On January 26th, the Ukrainian Parliament passed the Draft Law No. 2168a Ukraine “On Introducing Changes to the Law of Ukraine “On the Protection of Economic Competition” Regarding Improvement of the Efficiency of Merger Control System” introducing some highly anticipated merger control system improvements. The law came into force on 18 May 2016.
The amended law significantly improves Ukraine’s merger notification procedure and make it simpler. It introduces the following changes:
New thresholds system:
• The combined parties’ worldwide value of assets or turnover exceeds EUR30 mln (instead of the current EUR12 mln), and the value of Ukrainian assets or turnover of each or at least two parties exceeds EUR4 mln (instead of EUR1 mln of at least one party) for the last financial year.
• The combined value of Ukrainian assets or turnover of the target or at least one of the party of a joint venture exceeds EUR8 mln, and the worldwide turnover of at least one other party to the combined value exceeds EUR150 mln for the last financial year.
It also removed the 35% market share trigger for merger control approvals.
All mentioned thresholds will be still calculated at a group level for the financial year preceding the filing year in accordance with the official currency exchange rate set by the National Bank of Ukraine for the last day of the financial year.
Preliminary consultations and simplified filing procedure
The Law provides for significant facilitation of the merger filing procedure in general. Now the parties will be able to consult with the Antimonopoly Committee of Ukraine regarding the information and/or documents needed to be included into the filing. The consultations may be held during the filing process or even before the filing.
Additionally, the simplified procedure will last only 25 instead of 45 days. To apply the simplified procedure, the transaction in question has to meet one of the below criteria:
1. only one merging party is operating on the Ukrainian market, or
2. combined market share of the merging parties on the same commodity and geographical market does not exceed 15%, or
3. combined market shares of the merging parties operating on higher or lower product markets compared to the market of the other merging party’s operation does not exceed 20%.
Remedies negotiation
The new law introduces a remedy negotiation procedure. If Antimonopoly Committee of Ukraine detects any reasons to block a transaction, it shall notify the merging parties accordingly and give a time period of (30) days during which the parties may suggest some reasonable remedy for the transaction to be cleared.
The new law also introduced of initiative of parties to conduct consultations with the competition authority during an initial 15-day review period relating to merger control notification on technical grounds;
Also if parties fail to disclose the parties’ ultimate beneficial owners it will result now to become a ground for dismissing a merger notification;
Introduction of a 180-day limit for the competition authority to review a merger (including during a phase II investigation).
Fees increase
It is also expected the state fees to quadruple for all merger control-related issues. For instance, the current state fee for the merger application review amounts to about Euro 200 but is expected to be increased up to Euro 800.
Despite quite a few changes that the new law provides, it is believed that it won’t significantly affect the economic competition in Ukraine but simplify the procedure of M&A transactions and it is definite that merging parties will require a competent legal assistance on structuring of the transactions and compliance with the new procedures.
Nadiya Omelchuck
E: nadiya.omelchuck@eurofast.eu
T: +380445021068