Arzinger Alert: UKRAINIAN MERGER CONTROL DEVELOPMENTS
LEGAL ALERT - ARZINGER law firm,
Kyiv, Ukraine, Thursday, Nov 12, 2015
Today Ukrainian Parliament adopted the draft lawamending Ukrainian merger control rules in first reading. The said initiativecovers almost all the issues which have required adequate approaches for manyyears yet remained without any progress by now.
Below is the brief overview of the expected novelties.
FINANCIAL THRESHOLDS INCREASE
The daft law provides for both increase and some structuralamendments in the mentioned thresholds as follows:
Current financial thresholds to be met cumulatively (1+2+3)
Expected financial thresholds to be met cumulatively (1 + 2(a) or 1+ 2(b))
1. Euro 12 million worldwide in either assets or in revenue for all merging parties; and
1. Euro 30 million worldwide in either assets or in revenue for all merging parties;
and 2 (a) or 2 (b)
2. Euro 1 million worldwide in either assets or in revenue for each of at least two merging parties; and
3. Euro 1 million in Ukraine in either assets or in revenue for at least one merging party.
2. (a) Euro 4 million in Ukraine in either assets or in revenue for each of at least two merging parties.
2. (b) Euro 8 million in Ukraine in revenue for at least one merging party, and
Euro 100 million worldwide in revenue for at least one other merging party.
In all the cases above the merging party shall mean eitherpurchaser group of companies or target & seller group of companies (andeach JV partners' groups of companies, - when talking about the joint ventureestablishment).
Thus, the draft partly amends the basis of thresholdscalculation, provides increase in figures and more nexus to Ukrainian markets.
PRELIMINARY CONSULTATIONS & SIMPLIFIED PROCEDUREINTRODUCTION
Upon request of themerging parties the AMCU will have to provide preliminary consultations inrespect to the scope of the information to be provided for application review.Moreover the merging parties will be able to get consultancy from the AMCU onhow to eliminate some defects of their submission within the 15-day previewperiod. In other words the AMCU will have fewer chances to reject theapplication due to some insufficient formal mistakes in the documents.
Additionally the partieswill be able to negotiate the possibility to go through the simplifiedprocedure. The timing for such shall be 25 days instead of 45. To allow theabove the transaction in question has to meet one of the following criteria:
- only one merging party is operating on the Ukrainian market, or
- aggregate market share of the merging parties on the same commodity and geographical market does not exceed 15%, or
- market shares or aggregate market shares of the merging parties operating on the product markets which are upstream or downstream markets with regard to the market in which any other merging party is operating does not exceed 20%.
At the same time thedraft law does not contain any details re the simplified procedure itself. Itis understood that the merging parties will negotiate the scope of necessarydocuments and information with the AMCU on a case-by-case basis.
PHASE II REVIEW
In accordance with thenew law the AMCU will be able to launch Phase II review only upon detecting anyreasons to block the notified merger. Currently the AMCU is also entitled to doso if there is necessity to conduct the in-depth investigation orexpertize. Normally this broad wording should have been applied whenthe AMCU would allege some potential harm to competition resulting from themerger. However in practice it has been used frequently to delay the reviewprocess when the transaction raised no any antitrust concerns at all.
The draft law introducesremedies negotiation procedure which is poorly regulated by the current laws.Upon detecting any reasons to block the transactions the AMCU shall inform themerging parties accordingly. The merging parties in their turn can suggest somereasonable and proportionate remedies to eliminate potential harm tocompetition resulting from the merger. Further the parties may participate inremedies-related consultations with the AMCU to get optimal result.
STATE FEE INCREASE
The state fee for allmerger control-related issues (review of application for merger clearance,concerted practices clearance, preliminary conclusions in respect to necessityto obtain clearance) is planned to be increased four times. E.g. currently thestate fee for merger application review is approximately Euro 200, however isexpected to be increased to Euro 800.
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We expect the lawto be finally approved by the Parliament and signed into power bythe President of Ukraine latest by the end of the year. So, the chances arehigh, that the new regime will start to apply latest from the 01.01.2016. Wewill keep you posted about the developments.
You can contact us for more information andassistance using the following contact details:
ManagingPartner, Head of Antitrust & Competition practice