Recently, the Antimonopoly Committee of Ukraine (the AMC) adopted the Recommendations on Procedure for Applying of Part 1 of Article 25 of the Law of Ukraine “On Protection of Economic Competition” (on assessment of non-horizontal concentrations). This document stipulates criteria for the assessment of potential influence on the markets of non-horizontal concentrations (i.e. vertical and conglomerate mergers). It regulates mainly concentrations that involve the parties with (i) combined market shares exceeding 15% and/or (ii) market shares or combined market shares exceeding 20% on vertically related markets.
Assessment of the influence of the concentration mainly includes determination of relevant markets, analysis of market shares and level of market concentration, potential anticompetitive effect of the concentration, factors that may serve as a counterbalance for anticompetitive effect, and risk of bankruptcy. The AMC on a case-by-case basis decides whether to analyze all of these factors or only certain of them, depending on the concentration and markets involved.
During analysis of the market shares and the level of concentration, the AMC considers HHI as an indicator that characterizes the level of market concentration.
If, following completion of the concentration, the market share does not exceed 30%, and the level of concentration is below 2,000 points, the AMC decides that the concentration does not result in substantial restriction of competition (except for certain specific exemptions). But if market shares and the level of concentration exceed these thresholds, this is a ground for the AMC to perform a deeper investigation of potential negative effects of the concentration.
For vertical mergers such investigation envisages analysis of ability, possible motivation of the parties to restrict access to manufacturing or to purchasers, and potential influence of such restrictions, as well as analysis of any coordinative impact that may affect the competition.
In conglomerate mergers the AMC would mainly pay attention to suppliers of complementary products and suppliers of products of the same category (which usually are purchased by the same buyers for the same end use), provided that they hold dominant or monopolistic position on the respective markets. In this aspect the AMC would analyze the ability of the parties to restrict access of competitors to the market, possible motivation for such restriction, general effect on competition, and any coordinative impact that may strengthen negative effect on competition.
If, following analysis of the concentration, the AMC comes to a conclusion that such a concentration will result in substantial restriction of the competition or monopolization of any market, it may grant merger clearance imposing certain undertakings over the parties, or forbid the concentration if negative effects cannot be eliminated by way of imposing of the undertakings.
It is expected that the Recommendations will clarify the approach of the authority during analysis of non-horizontal concentrations and will give the stakeholders more understanding about those factors that should be taken into account during the merger clearance process.