Last year, the Antimonopoly Committee of Ukraine (AMCU) has succeeded in promotion of fair competition in Ukraine. Bolstered by efficient regulatory regime, the role of AMCU has become increasingly important.

AMCU's efforts and success to date were recognised earlier this year at the 2016-2017 Competition Advocacy Contest organised by the World Bank Group and the International Competition Network. Ukraine was selected as the winner of the category: "Engaging through results: Successful experience in planning, implementing and monitoring advocacy strategies". AMCU was cited for its success combining, "analytical work with proactive stakeholder engagement to advocate for a reform package to address regulatory bottlenecks and other barriers to competition." The citation also notes that to date, six of the reforms advocated by AMCU have been implemented, "resulting in new market players, more transparent regulations and the creation of more than 300 jobs."

In light of this recognition, we devote this "Year in Review" to the main developments and "successful experience" of AMCU.

New merger control thresholds

One of the most important achievements of last year is the introduction of new merger control thresholds. In particular, a two-tier jurisdictional test for a merger that requires notification was introduced:

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.

The amendment abolishes the previous 35% market share test, which is no longer applicable.

The results have been significant: the number of applications for merger approval has reduced by approximately 30%.

New Merger Regulation

On 19 August 2016, a new "Regulation for Filling and Consideration of Applications on Preliminary Receipt of Merger Clearance of the Antimonopoly Committee of Ukraine" (New Merger Regulation) introduced further improvements to the efficiency of Ukraine's merger control system:

  • the volume of required information about merger participants was reduced substantially;
  • only the undertakings concerned and companies active in the Ukrainian market are obliged to disclose market data;
  • the substantial requirements with regard to feasibility studies for mergers requiring notification were introduced; and
  • the obligation to duplicate all data submitted by applicants in specific e-software was abolished etc.

Efficiency: Simplified Review Procedure & Other Developments

A simplified 25-day review procedure (in contrast to the standard review period of 45 days) was introduced as a part of the reform of competition laws in Ukraine. In particular, the new simplified procedure applies if one or more of the following conditions are met:

  • 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.

The simplified review procedure is an important amendment to Ukrainian competition laws. It releases the parties from the previous obligation to provide detailed market data regarding all product markets in which they are active, even though such markets are not relevant markets.

The parties may also initiate consultations with the competition authority during an initial 15-day review period relating to merger control notification on technical grounds.

Transparency & Predictability

On 9 August 2016, AMCU adopted new "Guidelines of Fines for Violation of Ukrainian Competition Laws". In particular, the following changes were introduced:

  • a new approach to the calculation of the basic amount of the fine;
  • a party in violation of competition laws shall have the right to provide an adequately supported calculation of illegally obtained turnover and / or losses of the affected party for the purposes of calculating the basic amount of the fine.

For more details, please follow this link.

In another step towards increasing transparency, last year AMCU adopted "Guidelines on Assessment of Horizontal Mergers". According to these Guidelines, a merger assessment will include (i) a definition of related products and geographic markets and (ii) an assessment of the merger's impact on competition.

Another significant achievement is the increased transparency of decisions adopted by the competition authority. In particular, AMCU is obliged to publish on its official website information on its decisions and investigations.

Parties to a merger deal must also adhere to this transparency introduced by the new regulations. For example, failure to observe the obligation to disclose the parties' ultimate beneficial owners is now a ground for dismissing a merger notification.

Preview

While 2016 was a remarkable year for competition law practitioners and business in Ukraine, there remain a number of areas that still require substantial improvement. For this reason, it is expected that 2017 will be a year of:

  • legal certainty in eliminating inconsistencies between the New Merger Regulation with certain provisions of the Law on the Protection of Economic Competition;
  • uniformity in summarising AMCU's practices;
  • increased transparency in consideration of cases regarding failure to obtain a merger clearance which did not result in monopolisation or essential limitation of competition; and
  • predictability in harmonisation of the approach of AMCU in determination of fines.