May 2016 - On 18 May 2016, a long-anticipated amendment to the law “On the Protection of Economic Competition” (No 935-VIII dated 26 January 2016) comes into force that introduces improvements to the efficiency of Ukraine’s merger control system.

The new amendment significantly improves and simplifies Ukraine’s merger notification procedure. It introduces (i) new merger control thresholds, (ii) a simplified merger review procedure, and (iii) other important changes to merger control rules.

New merger control thresholds

The amendment introduces a two-tier jurisdictional test by applying the following alternative tests for a merger that requires notification.

  • Test 1: The parties’ combined worldwide turnover or value of assets exceeds EUR 30 million, provided that at least two parties have more than EUR 4 million in sales or assets in Ukraine; or
  • Test 2: The target, seller of assets or one of the joint venture founders have turnover or value of assets in Ukraine exceeding EUR 8 million, provided that worldwide turnover of at least one other party exceeds EUR 150 million.

All thresholds are calculated for the previous year on a group-wide basis. The amendment abolishes the previous 35% market share test, which is no longer applicable.

Simplified merger review procedure

The amendment introduces a simplified 25-day review procedure (in contrast to the standard review period of 45 days) if:

  • only one party operates in Ukraine, or
  • the parties’ combined market share does not exceed 15% in horizontal mergers, or
  • the individual or combined market share in a downstream/upstream market does not exceed 20% in non-horizontal mergers.

Other important changes to merger control rules

In addition, the amendment establishes the following important changes to merger control rules:

  • the filing fee is increased to approximately EUR 700;
  • the parties may initiate consultations with the competition authority during an initial 15-day review period relating to merger control notification on technical grounds;
  • failure to observe the obligation to disclose the parties’ ultimate beneficial owners is now a ground for dismissing a merger notification;
  • the only ground for commencing a phase II investigation is identification of reasons that would prohibit a merger (as opposed to previous vague grounds that included a need to carry out a complex and comprehensive market investigation);
  • a 30-day period (that can be extended upon reasonable justifications) for the parties to offer remedies to the competition authority during a phase II investigation. The parties did not have this right before; and
  • the introduction of a 180-day limit for the competition authority to review a merger (including during a phase II investigation).

The amendment does not exempt from notification non-competition clauses (so-called “ancillary restraints”), which are widely used in the majority of M&A transactions. This means that enforcement of non-competition restrictions may require a separate approval.