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Competition law

Although the economic crisis has slowed M&A activity, the Antimonopoly Committee of Ukraine (AMCU) has demonstrated its strong desire to adjust the merger control rules in line with the best practices of other European countries. As a result, a number of significant and long-awaited reforms to competition law have taken place during the past few years. Following the recommendations of the OECD and the United Nations Conference on Trade and Development, back in 2016 Parliament amended the rules on merger control.28 The changes increased the merger notification thresholds that had been in effect for over 15 years. In particular, since May 2016, transactions are subject to prior approval of the AMCU if for the preceding year:

  1. the parties' combined worldwide turnover or assets exceed the equivalent of €30 million, and the domestic turnover or assets of each of the two parties exceeds the equivalent of €4 million; or
  2. the target's domestic assets or turnover exceed the equivalent of €8 million, and the buyer's worldwide turnover exceeds the equivalent of €150 million; or
  3. in the case of the establishment of a business entity, the domestic assets or turnover of one of the parties exceed the equivalent of €8 million, and the worldwide turnover of the other party exceeds the equivalent of €150 million.

All thresholds are to be calculated on a group level for the last financial year preceding the contemplated transaction.

In addition to amending the rules on merger control, the merger control procedures have been simplified by allowing parties to conduct preliminary consultations with the AMCU. Furthermore, the new merger control procedures have significantly simplified the disclosure requirements for parties during the course of filing preparation, but at the same time they require profound economic analysis for transactions that may impact competition in Ukraine. A further sign of liberalisation has been the introduction of a fast-track procedure for certain cases, with decisions to be issued within 25 calendar days instead of 45 calendar days.

As part of the reform in the antitrust sphere, the AMCU's transparency has been enhanced. Previously, the AMCU decisions did not have to be published; however, starting from 2015 all decisions of the authority are to be published on the AMCU's official website within 10 working days from the adoption of a decision.29

Furthermore, in 2015 the AMCU approved fining guidelines that make its process of calculating fines more predictable and transparent.30

In 2017, Parliament adopted changes to the Ukrainian competition and sanctions laws that allow the AMCU to deny merger clearance of transactions involving entities included in the sanctions list.

Another step towards the alignment of the Ukrainian competition legislation to the EU competition legislation was the AMCU's approval of the Guidelines on the Assessment of Horizontal Mergers at the end of December 2016 and the Guidelines on the Assessment of Non-Horizontal Mergers in March 2018.

In 2018, the AMCU adopted the new Guidelines on Definition of Control, which were developed around a concept of control similar to that of the EU competition legislation.

Further, in June 2019, the AMCU adopted amendments to the provisions on concerted actions, which cancelled the concerted actions financial thresholds and removed the de minimis exemption. Due to these amendments, restrictive arrangements implemented in M&A transactions, such as non-compete and non-solicitation, irrespective of the financial thresholds of the parties, may benefit from the block exemption according to which concerted practices are allowed and do not require prior clearance from the AMCU if the aggregate market share of the parties (on a group level) does not exceed 15 per cent (for horizontal or mixed concerted actions) or 20 per cent (for conglomerate concerted actions) in any product market.

Another recent significant development was the adoption in September 2019 by the AMCU of non-binding guidelines on the application of merger control rules to joint ventures, which clarified the notifiability of the establishment of joint ventures. The establishment of a joint venture qualifies as a notifiable concentration subject to the following conditions:

  1. the joint venture shall be created from scratch by several undertakings and shall be jointly controlled by its founders;
  2. the joint venture shall be full-function, meaning it shall carry out all the functions generally associated with fully independent undertakings active on that market;
  3. the joint venture shall be intended to operate on a lasting basis; and
  4. the establishment of the joint venture shall not result in the coordination of the competitive behaviour between the joint venture founders, or between the founders and the joint venture.

In July 2020, the AMCU adopted guidelines on the application of the small but significant and non-transitory increase in price test, which elaborates the applicability of this test to alternatively identify the narrowest relevant market.

The completed and ongoing reforms represent a broader effort to harmonise Ukrainian competition law with that of the EU, and generally make Ukraine a more business-friendly place. In addition to these initiatives, a number of legal changes are making their way through the legislative process. Several are responses to recommendations cited in reviews carried out by the OECD and the United Nations Conference on Trade and Development. These legislative proposals address, for example, a revision of the concerted actions regulation, the AMCU's increased discretion in determining which cases to investigate and the establishment of a specialised court chamber for hearing antitrust-related disputes.

In addition to the above, the draft amendments to the Ukrainian competition laws are currently under the consideration of the Parliament, which anticipates essential changes to the merger control regulations, in particular the exclusion of a seller's financials for the purposes of merger control assessment, implementation of new merger notification thresholds, and an increase of filing fees for the submission of merger and concerted action applications.

In particular, in July 2021 the Parliament of Ukraine adopted the respective draft law,31 aimed at reform of Ukrainian competition law, which was developed together with competition law experts from the EU in line with the EU–Ukraine Association Agreement. As of the time of writing, the draft law awaits the second reading in the Parliament of Ukraine with numerous amendments thereto expected.

Further, in July 2021 the so-called Tax Amnesty Law32 entered into force, which, among other things, envisages an amnesty for failure to comply with the merger control requirements in Ukraine. In particular, the law provides for an exemption from the fine for the failure to obtain the AMCU's prior merger approval if such approval was required, which may amount up to 5 per cent of the global annual turnover of the participating groups (including all persons or entities related by control) for the preceding fiscal year. The law, in its turn, envisages the replacement of the regular fine by an 'amnesty fine' of 20,400 hryvnas if the following requirements are met:

  1. the concentration (e.g., acquisition of assets or shares) took place before 31 December 2020, the concentration was completed by individual or undertaking, controlled by such individual, which:
    • filed a one-time special voluntary declaration with respect to personal assets; and
    • paid the agreed fee for one-time special voluntary declaration;
  2. such concentration has not led to a significant restriction of competition or monopolisation of the relevant market; and
  3. the application for approval of the respected concentration was filed with the AMCU between 1 October 2021 and 1 October 2022.