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Merger Control 2019 | Ukraine

17.12.2018

Oleksandr Fefelov, Attorney at Law, Head of Antitrust and Competition Practice at Ilyashev & Partners Law Firm
Haryk Matosian, lawyer

Source: ICGL

Relevant Authorities and Legislation

1.1 Who is/are the relevant merger authority(ies)?

The Antimonopoly Committee of Ukraine (hereinafter – the AMCU) is the state agency with special status, which is authorised to ensure the state protection of competition in business activity in Ukraine, including merger control rules compliance (here and throughout the chapter the term “concentration”, which is used in the Ukrainian competition law, shall be understood to mean a general conception of all types of mergers). The AMCU authorities include, among others, effecting control over the concentrations and concerted practices of the business undertakings. When exercising control over the concentrations, the AMCU shall have the following powers: (i) consider applications on granting a permit on concentrations and carry on proceedings on concentration cases; (ii) approve resolutions and decisions on applications and proceedings of cases on concentrations, issue conclusions/findings and preliminary findings on concentrations; (iii) revise and examine decisions taken by the AMCU; (iv) authorise or prohibit concentrations; and (v) impose sanctions for violations of merger control rules, etc.

The Cabinet of Ministers of Ukraine (hereinafter – the CMU) is the highest state body in the system of the bodies of executive power in Ukraine, which is authorised to overrule the AMCU’s refusal to grant a permit on concentration.

1.2 What is the merger legislation?

The primary legislative point regulating the rules of merger control in Ukraine is the Law of Ukraine “On Protection of Economic Competition” as of 2001 (hereinafter – the “Law on Competition”). In the sphere of the merger control, the Law on Competition provides definitions of “control”, “commodity market”, “commodity”, “business undertaking”, etc. It determines events of “concentrations”, the thresholds meeting of which requires merger clearance, participants to concentrations, procedures and terms of obtaining merger clearance, procedure of proceedings on concentrations, procedures of the proceedings on breach of normative requirements as well as sanctions for violations.

The merger legislation also includes the following normative acts:

• the Commercial Code of Ukraine;
• the Law “On Antimonopoly Committee of Ukraine”;
• the Procedure of Submitting Applications to the Antimonopoly Committee of Ukraine for Prior Obtaining Permit for Concentration of Business Undertakings (Regulation on Concentration), approved by the AMCU Resolution on February 19, 2002, No 33-р (as amended);
• Procedure of Granting Permit on Concerted Practices, Concentration of Business Undertakings by the Cabinet of Ministers of Ukraine, approved by the Decree of the CMU No. 219 dated 28.02.2002 (as amended);
• Methodology for Establishment of the Monopoly (Dominant) Position of the Business Undertakings on the Market, approved by the Resolution of the AMCU on March 05, 2002;
• Advisory Explanations Application of Provisions of Parts Two, Five and Six of Art. 52 of the Law on Competition and Parts One and Two of Art. 21 of the Law of Ukraine “On Protection from Unfair Competition”, approved by the AMCU on August 09, 2016 No. 39-rr (hereinafter – the Guidelines on Fines), which defines the AMCU approaches to calculation of the fines for violations of the competition laws;
• Advisory Explanations on the Procedure for Application of Article 25(1) of the Law of Ukraine “On Protection of Economic Competition” (regarding the assessment of horizontal mergers), approved by the AMCU as of 27.12.2016 No. 49-rr; and
• Advisory Explanations on the Procedure for Application of Article 25(1) of the Law of Ukraine “On Protection of Economic Competition” (regarding the assessment of non-horizontal mergers), approved by the AMCU as of 16.03.2018 No.13-pp.

1.3 Is there any other relevant legislation for foreign mergers?

No. There is no other specific legislation relevant for foreign mergers.

1.4 Is there any other relevant legislation for mergers in particular sectors?

No. Ukrainian competition law does not provide specific regulations for any particular sectors of the economy. Having said that, the Law on Competition provides for specific rules of calculating the thresholds for the banks and insurance companies when determining if the requirements for merger clearance for transactions with participation of such undertakings are met.

