of being notified about the ruling.

According to the Chairman of the Communications Commission Kakha Bekauri, it is highly important for authorised entities who intend to procure, merge or sell their shares to seek prior approval from the Commission, so that it can examine the market and assess whether the prospective changes in shareholding will affect competition on the market.

“In the specific case of Caucasus Online, such changes have an even higher significance. Not only could this transaction affect the domestic market with regards to provision of certain telecommunications services, but it could also damage Georgian competitiveness on the regional market.

“We all understand that a change of beneficiaries can fundamentally alter the company’s strategies and vision. The legal duty to inform the Communications Commission about any such plans in advance and allow it to thoroughly study the case is designed precisely to avoid such risks. The fact is that a change of beneficiaries has taken place, and we are dealing with a serious violation. Caucasus Online is the only large regional infrastructural player that directly connects Europe to our region, which makes the aforementioned changes so significant,” Kakha Bekauri stated during the meeting of the Communications Commission.

Caucasus Online already changed its beneficiary owner in October 2016. On that occasion, the changes were approved by the Communications Commission, and the company was reminded of its duty to obtain the Commission’s prior approval for any further changes, which it failed to do in August 2019.