On 26 January 2016 a draft law significantly changing the merger control procedure in Ukraine (the “Law”) was adopted by the Ukrainian Parliament.
The Law is part of the overall competition law reform which Ukraine undertook to implement in accordance the Ukraine-EU Association Agreement. The Law introduces several important changes to the existing merger control procedure aimed at:
(i) decreasing the number of transactions that require merger clearance in Ukraine by significantly increasing asset/turnover thresholds for notifiable transactions, specifically via two alternative tests:
Test 1. Parties’ combined aggregate worldwide assets or sales exceeding EUR 30 million plus Ukrainian assets or sales of each of at least two parties to a transaction exceeding EUR 4 million; OR
Test 2. Target’s Ukrainian assets or sales (including controlling sellers’ figures) or assets or sales of at least one of the founder of a to-be-established entity exceeding EUR 8 million plus at least one other party’s aggregate worldwide sales exceeding EUR 150 million.
(ii) making the filing test more simple and straightforward for parties to a transaction by eliminating the market share test;
(iii) introducing a simplified expedited review procedure (25 instead of 45 days) for transactions with little or no impact on the Ukrainian market;
(iv) introducing an option for preliminary consultations with the competition authority regarding the scope of information and documents necessary for review of the notification, including under a simplified review procedure; and
(v) limiting cases when the authority can commence an in-depth (Phase 2) review.
With adoption of the Law, the Ukrainian merger control procedure should become more transparent and the competition authority more open and approachable for the notifying parties. Also, importantly, the revised approach to the notifiable transactions is expected to positively impact the timelines toclosing large multi-jurisdictional transactions and release those which currently have a tangential relationship to Ukraine from the requirement of local merger control clearance.
The Law is now awaiting the President’s signature and will become effective two months after its official publication. It is expected that the new Law will become effective in April this year.
Legislation: Draft Law on Introducing Amendments to the Law of Ukraine on Protection of Economic Competition (regarding increasing the effectiveness of the merger control system) No. 2168a dated 25 June 2015.