Will proposed amendments to the Russian merger control regime affect clearance of large transactions?

At a session of the XXIV Saint Petersburg International Economic Forum on 4 June 2021, President Vladimir Putin proposed* to cancel approval of economic concentration transactions with the Federal Anti-monopoly Service (FAS) in cases where the book value of assets of the acquired company or its group of entities does not exceed RUB 800m (EUR 9.1m). The official website of the anti-monopoly authority has published* the news that the FAS is now preparing a corresponding bill.

Currently, under the Law on Protection of Competition*, transactions are subject to mandatory preliminary approval if the total value of assets of the acquired company and its group of entities exceeds RUB 400m (EUR 4.6m) as per the latest balance sheets.

For the prior approval requirement to be triggered, the total value of the assets of the groups of companies concluding the transaction should exceed RUB 7bn (EUR 79.7m), or their total revenue from the sale of goods during the last calendar year should also exceed 10bn (EUR 113.9m). This approach applies both to transactions to acquire shares or participatory interests in companies, and to transactions to acquire assets of companies. No plans have been proposed to increase these thresholds.

Thus, the above increase in financial thresholds will allow small and medium-sized enterprises (SMEs) to conclude transactions without the prior consent of the anti-monopoly authority. The FAS has confirmed that the initiative is primarily aimed at reducing excessive control over SMEs.

At the same time, the changes in the regulation of economic concentration transactions will presumably not affect the approval of acquisitions of companies belonging to large groups. Indeed, as a rule, the value of assets of such companies and their groups of entities (which may also include foreign business units) significantly exceeds RUB 800m (EUR 9.1m). This is particularly relevant for M&As at the global level, which are implemented by international holdings and affect several jurisdictions at once.

In view of the above, in most cases, acquisitions of companies belonging to large groups, including international ones, will still have to be approved by the FAS.

For more information on this eAlert, please contact CMS Russia experts Maxim Boulba, Kristina Potapova or your regular contact at CMS Russia.

* In Russian