Transactions Caught by Merger Control Legislation

2.1 Which types of transaction are caught – in particular, what constitutes a “merger” and how is the concept of “control” defined?

The following are caught under the Law on Competition as the concentration:

1) merger of undertakings or affiliation of one undertaking to another one; or

2) direct or indirect (through other persons) takeover by one or several undertakings of one or several undertakings or parts of undertakings, particularly, by means of:

a. direct or indirect acquisition, obtaining into ownership (by other means) of assets in the form of single (integral) property complex or structural unit of an undertaking; obtaining in management, rent, lease, concession or acquisition in another manner of the right to use the assets in the form of the single (integral) property complex or structural unit of an undertaking, including acquisition of assets of an undertaking being liquidated; or

b. appointment or election of a person as a head, deputy head of supervisory board, executive board or other supervisory or executive bodies of an undertaking if that person already occupies one or several of the mentioned positions in other undertakings; or the creation of the situation, where more than half of the offices of the members of the supervisory board, executive board, other supervisory or executive bodies of two or more undertaking(s) are occupied by the same persons;

3) establishment of an undertaking by two or more undertakings, which will independently perform business activities for a long period of time, but at the same time such establishment does not result in coordination of the competitive behaviour between the undertakings established new undertaking, or between them and the newly-established undertaking; and

4) direct or indirect acquisition, obtaining in ownership by other means or obtaining in management of shares (participation interests, shareholdings), ensuring achievement or exceeding 25 or 50 per cent of votes in the highest governing body of the appropriate undertaking.

The Law on Competition defines “control” as a decisive influence of one or more related legal and/or natural persons on business activity of an undertaking or its part, being exerted directly or through other persons, particularly via: the right of possession or enjoyment of all assets or significant part thereof; the right ensuring the decisive influence on formation of membership, results of voting and decisions of management bodies of an undertaking; concluding agreements and contracts enabling to determine conditions of economic activity, give binding instructions or perform functions of management body of an undertaking; occupation of a position of the head, deputy head of the supervisory board, management board, other supervising or executive body of an undertaking by a person, who already occupies one or more of the said positions in other undertakings; and being in more than a half of positions of members of the supervisory board, management board, other supervising or executive bodies of undertakings by persons, who already occupy one or more of the said positions in other undertakings. Related persons shall mean legal and/or natural persons, who (which) jointly or in coordination conduct business activity, including exerting jointly or in coordination influence on the business activity of an undertaking. In particular, related natural persons shall be deemed those being spouses, parents, children and siblings.

2.2 Can the acquisition of a minority shareholding amount to a “merger”?

Yes, it can. As mentioned in question 2.1 above on direct or indirect acquisition, obtaining ownership in another manner or obtaining a management of shares (participation interests), ensuring achievement or exceeding 25 per cent of votes in the highest governing body of the undertaking in question amounts to a merger and in the case of meeting the thresholds described in question 2.4 below triggers merger control filing obligations.

2.3 Are joint ventures subject to merger control?

Yes, the certain joint venture shall be subject to merger control if its establishment is deemed a concentration, which means that the joint venture (as a legal entity) is created for conducting business activity for a long time and established not for coordination of the competitive behaviour between its founders or between its founders and JV itself, provided that the founding undertakings meet the thresholds triggering merger control filing obligations. Establishment of such JV requires prior approval of the AMCU. To the contrary, setting up the joint venture, the purpose or consequences of which are to be the coordination of the competitive behaviour between the founding undertakings or between the founding undertakings and JV, is not deemed the concentration, but the concerted practices.

2.4 What are the jurisdictional thresholds for application of merger control?

The mergers must be cleared when:

(i) the parties’ combined aggregate worldwide value of assets or volume of sales exceed the equivalent of EUR 30 million in the preceding financial year, provided that at least two parties to concentration (taking into account their control relations) have a value (aggregate value) of assets or volume (aggregate volume) of sales in Ukraine exceeding the equivalent of EUR 4 million in the preceding year each; or

(ii) the aggregate value of assets or aggregate volume of sales of the target undertaking, or of one of the newly-established undertaking (joint venture) founders in Ukraine exceeds the equivalent of EUR 8 million, and at least one other party’s aggregate worldwide volume of sales exceeds the equivalent of EUR 150 million in the preceding financial year.

