Market players may now face significant non-monetary sanctions in addition to the fast growing fines for the violation of the Ukrainian merger control regime, i.e. failure to notify the Antimonopoly Committee of Ukraine (the "AMC") of a transaction.

Basically from now on any transaction for which the parties failed to obtain AMC approval may be claimed invalid by any party to the transaction or any third party whose rights/legally-protected interests are affected by the transaction (the latter should be assessed based on the provisions of the Civil Code of Ukraine and the Competition Law).

The respective ruling, Ruling No. 15 "On Certain Practical Issues Related to the Application of the Competition Law" (the "Ruling") was issued by the Plenum of the Supreme Commercial Court of Ukraine on 26 December 2011. In the Ruling the Supreme Commercial Court of Ukraine ruled that in addition to a fine, failure to obtain merger control approval from the AMC may serve as legal grounds for invalidation of any transaction that required AMC approval according to the provisions of the Competition Law and for which such approval was not obtained. The Ruling thus intensifies and extends the scope of the effective legislation on the matter and in particular the Competition Law provision, which envisages that the AMC may go to court to invalidate a transaction that led to monopolization of the market or a significant restriction of competition.

This new provision thus covers all transactions that may trigger merger control approval in Ukraine, including foreign-to-foreign transactions, and is no longer limited only to transactions leading to monopolization of a market or significant restriction of competition. According to the Ruling the risk of invalidation appears as of the date of implementation of a transaction and shall not apply to preliminary negotiations or arrangements of parties provided they do not implement a transaction and explicitly state that they are preliminary and that the final agreement and subsequent implementation of a transaction will be subject to AMC approval if required.

Issues to consider

The potentially high risk of invalidation of any transaction of which the AMC is not notified, as well as the fast growing monetary sanctions for the failure to notify, should be taken into account when making a decision on whether to notify in Ukraine.

For More Information:

Antonina Yaholnyk, Partner
+380 44 590 0101
antonina.yaholnyk@bakermckenzie.com

Kateryna Tkachenko, Senior Associate
+380 44 590 0101
kateryna.tkachenko@bakermckenzie.com

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