Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

There are no deadlines for filing a notification in Ukraine. The only requirement is that the AMC clearance is obtained before the implementation of the concentration. It is possible to notify transactions at their early stages where no definitive agreement is reached.

Failure to notify can lead to a fine of up to 5 per cent of the consolidated turnover in the year immediately preceding the year when the fine is imposed, but in practice the fines in merger cases are considerably lower. The Guidelines on Fines (last revised in 2016) sets basic amounts of fines for violation of competition laws, including for merger cases. Under the Guidelines of Fines, the basic fines in merger cases are:

  • 10 per cent of the turnover on the relevant (and adjacent) Ukrainian markets - for failure to notify a concentration that results in monopolisation or substantial restriction of competition;
  • between 510,000 hryvnas (approximately €17,400) and 5 per cent of the turnover on the relevant (and adjacent) Ukrainian markets - for failure to notify a concentration that does not lead to monopolisation or significant restriction of competition or have impact on Ukrainian product markets; and
  • between 170,000 hryvnas (approximately €5,800) and 510,000 hryvnas (approximately €17,400) for failure to notify a concentration in case the parties are active on non-overlapping and non-adjacent markets in Ukraine.

When defining the basic fine, the AMC may apply coefficients depending on the effect of violation on competition, social importance of the products, profitability of economic activity connected with violation, which may increase or decrease the fine. Also, in each case, the above basic amounts are subject to possible further adjustment for aggravating or mitigating circumstances.

Although the statutory ceiling for a fine, of 5 per cent of the turnover in the year preceding the fining decision, remains in force, the authority clarified that the maximum theoretical fine can be imposed only in exceptional circumstances to ensure deterrence. The Guidelines on Fines have a recommendatory nature and are non-binding. However, the AMC has publicly committed to follow its rules on setting fines strictly.

The fine may be imposed on the entire corporate group of the offender whose actions or omissions have led to violation of the Competition Law (in practice: on the acquiring party, the founding partners in case of establishment of a joint venture or the merging entities).

In addition to the financial penalties, parties may potentially be subject to any or all of the following sanctions:

  • third-party damages claims (double the amount of actual damages sustained);
  • reputational issues (information about the imposed fine, identity of the parties and non-confidential version of decision are published by the AMC on its website);
  • possible complications with Ukrainian clearance of future transactions, as the AMC may scrutinise these more actively; or
  • invalidation of the transaction.

Which parties are responsible for filing and are filing fees required?

The filing is a joint obligation of the participating undertakings, which can mean the acquirer and the target. The controlling seller can also be the applicant on the target’s side in a share deal or generally in an assets deal, the founding partners with respect to joint ventures or the merging entities.

The filing fee is 20,400 hryvnas (approximately €690) per one notifiable event (a transaction may require multiple notifications depending on its structure).

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

The parties are subject to a standstill obligation. Closing prior to clearance constitutes a violation of Ukrainian merger control rules. The suspension requirement applies globally and Ukrainian merger control rules do not provide for any possibilities to obtain individual derogation or avoid sanctions by carving out Ukraine.

The only exception concerns tender and bid process where a notifiable concentration should be filed within 30 days after the winner of a tender or bid is announced. However, this provision was originally designed for local privatisation procedures and may not be adaptable to public bids abroad.

Pre-clearance closing

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

The same sanctions apply in case of closing or integrating the activities of the merging businesses (even partly) before clearance, as outlined in question 9. However, in practice, closing a non-problematic transaction before clearance but after the filing was made is likely to receive a more favourable treatment by the AMC than an omission to file.

The fining decisions are publicly available from mid July 2015. Since then the AMC has imposed more than 100 fines for failure to notify, closing or integrating activities before clearance. In almost all such cases, the amount of fine did not exceed 510,000 hryvnas (approximately €17,400) and these were likely imposed for implementing non-problematic transactions. The authority publishes only redacted versions of decisions on its website and it is not possible to comprehensively analyse the reasons behind the calculation of a fine.

One of the largest fines for closing before clearance amounted to approximately 3 million hryvnas (approximately €100,000). According to publicly available information, the closing occurred by means of interlocking directorship, which was discovered during the Phase II review. Otherwise, the transaction was found non-problematic and was cleared without conditions.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

Yes.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

There are no such solutions. Still, a hold-separate or carve-out arrangement is likely to be treated by the AMC as a mitigating factor when deciding on the amount of a fine.

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

In a tender or bid process, a notifiable concentration should be filed within 30 days after the winner of a tender or bid is announced. However, this rule was designed for local privatisation procedures and may not be adaptable to public bids abroad.