For the purposes of this point, the term “parties” is understood as an undertaking (or group of entities connected by the control relations), i.e. when considering the above thresholds, the target’s or buyer’s turnover and/or value of assets should be calculated taking into account turnover and/or value of assets of their corresponding groups, i.e. all entities connected by control. Notably, the target’s turnover and/or sale proceeds shall include the same of the seller’s group.

If commercial banks are the parties to a concentration, one-tenth of the value of assets of the commercial bank shall be used for the calculation of both the value of assets and sales proceeds. In cases where insurers are participants to a concentration, their net assets shall be used for the calculation of the aggregate value of assets of the insurer and the incomes from insurance activities shall be used for the calculation of sales turnover.

2.5 Does merger control apply in the absence of a substantive overlap?

Yes, if the parties to a merger meet the thresholds mentioned in question 2.4 above.

2.6 In what circumstances is it likely that transactions between parties outside your jurisdiction (“foreign-to-foreign” transactions) would be caught by your merger control legislation?

Ukraine merger control requirements are applicable to foreign-to-foreign transactions if the thresholds mentioned in question 2.4 above are met. The national merger control regime has exterritorial character and applies to the foreign-to-foreign transaction with insignificant (or even in absence of any) impact on the Ukrainian commodity markets or competition thereon. In our experience, there are a number of cases where the foreign businesses were fined in Ukraine for failure to have the “foreign-to-foreign” mergers cleared by the AMCU in cases when it was required.

2.7 Please describe any mechanisms whereby the operation of the jurisdictional thresholds may be overridden by other provisions.

Ukrainian merger control rules do not provide for such mechanism. At the same time, the Law on Competition stipulates instances when certain transactions, where the jurisdictional thresholds are met, are not deemed concentrations and are excluded from the compulsory obligation of prior merger clearance (please see question 3.2 below).

2.8 Where a merger takes place in stages, what principles are applied in order to identify whether the various stages constitute a single transaction or a series of transactions?

The AMCU tends to consider each stage of the single merger as a separate notifiable concentration if the jurisdictional thresholds of the certain single stage are met. At the same time, in cases where the buyer acquires control over a holding entity of the target group, it is possible to have one merger clearance instead of obtaining separate merger permits in respect of all other companies controlled by such target holding company.

Notification and its Impact on the Transaction Timetable

3.1 Where the jurisdictional thresholds are met, is notification compulsory and is there a deadline for notification?

If the jurisdictional thresholds are met, obtaining the AMCU’s (or CMU’s), merger clearance is compulsory. There is no deadline for filing the application for obtaining merger clearance, but the effectuation of the transaction requiring merger clearance shall be prohibited until it has been cleared. Until the merger has been cleared, participants thereto shall refrain from performing such actions that could result in the restriction of competition and in the impossibility of restoring the initial state. It means, for instance, that the shares acquired in the course of notifiable concentration cannot be registered in the name of the acquirer until the merger clearance has been obtained.

It should be noted, however, that if a notifiable concentration is performed by using bidding procedures (bids, contests, tenders), an application may be filed with the AMCU both prior to commencement of the tender procedure or thereafter, but not later than within 30 days following the date of announcement of the winner.

At the same time there are instances when the jurisdictional thresholds are met but the transaction is not considered a concentration, and no merger clearance is required (please see question 3.2 below).

3.2 Please describe any exceptions where, even though the jurisdictional thresholds are met, clearance is not required.

Pursuant to the Law on Competition, the clearance is not required in the following instances:

• establishment of an undertaking, the purpose or consequence of the establishment of which shall be the coordination of competitive behaviour between the founders, or between the founders and newly-established undertaking. Such actions shall be deemed concerted practices;

• acquisition of shares (participation interests) by a person whose primary type of activities is conducting financial operations or operations with securities, provided that the acquisition is done for the purpose of their subsequent resale and that the said person takes no part in voting in the highest governing body or other management bodies of the target undertaking. In this case, the subsequent resale shall be made within one year following the day of acquisition of the shares
(participation interests) (that period upon application of the buyer may be extended by the AMCU);

• actions taken between the undertakings connected by control relations, except for the cases of gaining such control without permit of the AMCU if the necessity of such permit was required by law; and

• takeover of an undertaking or its part, including takeover due to the right of management and disposition of its property by the insolvency receiver or the official of state authority.

