For years, Ukrainian and multinational companies have been advocating for changes to Ukrainian antitrust regulations. One of the main concerns was that due to the very low notifiability thresholds, too many transactions that are unlikely to have any adverse effect on competition in Ukraine were subject to mandatory pre-completion merger notification. In response to these requests, the notifiability thresholds were increased and apply to any transactions which are completed after May 18, 2016. Increase of the notifiability thresholds was supplemented with introduction of a simplified fast-track notification procedure for concentrations which do not have significant effect on competition in Ukraine.
It is likely that as a result of increase of the thresholds, a significant number of cross-border concentrations will fall outside the scope of Ukrainian merger control, while large cross-border concentrations affecting the Ukrainian market will be closely scrutinised by the Antimonopoly Committee of Ukraine (AMCU).
There are two alternative notifiability thresholds. The first set of thresholds requires:
- worldwide value of assets or aggregate turnover of the parties to a concentration in the last financial year exceeds €30 million; and
- the value of assets or turnover in Ukraine of at least two parties to a concentration in the last financial year exceeds €4 million each.
The second alternative set of thresholds requires:
- worldwide value of assets or aggregate turnover of at least one other party to a concentration in the last financial year exceeds €150 million; and
- the value of assets or turnover in Ukraine of a target undertaking, or of an undertaking whose corporate rights are acquired, or of at least one founder of a new undertaking to be established (taking into account control relations) in the last financial year exceeds €8 million.
If the concentration meets the above thresholds, a permit for implementation of concentration must be obtained before completion of the transaction. In addition, some of the standard restrictive covenants (e.g., non-competes; covenants related to operation of the business between exchange and completion) are considered restrictive covenant and subject, to limited exemptions, require obtaining a separate permit from the AMCU to implement concerted actions.
In practice, it takes the AMCU up to 45 days from the date of notification to issue a permit to implement concentration. However, the AMC may issue the permit under the simplified fast-track procedure (the permit is issued within 25 days from the date of submitting of the notification), if one of the following criteria is satisfied:
- only one party to the concentration is active in Ukraine or
- the aggregate market share of parties to a concentration on the same market does not exceed 15 percent or
- shares or aggregate shares of parties to a concentration in the key markets does not exceed 20 percent
Even in cases where neither party to the transaction is a Ukrainian company and the transaction is implemented outside of Ukraine, clearance of the transaction with the
AMCU may be required if the above thresholds are met. Therefore, we would recommend seeking the – advice of Ukrainian competition lawyers before structuring the transaction in order to identify whether clearance by the AMCU may be required.