Documentation

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

The notification shall include the following, in particular:

  • Simplified procedure:
    • description of the transaction structure, indicating transaction stages, and the timeline for their implementation along with the draft or copy of transactional documents; information if the clearance is sought or granted in other jurisdictions;
    • description of the source of financing, indicating terms and conditions and submitting documents to confirm availability of own funds (eg, balance sheet, excerpt from bank account) or to evidence that a financial institution lending funds does not acquire control over the borrower in the result of the financing arrangement (eg, loan agreement);
    • parties’ asset and turnover data - globally and in Ukraine for the previous financial year;
    • for all markets - general outline of the parties’ activities globally and in Ukraine, indicating Ukrainian subsidiaries and companies active in Ukraine; and
    • for the relevant markets - value and volume-based sales and market share data; indicating competitors and their estimated market shares on overlapping markets.
  • Standard procedure (in addition to the above list applicable to simplified procedure):
    • detailed economic analysis of the transaction’s effect on the Ukrainian market;
    • information regarding membership in associations; and
    • parties’ excerpts from the trade register or similar (notarised and apostilled or legalised).

Furthermore, along with the hard copy of the notification, parties are required to provide a CD with an electronic version (PDF/Word, etc) of the notification and all documents attached to it.

Documents to be submitted to the AMC should be duly certified and translated into Ukrainian. Confidential information should be properly marked in the notification so that the AMC treats it accordingly.

As regards the missing information in the notification, there may be the following scenarios:

  • If the required information is missing from the start: the authority may either request it during the review or issue a declaration of incompleteness within the 15-day preview period and the parties will have to file anew, adding the missing information. In such scenario, no sanctions are imposed on the notifying parties.
  • If the parties fail to submit information upon request within Phase II review: the authority may close a merger case without ruling on the essence. If so, the parties may submit a repetitive application.

Also, failure to provide information to the AMC within the specified period or provision of wrong, inauthentic or untrue information may result in a fine in the amount of up to 1 per cent of the respective party’s turnover in the year immediately preceding the year when the fine is imposed. However, the Guidelines on Fines clarify that the fine for such violation is capped at 136,000 hryvnas (approximately €4,600). This amount is also subject to possible adjustment for aggravating or attenuating circumstances.

Finally, the AMC may reconsider its decision if it was based on materially incomplete or inauthentic information.

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

The law does not provide for formal consultations with the authority before notifying a merger, although informal consultations are usually possible. After notifying a merger, the standard review process will include the following steps:

  • Preview period. The AMC has 15 calendar days to decide whether the notification is complete and can be accepted for the substantive review (Phase I). If the AMC considers the notification as incomplete, it can be rejected without review on the substance. In such case, the parties would need to file a supplemented notification anew, restarting the process.
  • Phase I review. This stage involves a substantive review and assessment by the AMC of whether the concentration can be approved or whether there are potential grounds to prohibit the concentration, in which case Phase II is initiated. The Phase I review period is up to 30 calendar days during which the AMC will either grant clearance or initiate Phase II.
  • Phase II review. In case the AMC sees any grounds to prohibit the concentration, it can initiate Phase II review, which involves a close analysis of the transaction and the associated competition concerns, examination of expert opinions and other additional information. In practice, the Phase II review period is limited to 135 calendar days, which starts on the day Phase II notice is sent to the parties. The parties, however, can request extension of the review period, if necessary. During this period, the AMC will either issue the clearance (either conditional or unconditional) or adopt a decision prohibiting the concentration.

A fast-track simplified 25-day review procedure is available for transactions where only one party is active in Ukraine or parties’ combined shares do not exceed 15 per cent on the overlapping markets or 20 per cent on vertically related markets. The AMC tends to interpret the 15 or 20 per cent threshold quite restrictively and irrespective of whether an overlap occurs on a relevant or non-relevant market.

What is the statutory timetable for clearance? Can it be speeded up?

A standard merger review timetable is as follows:

  • Preview period: 15 calendar days;
  • Phase I review period: up to 30 calendar days (in practice, it is possible to request a faster review, although there is no formal procedure for this); no prolongation is possible; and
  • Phase II review period: three months (extendable, if additional documents, information or expert opinion are required), but, in practice, shall not exceed 135 calendar days starting from the day that Phase II notice is sent to the parties (see question 17).

Also, a fast-track, simplified 25-day review procedure is available for transactions reasonably raising no competition concerns (see question 17).

The authority usually takes the whole of the Phase I and Phase II review period for review of transactions and adopts the relevant decisions during the last week before the respective deadline.

If prior to or on the date when the Phase I or Phase II period expires the AMC has failed to adopt any decision on the concentration, clearance by tacit consent is deemed to have been granted, although in practice the AMC tends to issue formal clearances.