3.3 Where a merger technically requires notification and clearance, what are the risks of not filing? Are there any formal sanctions?

Taking into account requirements of the Law on Competition and current practice, the most visible risk if the parties close the notifiable transaction without clearance is the commencement by the AMCU of the investigation proceedings and imposition of the fine as a result. The Law presumes that the amount of the fine for such violation shall be up to 5% of the annual revenue from the sale of goods (works, services) for the preceding financial year of the participants to the concentration including their groups (all legal entities and individuals related by control relations, including shareholders with control).

If only some of the members of the group(s) committed punishable acts (omissions) and/or had the rights without which the commitment of such act could not be possible and/or got or can get advantages in competition or other benefits, the fine is imposed on such members or those members that obtained (could obtain) the above benefits (i.e. possibility of having an influence on other business subjects’ activity or possibility of getting a part of their profit). It is not provided by the law, but in practice if it is not cleared in M&A transactions, the fine is imposed on the buyer only.

At the same time, the fines for violations in the merger cases are substantially lower than the above-mentioned 5% of the parties’ turnover. They are determined based on the Guidelines on Fines, which provide a detailed procedure of the calculation of the fines, which is used by the AMCU, notwithstanding that the Guidelines are still not registered as a binding normative act. In addition, the AMCU tends to calculate the fines based not on the global aggregate turnover of the whole group of the violator, but on the sales proceeds on the relevant and adjacent Ukrainian markets. To define the actual amount of the fines, the AMCU used to apply specific coefficients for calculation of the basic amount of the fine. To determine this, the specific coefficient is applied to the initial amount of the fine; such coefficients concern an impact of the violation on the markets, social importance of the commodities, level of the profitability connected with the violation, and may increase or decrease the final amount of the fine. Also, the final amount may be decreased or increased using the mitigating or aggravating factors by up to 50 per cent. Mitigating factors include, inter alia: the level of cooperation of the violator with the AMCU; and filing the merger application before the commencement of the proceedings, etc. There is no criminal liability for breaches of the competition laws. Foreign business making sales in Ukraine, but having no subsidiaries or assets there, may be subject to a fine despite the difficulty of obtaining any enforcement related to this.

Furthermore, should the sanctioned entities not pay or not contest the fine, the AMCU may apply to the Ministry of Economic Development and Trade of Ukraine to impose the ban on trans-border operations of such undertakings.

Third parties may claim their damages incurred as a result of violation of the competition laws by twofold of those actually suffered.

3.4 Is it possible to carve-out local completion of a merger to avoid delaying global completion?

Ukrainian merger control regulations do not provide for the possibility to carve-out local completion of a merger without risks of commencement of the investigation proceedings and imposition of the fine as a result thereof.

3.5 At what stage in the transaction timetable can the notification be filed?

Ukraine merger control rules establish that the notifiable transaction should be cleared before the closing thereof. Thus, it is advisable to file the merger application at least within 60–65 calendar days prior to the planned completion date, if the parties are sure that there would be no a Phase 2 investigation, in which case the terms of the advance filing should be much longer.

3.6 What is the timeframe for scrutiny of the merger by the merger authority? What are the main stages in the regulatory process? Can the timeframe be suspended by the authority?

The main stages in the regulatory process are as follows:

• Phase 1, which consists of two stages:

(i) within the initial 15 calendar days following the filing date, the AMCU reviews the merger application in terms of technical completeness, meeting the formal requirements and sufficiency for substantive review. During this stage, the AMCU is entitled to decline the application (actually, to return it to the applicants). It means that the new corrected/amended application should be filed; and

(ii) if the merger application is accepted as satisfactory for its consideration per se, the statutory period of its review shall be 30 calendar days commenced immediately after the initial 15-day period. During this stage, the AMCU conducts an analysis and assesses whether the merger may be cleared, requests the additional documents and information from the applicants it believes necessary for the assessment, raises questions, interviews the applicants and discusses necessary issues with the applicants. Applicants may contact the AMCU in order to find out the status of the review and provide their responses to the questions and requested additional documents. As a result, the AMCU either permits the merger or initiates commencement of Phase 2.

