Ukraine: Draft law changing Merger Control system passed on first reading

Ukraine

On 12 November 2015 a draft law changing the merger control procedure in Ukraine (the “Draft Law”) was passed after its first reading in the Ukrainian Parliament.

The Draft Law is part of ongoing competition law reforms which Ukraine is undertaking in line with the Ukraine-EU Association Agreement.

The Draft Law introduces several important changes to the existing merger control procedure:

A.  Filing thresholds significantly increased

Current filing thresholds  Thresholds proposed under the Draft Law
Asset/turnover threshold:

1) all parties’ combined aggregate worldwide assets or sales (including related entities), exceed the equivalent of EUR 12 million; and

2) each of at least two parties to a transaction has aggregate worldwide assets or sales (including related entities) exceeding the equivalent of EUR 1 million; and

3) at least one party to a transaction (including related entities) has assets or sales in Ukraine exceeding the equivalent of EUR 1 million

Two alternative tests apply

Test 1: transactions with both parties active in Ukraine:

1) all parties’ combined aggregate worldwide assets or sales (including related entities) exceeding the equivalent of EUR 30 million; and

2) at least two parties to a transaction (including related entities) have assets or sales in Ukraine exceeding the equivalent of EUR 4 million.

Test 2: big transactions:

1) at least one party to a transaction (including related entities) has sales in Ukraine exceeding the equivalent of EUR 8 million; and

2) at least one other party’s aggregate worldwide sales (including related entities) exceeding the equivalent of EUR 100 million

Market share threshold (if met, triggers filing irrespective of the assets or turnover of the parties to a transaction):

The market share of any party to a transaction or the combined market share of all parties to a transaction (including related entities exceeds 35% of the market on which the transaction takes place and/or the adjacent markets. No market share test 

B.  Preliminary consultations and expedited review procedures introduced

Applicants are entitled to consult the Anti-Monopoly Committee (the “AMC”) with respect to the following: documents and information necessary for the notification of the intended merger, expedited notification review options, and removal of defects in notification materials already submitted.

The expedited review procedure of 25 days (regular review procedure is 45 days) starting from the submission applies in the following cases:

  1. only one party to a transaction is active in Ukraine; or
  2. the aggregate market share of all parties to a transaction in one and the same market does not exceed 15%; or
  3. the market shares or aggregate market shares of parties to a transaction active in a market that is downstream or upstream to the market in which any other party to a transaction is active, do not exceed 20%.

C.  Procedure for proposing remedies and imposing conditional decisions during Phase II review clarified

If, during Phase II, the AMC sees grounds for prohibiting the transaction, it must notify the applicants and give them reasonable time to propose remedy obligations mitigating or removing the negative impact of the transaction on competition.

Such remedy obligations must be proportional to and justified by the anti-competitive threats of the transaction. The AMC’s measures to control the remedy obligations undertaken by the parties to a transaction cannot be excessive.

D.  Filing fee increased

Administrative fees for submitting the merger control and concerted action notifications and other submissions to the AMC increased significantly (four times the current fees). Nonetheless, even the increased filing fee will remain relatively low (see some examples below).

Type of submission  Current fee Fee proposed by the Draft Law
Merger control filing approx. EUR 200        approx. EUR 800
Concerted actions filing approx. EUR 100 approx. EUR 400
Preliminary conclusions on merger control cases  approx. EUR 150 approx. EUR 600
Preliminary conclusions on concerted actions cases    approx. EUR 50 approx. EUR 200

 

The Draft Law is now being prepared for its second reading in Parliament.