1. What (if any) merger control rules apply to mergers and acquisitions in your jurisdiction? What is the regulatory authority?
Mergers and acquisitions, as well as establishment of an undertaking and appointments to corporate positions under certain circumstances, are subject to merger control in Ukraine.
Applicable laws and regulations include the:
The Antimonopoly Committee of Ukraine (AMC) is the primary state authority entrusted with ensuring protection of competition. In particular, it has powers to review transactions and grant or refuse clearance for mergers (concentrations). If the AMC refuses to approve a concentration, the Cabinet of Ministers of Ukraine may overrule that decision on public interest considerations (see Question 7).
See box, The regulatory authority.
2. What are the relevant jurisdictional triggering events/thresholds?
The Competition Law sets out the exhaustive list of transactions/events that are considered concentrations and may require prior merger clearance:
Ukrainian merger control rules define control as the ability to exercise decisive influence (including via blocking rights) on the strategic decisions related to the business activity of an undertaking. In particular, control is deemed to exist if an undertaking:
The following are not considered concentrations:
The limitation period for the authority to take action in relation to mergers is five years from closing.
A concentration is notifiable and requires prior approval by the AMC if in the financial year immediately preceding the year of the concentration either of the following thresholds is met:
Turnover or assets figures of non-controlling interests are not taken into consideration when determining the turnover or assets for the purpose of thresholds calculation.
Special rules apply to the calculation of thresholds for banking and insurance companies, as follows:
Even if a transaction falls below the thresholds, the parties can still apply for clearance on a precautionary basis.
3. What are the notification requirements for mergers?
The parties to the concentration must obtain the AMC's approval of the notifiable concentration before closing (see Question 2).
The law does not set any specific deadlines for filing a notifiable concentration. The only requirement is that AMC approval is obtained before closing. The exception is made for a case of a tender/bid process where a notifiable concentration should be filed within 30 days after a winner of a tender/bid is announced (this obligation was designed for Ukrainian privatisation procedures and may not be adaptable to public bids abroad).
Parties to a transaction may refer to the AMC for formal guidance (in the form of a non-binding preliminary opinion) on whether the concentration is notifiable, or whether the clearance is likely to be granted or refused.
The law does not provide for formal pre-filing consultations although informal pre-filing discussions are usually possible. The parties can request formal consultations with the AMC during the 15-day preview period (see Question 4).
The parties to a transaction are jointly responsible for notifying. However, the AMC may agree to accept a notification filed by one of the parties in the following circumstances:
The AMC is the relevant authority. However, if the AMC prohibits a concentration, it may still be approved by the Cabinet of Ministers on public interest considerations (see Question 7).
The parties must submit a written notification with the contents and annexes required under the Concentrations Regulation. There is no prescribed form of notification. The parties must also submit electronic versions of the notification and all documents attached to it (on CD).
The filing fee is UAH20,400 (approximately EUR670) per one notifiable event (there may be multiple events depending on the transaction structure) to be paid by either party.
The parties must suspend implementation of the transaction until the AMC clearance is granted. In addition, they must refrain from any actions that may restrict competition and make restoration of the initial state of affairs impossible (for example, through pre-clearance "gun-jumping"). This suspension requirement applies globally and the only exception to the rule concerns the tender/bid process (see Question 3).
4. What are the applicable procedures and timetable?
The standard merger review procedure includes the following steps:
If prior to or on the date when Phase I period 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, though the AMC does not normally clear by tacit consent.
The law also provides for the fast-track simplified 25-day review procedure for transactions where either:
For an overview of the notification process, see flowchart, Ukraine: merger notifications.
5. How much information is made publicly available concerning merger inquiries? Is any information made automatically confidential and is confidentiality available on request?
The AMC must publish non-confidential versions of the following documents on its website:
Currently, the AMC also publishes on its website a short note of the decision/resolution made (with the identity of the parties and the outcome) followed by publication of the non-confidential version of the relevant decision/resolution (see below, Confidentiality on request).
Automatic confidentiality does not apply to any information.
Confidentiality may be available to the parties on request. The parties must provide a grounded justification when applying for the confidentiality, as well as a non-confidential version of the information. If not satisfactorily justified, the parties' confidentiality request will be rejected by the AMC.
6. What rights (if any) do third parties have to make representations, access documents or be heard during the course of an investigation?
Third parties (for example, competitors and customers of the notifying parties) can be involved during the Phase II review if the notified transaction may significantly affect their rights and interests. The law is generally silent on whether and how third parties must show an interest in the transaction. The decision on their involvement is up to the discretion of the AMC. The law also does not distinguish between different classes of third parties with respect to the rights they have.
Third parties participating in an investigation have the right to access case materials, except for confidential information (see Question 5) and/or other information, disclosure of which may cause harm to the interests of the other parties involved or hinder further review of the case.
Third parties can submit their observations relating to, among other things, the notified transaction and its impact on the market. The AMC must take these observations into account when deciding on the case.
7. What is the substantive test?
The AMC approves the concentration if it does not lead to monopolisation (creating or strengthening the party's monopoly/dominant position) or substantial restriction of competition on the Ukrainian market or a significant part of it. Otherwise, the transaction will be prohibited unless the parties offer sufficient remedies.