• Phase 2:

In case of revealing the grounds for the prohibition of a merger, the AMCU may initiate consideration of the case on the merger. At the beginning, it sends the notice on commencement of the Phase 2 investigation proceedings together with an inquiry for additional information and documents. Additional information may also be requested from third persons if its absence prevents the consideration of the case. Furthermore, the expert examination may be appointed as well. The length of Phase 2 should not exceed 135 days notwithstanding the law provides that it starts from the date of submission by the applicant (applicants) of the complete amount of the requested information and obtaining an expert opinion. If, within the terms of consideration of the case, the AMCU decision has not been taken, it is deemed that the merger has been cleared (tacit consent).

Since May 2016, the Law on Competition envisages a simplified procedure for consideration of the merger applications (within 25 days from the date of its receipt) which may be applicable when:

• only one party to the concentration carries out business activity in the territory of Ukraine;
• the aggregate share of the parties on the same commodity market (horizontal overlap) does not exceed 15 per cent; or
• the shares or aggregate shares of the parties do not exceed 20 per cent in the commodity markets where the products (goods, works, services) are sold, without the purchase or sale of which the business activity of any other party to the concentration is impossible (vertical related markets).

The application shall not be considered if the applicant withdraws the application or if the merger is prohibited pursuant to the Law of Ukraine “On Sanctions”.

3.7 Is there any prohibition on completing the transaction before clearance is received or any compulsory waiting period has ended? What are the risks in completing before clearance is received?

Yes, the effectuation of the transaction requiring merger clearance shall be prohibited until the merger clearance is obtained. Until the merger has been cleared, participants thereto shall refrain from performing such actions that could result in the restriction of competition and impossibility of restoration of the initial state.

In this respect, the transaction subject to merger clearance is considered to be completed:

• in case of establishment of a business entity – from the moment of state registration thereof;
• in case of the merger of business undertakings – from the moment of the state registration of the business undertaking that appears as a result of the merger;
• in case of affiliation of an entity – from the moment of the exclusion of the affiliated entity from the companies state register;
• in case of acquisition of ordinary registered shares in a non-documentary form or immobilised shares – from the moment of transfer of purchased securities to the securities account of the buyer with the custodian;
• in case of acquisition of ordinary registered shares issued in a non-documentary form or immobilised shares – from the moment of the transfer of purchased securities to the account of the buyer with the custodian;
• in case of acquisition, acquisition by another means of ownership, obtaining in management (use) of participation interests – from the moment of acquisition the right of ownership, the right to manage (use) the participation interests in accordance with the contract (assignment);
• in case of acquisition of bearer shares – from the transfer of ownership of shares in accordance with the sale-purchase contract;
• in case of receipt of shares in management (use) – from the moment of acquiring rights to manage (use) shares in accordance with the agreement (assignment); and
• in case of acquisition, acquisition or otherwise acquisition of assets (property) in the form of a single (integral) property complex of an entity or a structural subdivision of an entity – from the moment of acquisition of right of ownership, management (use) of assets (property) in accordance with the contract (assignment), act of assets acceptance and transfer.

Failure to obtain merger clearance prior to the above events may result in the sanction, including imposition of the fines.

3.8 Where notification is required, is there a prescribed format?

Under the Regulation on Concentration, a merger application is to be prepared in writing and additionally recorded on a CD.

The content and form of the merger application and supporting documents are described in the Regulation on Concentration. In general, the content of the merger application (including the list of the supporting documents and necessary data and information) to a certain extent depends upon the type of the merger in question.

