On January 26, the Ukrainian Parliament passed the Draft Law No. 2168a introducing some highly anticipated merger control system improvements (the “Law”).
In addition to the amendments associated with an increase in filing fees, cancelation of the market share threshold and making failure to disclose the beneficiary owners of merger’s participants the reason for dismissal of an application for merger clearance, there are also the most notable developments relating to: the substantial modification of the threshold model, introduction of a fast track for certain merger clearances, introduction of consultations with the Antimonopoly Committee of Ukraine (the “AMC”) and extension of remedies regulation.
These substantial changes envisaged by the Law in Ukrainian merger control system can be briefly summarised as follows.
The new threshold system providing for the significantly increased thresholds as well as for two basic alternative options, has been introduced, as follows:
Click here to view table.
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.
The parties will be able to call for consultations with the AMC regarding the information and/or documents the AMC wants to be included into the filing. Such consultations may be held during any phase of the filing process or the consideration procedure or even before the filing.
C. Fast Track
The fast track of twenty-five (25) days from the day of the merger clearance application receipt by the AMC will be available in case of a contemplated transaction where:
- only one party operates in Ukraine; or
- the aggregate parties’ share in any market is less than 15%; or
- the aggregate parties’ share in any adjacent markets is less than 20%.
If the AMC believes that there are grounds for not clearing a transaction, i.e. in case of potential monopolization or distortion of competition, it will notify the parties of those grounds and give a time period of (30) days during which the parties may propose remedies for the transaction to be cleared.
The Law will become effective two (2) months after its publication. There is no doubt that the President will sign the Law, and thus we may expect that it will become effective tentatively in April.
Although the amendments provided by the Law do substantially improve the Ukrainian merger control system and omit almost all foreign-to-foreign transactions, as well as those that do not significantly affect the economic competition in Ukraine, we expect that those transactions that require merger clearance, will probably be subject to deeper and broader scrutiny by the AMC. In its turn, this will require a competent legal advice on structuring of the contemplated transactions and on compliance with the new merger clearance procedures.