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Transactions caught and thresholds

Under what circumstances is a transaction caught by the legislation?

The Competition Law uses the term ‘concentrations’, broadly defined as covering:

  • the merger of two or more previously independent undertakings or the takeover of one undertaking by another;
  • the establishment by two or more undertakings of a new undertaking that will independently pursue business activities on a permanent basis and whose establishment does not result in the coordination of competitive behaviour between the parents or between the new undertaking and its parents;
  • the direct or indirect acquisition of shares, whereby certain thresholds (25% or 50% of the votes in the highest governing body of the undertaking concerned) are reached or exceeded; and
  • the acquisition of direct or indirect control over an undertaking, including through:
  • the acquisition or lease of a significant part of the assets of an undertaking (including through liquidation); or
  • appointments to certain roles (eg, chairperson, deputy chairperson or more than half of the members of the decision-making or supervisory corporate bodies).

The AMC requires separate notification for each step of a multi-stage transaction. In particular, an acquisition of joint control by two independent undertakings through a special purpose vehicle (SPV) normally requires two separate clearances: one for the joint establishment of a purely technical SPV (even where the SPV is a new company incorporated with the sole purpose of participating in a bidding process) and one for the acquisition of the target. Depending on its structure, the deal may involve other triggering events that require additional clearance.

The same complexity applies to multiple acquisitions. For example, in deals involving the direct acquisition of shares in a number of entities by one undertaking from the same (ultimate) seller, the AMC clears each acquisition through separate clearance decisions.

Regarding the acquisition of control provision, although the Competition Law provides only two examples of notifiable transactions, it is a catch-all provision intended to cover acquisitions with respect to any kind of control. Control is established through rights, contracts or any other means that confer the possibility of exercising decisive influence on the target. The recently adopted Guidelines on the Definition of Control further clarify how the concept of control and changes in the quality of control are treated by the AMC.

Exemptions The following transactions do not qualify as concentrations under the Competition Law and no merger clearance is required, irrespective of the parties' turnover or the value of their assets:

  • the establishment of a new undertaking aimed at, or which results in, the coordination of competitive behaviour between the parents or between the new undertaking and its parents – this is generally regarded as a concerted practice and may require antitrust clearance;
  • the acquisition of shares qualifying as a financial buyer transaction – for example, where shares are acquired by a financial institution for the purposes of further resale within one year (extendable), provided that the acquirer does not exercise voting rights attached to the acquired shares;
  • the acquisition of control over an undertaking or part thereof by a receiver or a representative of a state authority (eg, through an insolvency procedure); and
  • intra-group transactions, provided that control links within the group have been established in compliance with Ukrainian merger control rules.

Do thresholds apply to determine when a transaction is caught by the legislation?

A transaction that qualifies as a concentration requires merger clearance by the AMC if:

  • the combined parties' worldwide value of assets or turnover exceeds €30 million and the value of assets in Ukraine or Ukrainian turnover of each of at least two parties exceeds €4 million; or
  • the value of assets in Ukraine or the Ukrainian turnover of the target (including its controlling shareholder or seller group) or of at least one of the founders of a new entity exceeds €8 million and worldwide turnover of at least one other party exceeds €150 million.

All figures are calculated for the financial year immediately preceding the year of the concentration on a group-wide basis.

The following special rules are applicable to the calculation of thresholds for banking companies and insurers:

  • For banking companies, one-tenth of the bank's assets should be considered for the purposes of the turnover or asset threshold.
  • For insurers, the net assets of the insurer should be considered for the purposes of the asset threshold and the revenues from insurance activities should be considered for the purposes of the turnover threshold.

Informed guidance

Is it possible to seek informal guidance from the authority on a possible merger from either a jurisdictional or a substantive perspective?

Under the Competition Law, the parties may initiate consultations with the AMC during an initial 15-day review period with respect to documents and information required for review of the application for approval of a concentration, including the possibility of a simplified procedure and the elimination of minor faults in the application. However, the law does not envisage the possibility of preliminary consultations taking place before notification (such consultations are available only to applicants and thus only after notification). Informal discussions with the AMC's officers are possible, although the law does not expressly provide for them.

The parties may also refer to the AMC for formal guidance (ie, a non-binding preliminary opinion) on the notifiability of a concentration and whether clearance is likely to be granted. The review period for a preliminary opinion application is up to 30 calendar days. There is no prescribed form of the preliminary opinion application, but the data and documents that must be filed with the AMC are roughly the same as those required for a merger clearance notification.

The fee for a preliminary opinion application is UAH5,440 (approximately €170). Obtaining a preliminary opinion does not release the parties from having to apply to the AMC for a merger clearance, if required.

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