The merger application should mention (include), inter alia, the following:

• details of the parties with disclosure of their relevant group of business undertakings connected by control relations, and details of the ultimate beneficiaries thereof;
• detailed description of the transaction, together with the originals or copies of the transactional documents;
• sources of financing the transaction in order the AMCU could make certain that the participants are acting in their own interest;
• details of the party groups’ volume of assets and amount of sales proceeds;
• economic justification of the transaction;
• power of attorneys which should include specific wordings; and
• documentary confirmation of the payment of the application fee.

A set of documents attached to the merger application must be drawn up as prescribed by the Regulation on Concentration. Such set of documents should be bound in the binders’ folder.

Copies of the constituent documents and changes to the constituent documents must be prepared in accordance with the requirements of the relevant legislation.

The joint application is signed by the heads or authorised representatives of all applicants. Information and other documents, including copies of documents, attached to the merger application, shall be signed by the applicant or its authorised representative, with mentioning names, positions, places of work and the contact details of the persons prepared the answers to the questions of the relevant section.

Foreign-origin excerpts from the companies register and the powers of attorney of foreign business entities shall be notarised at the place of their issue and legalised/apostilled, unless otherwise provided by international agreements of Ukraine, and accompanied by a certified translation into the Ukrainian language. Documents and information in a foreign language must be accompanied by a certified translation into Ukrainian.

Documents consisting of two or more sheets of paper should be numbered and stitched.
Information provided as the annexes shall be set out using the numbering of sections and paragraphs of the appendices to the Regulation on Concentration. Numbering should be as proposed in the annexes to the Regulation on Concentration.

All information and documents attached to the merger application shall be submitted in paper and electronic form.

A person providing information with the limited access (including confidential information) is required to indicate which information has such restrictions, including which documents or parts of the documents contain restricted information. Each page containing restricted information should be marked “contains restricted information”. The applicant should provide reasons for referring information to be restricted information.

In order to represent the interests of the participants, representatives must submit confirmation of their authority in writing, such as an assignment contract or power of attorney, which must include the wording that the risks of negative consequences related to the review by the AMCU, a decision taken on the basis of the false information provided by the representative, as well as responsibility for the submission of such information, are borne by the participants to the concentration appointed the representative or successors thereof.

The application shall be accompanied by a general scheme of control relations of each participant to the concentration with an indication of the concentration participants, their final beneficiary owners, as well as all legal entities and individuals that are participants to the merger and are registered and/or carrying out economic activity on the territory of Ukraine, as well as control relations between them. The application shall be accompanied by a general common scheme for changing control relationships due to the concentration, which indicates the concentration participants, their final beneficiary owners, as well as a schematic representation of change of control.

A simplified procedure presumes filing almost the same documents and information that has to be filed pursuant to the general procedure, save for the detailed economic justification.

3.9 Is there a short form or accelerated procedure for any types of mergers? Are there any informal ways in which the clearance timetable can be speeded up?

The Ukrainian merger control rules provide for the simplified notification review in instances mentioned in question 3.6 above. The decision on accelerated consideration of the merger is taken by the State Commissioner (member of the AMCU) supervising the consideration of the application.

Sometimes the ordinary clearance timetable can be sped up; this mostly depends on the workload of the AMCU, accuracy and completeness of the merger application, complexity of the notified transaction, absence of any competition concerns, national interests in accelerating the process, etc.

3.10 Who is responsible for making the notification?

All parties to a merger are responsible for filing the merger application. As a rule, the parties to a concentration file the joint merger application, save for the hostile takeover, when the merger application may be filed by the buyer individually.

3.11 Are there any fees in relation to merger control?

The Competition Law provides for the filing fee in the amount of 20,400 Ukrainian Hryvnias (approx. EUR 635).

3.12 What impact, if any, do rules governing a public offer for a listed business have on the merger control clearance process in such cases?

In general, the same Ukraine merger control rules shall apply to the public offer for a listed business.

3.13 Will the notification be published?

The merger applications are not published contrary to the completed AMCU decision, which must be published (save for the restricted/confidential information) within 10 days following the decision which has been taken.

Substantive Assessment of the Merger and Outcome of the Process

4.1 What is the substantive test against which a merger will be assessed?

The AMCU grants a merger permit if it does not result in the monopolisation or significant restriction of the competition in the whole or in a significant part of the market. The CMU may permit a merger, which was not authorised by the AMCU, if the positive effect for the public interests of the indicated merger outweighs the negative effects of restriction of competition. A permit may not be granted if the restriction of competition caused by the concentration is not necessary for achieving the purpose of concentration or it poses a threat to the market economy.

Recently, the AMCU approved Advisory Explanations on the Procedure for Application of Article 25(1) of the Law of Ukraine “On Protection of Economic Competition” (regarding the assessment of horizontal mergers) and Advisory Explanations on the Procedure for Application of Article 25(1) of the Law of Ukraine “On Protection of Economic Competition” (regarding the assessment of non-horizontal mergers) in order to explain its approaches to assessment of the mergers.

4.2 To what extent are efficiency considerations taken into account?

Only as a supporting element in the course of consideration of the merger by the AMCU. At the same time, when assessment of the merger is conducted by the CMU, the efficiency consideration may be taken into account.

4.3 Are non-competition issues taken into account in assessing the merger?

It is impossible to say that non-competition issues are taken into account in assessing the merger. At the same time, it should be noted that the mergers with participation of the undertakings included in the list of sanctioned persons under the Law “On Sanctions” are not considered (and assessed) at all.

4.4 What is the scope for the involvement of third parties (or complainants) in the regulatory scrutiny process?

In certain cases, the AMCU involves the customers, competitors and suppliers in the course of the investigation of the merger proceedings (usually during the Phase 2), if it believes that the notified transaction may be harmful to their rights and interests. The AMCU may also inquire about certain information from other state agencies in order to find out revealed or unrevealed incomplete data and information.

4.5 What information gathering powers (and sanctions) does the merger authority enjoy in relation to the scrutiny of a merger?

The AMCU is entitled to inquire about certain additional information in the course of the consideration of the merger application or merger proceedings in order to analyse the filed merger. As said above, the AMCU may apply to certain relevant state agencies (including the law-enforcement bodies) to gather necessary information. In some instances, the applicants may not even be aware of such inquiries and responses.

It is compulsory for the commercial subjects to respond to any information inquiries of the AMCU. Failure to provide responses in time, or incomplete or unfair responses result in the imposition of fines.

4.6 During the regulatory process, what provision is there for the protection of commercially sensitive information?

As said above in question 3.8, it is the obligation of the applicant to indicate which information has limited access, including which documents or parts of the documents contain restricted information. Merger applications must contain the list of documents and information indicating which documents or information contain the information with restricted/limited access. Each page containing restricted information should be marked “contains restricted information”. The information that the applicant considers to have restricted access to must be marked in any chosen manner by the applicant. At the same time, the applicant should submit reasonable grounds for giving the status of “restricted” for certain information, indicating why it cannot be disclosed or made public.

The confidential information should not be disclosed to the third parties. The risk of leakage of the confidential information during the merger control process is rather low. The merger application is not subject to publishing.

At the request of the applicant(s), the confidential information in the written AMCU decision may be hidden or blacked out (redacted).

The End of the Process: Remedies, Appeals and Enforcement

5.1 How does the regulatory process end?

The regulatory process ends with the granting by the AMCU of its decision permitting the concentration or prohibiting thereof. The participants to a concentration have to effectuate the permitted transaction within one year following the date of the AMCU’s decision unless they requested a more lengthy term and the AMCU agreed to provide it. If within the statutory term the AMCU takes no decision permitting the merger or commencing Phase 2, the permit is deemed to be granted. As far as we are aware, this has only happened once or twice. The AMCU decision in either case is publicly announced and published on the official website of the AMCU.

5.2 Where competition problems are identified, is it possible to negotiate “remedies” which are acceptable to the parties?

Yes, it is possible. In case of establishment of the grounds for prohibition of the merger, the AMCU informs the participants to the concentration on the substance of such grounds and provides a 30-day period for submission by the participants of their proposals as to obligations that they are ready to take in order to eliminate or mitigate the negative impact of the merger on competition acceptable for the AMCU. The obligations assumed by the participants to the concentration should be proportional to the reasonable threat of the negative impact on competition. Those remedies may be negotiated by the AMCU and participants. Decisions of the AMCU on the issue of merger clearance may be conditional to the implementation of the above obligations, which eliminate or mitigate the negative impact of the merger on competition. Such conditions and obligations may concern, in particular, restrictions on the management, use or disposal of property, as well as the obligation of the entity to dispose of the property.

5.3 To what extent have remedies been imposed in foreign-to-foreign mergers?

The law does not specify distinctions in this issue between “national” and “foreign-to foreign” mergers.

5.4 At what stage in the process can the negotiation of remedies be commenced? Please describe any relevant procedural steps and deadlines.

The Law on Competition is silent on the issue when the negotiations on remedies should or could be started. In practice, such negotiations usually commence during Phase 2. As said above, during the consideration of the case within Phase 2, the AMCU may propose the applicants to suggest and negotiate the remedies.

5.5 If a divestment remedy is required, does the merger authority have a standard approach to the terms and conditions to be applied to the divestment?

Ukrainian merger control rules do not provide a specific approach for a divestment remedy.

5.6 Can the parties complete the merger before the remedies have been complied with?

The Law is silent on this matter. The timetable of implementation of the remedies and effectuation of the merger is envisaged in the AMCU decision granting the clearance.

5.7 How are any negotiated remedies enforced?

In theory, the AMCU shall inspect the implementation of the remedies. Failure to comply with its decision on establishment of the remedies shall constitute a violation of the law and entails legal responsibility and pursuant to the Law on Competition may be the reason for the AMCU to review the decision on granting a permit on a merger. A review of the decision on granting a permit on a merger in cases of failure to comply with the established remedies may be done within the terms of effectiveness of such decision. Following the review of the decisions, the AMCU may take a decision on the prohibition of concentration, in that case the state registration of a business entity created as a result of a concentration is cancelled by the court at the AMCU suit.

The AMCU pursuant to the Law on Competition is entitled to impose the fine for failure to comply with the established remedies.

No “monitoring trustee” is appointed to monitor compliance with the terms of remedies.

5.8 Will a clearance decision cover ancillary restrictions?

Usually not. Such ancillary restrictions as non-compete arrangements, which are separately notified to the AMCU as concerted practices, require a separate permit of AMCU.

5.9 Can a decision on merger clearance be appealed?

The decision on a merger clearance may be appealed to the commercial court by third parties.

5.10 What is the time limit for any appeal?

The AMCU decision may be appealed within two months following the date of receipt thereof.

5.11 Is there a time limit for enforcement of merger control legislation?

Yes. In general, the statute of limitation period for the prosecution for violation of the legislation on the protection of economic competition is five years.

Miscellaneous

6.1 To what extent does the merger authority in your jurisdiction liaise with those in other jurisdictions?

We know that the AMCU collaborate with competition authorities in other jurisdictions through bilateral treaties between Ukraine and other countries (Russia, Georgia, Armenia, etc.) or between the AMCU and competition authorities (Austria, Belorussia, Poland, Turkey, etc.).

The AMCU cooperates with the competition authorities of certain CIS countries – members of the Agreement on Conducting Coordinated Antimonopoly Policy dated 2000 through the Interstate Council on Antimonopoly Policy established pursuant to the requirements of the Agreement.

The AMCU also collaborates with international organisations such as the Organization for Economic Cooperation and Development, United Nations Conference on Trade and Development, the International Competition Network and others. Particularly, OECD provides the AMCU with specific recommendations of improvement to diverse aspects of the AMCU authorised activity.

6.2 What is the recent enforcement record of the merger control regime in your jurisdiction?

The AMCU quarterly publishes news digests, which provides the review and analysis of the most significant mergers.

6.3 Are there any proposals for reform of the merger control regime in your jurisdiction?

This is not applicable. At the same time, in two weeks the AMCU has to approve Methodic Recommendation as to the Use of the Term “Control”, which may have certain influence on the merger clearance regime in Ukraine.

6.4 Please identify the date as at which your answers are up to date.

The answers are up to date as of 30 October 2018.

 
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