If the AMC identifies the grounds to prohibit the transaction, it opens Phase II investigation (see Question 4).
Ukrainian competition laws define monopolistic (dominant) position and set out the relevant benchmarks, which are:
Each transaction is assessed on a case-by-case basis. Further, under the Guidelines on the Assessment of Horizontal Mergers and recently adopted Guidelines on the Assessment of Non-Horizontal Mergers, the AMC will investigate possible unilateral and/or co-ordinated effects of the transaction, as well as countervailing factors (such as buyer power, market entry, failing firm defence).
Even if the AMC prohibits the concentration, the Cabinet of Ministers may still permit it if its positive effects for the public interest outweigh the negative impact of the restriction of competition, unless that restriction:
8. What, if any, arguments can be used to counter competition issues (efficiencies, customer benefits)?
The Guidelines on the Assessment of Horizontal Mergers and the recently adopted Guidelines on the Assessment of Non-Horizontal Mergers clarify that the AMC will take the following countervailing factors into account:
The AMC can also take account of the transaction's potential to contribute to modernisation and rationalisation of production, purchase or sales, technical and product standards, promotion of technical, technological or economic development and so on.
If the transaction poses serious competition concerns, adequate remedies will be required.
Other efficiencies (such as the positive effects of the transaction on the public interest that outweigh the negative impact of the restriction of competition caused by the transaction) are likely to be taken into account by the Cabinet of Ministers, which may authorise a transaction that has been prohibited by the AMC (see Question 7).
9. Is it possible for the merging parties to raise a failing/exiting firm defence?
According to the Guidelines on the Assessment of Horizontal Mergers and the recently adopted Guidelines on the Assessment of Non-Horizontal Mergers, the AMC can take into account a failing/exiting firm defence.
However, in cases posing serious competition concerns, adequate remedies are likely to be required.
10. What remedies (commitments or undertakings) can be imposed as conditions of clearance to address competition concerns? At what stage of the procedure can they be offered and accepted?
The AMC clearance decision can be made conditional on the parties' undertaking to perform, or refrain from performing, certain actions aiming to remove or mitigate the negative impact of the concentration on the market competition, which may be either:
If during a Phase II review, the AMC identifies grounds to prohibit the concentration, it must inform the parties of these grounds and allow them 30 days (with possible extension) for offering remedies to resolve the competition concerns identified by the AMC, and therefore obtain clearance for the transaction. The AMC must also carry out consultations with the parties to agree on the terms and conditions of the remedies.
There are no comprehensive guidelines regarding the requirements for remedies, the only relevant requirements are that:
11. What are the penalties for failing to comply with the merger control rules?
The statutory maximum fine for failure to notify is 5% of the company's turnover worldwide in the year immediately preceding the year when the fine is imposed.
The fine can be imposed on the entire corporate group of the company whose actions or omissions have led to violation of the Competition Law. This allows the AMC to fine immediately any local subsidiaries of the parties and improves the AMC's chances of successfully collecting fines.
In practice, the fines are considerably lower. The Guidelines on Fines set the following base fines in merger cases:
When defining the "base" fine, the AMC can apply coefficients depending on the effect of the violation on competition, the social importance of the market involved, and profitability of the economic activity connected with the violation, which may lead to an increase or a decrease of the fine. Additionally, the above "base" amounts are subject to possible further adjustment for aggravating and/or mitigating circumstances.
Although the Guidelines on Fines have a recommendatory nature and are non-binding, the AMC is publicly committed to follow its rules. The statutory ceiling of fine of 5% of the turnover in the year preceding the fining decision remains in force.
In addition to the financial penalties, parties may be subject to any or all of the following negative implications:
Additionally, the AMC may more actively scrutinise future notifications submitted by either party.
As regards notifying incorrectly, the following may lead to a fine of up to 1% of the infringer's turnover in the year immediately preceding the year when the fine is imposed:
The Guidelines on Fines limit the "base" fine for the above informational violations to UAH136,000 (approximately EUR4,400). This amount is also subject to possible adjustment in the case of aggravating or mitigating circumstances.
There is no criminal or administrative liability for individuals, except that a state official, the CEO (or a top manager) may incur a nominal administrative fine if they fail to provide information to the AMC or provide incorrect or misleading information. However, an efficient mechanism for implementation of this norm has not been created to date.
Implementation before approval entails virtually the same liability as failure to notify at all. However, in practice, closing a non-problematic transaction before clearance but after the filing was made receives a more favourable treatment by the AMC than an omission to file. Closing after prohibition may entail more severe sanctions (see below, Failure to observe).
The statutory maximum fine for failure to observe the AMC decision prohibiting a concentration, or only partial compliance with it, is 10% of the party's worldwide turnover in the year immediately preceding the year when the fine is imposed. Under the Guidelines on Fines, the base fine for the above violations is 10% of the turnover on the relevant (and/or adjacent) Ukrainian market.
The statutory maximum fine for failure to observe the AMC clearance decision that imposes certain obligations on the parties to the concentration is 5% of their worldwide turnover in the year immediately preceding the year when the fine is imposed. Under the Guidelines on Fines, the base fine for this violation, if it results in monopolisation or significant restriction of competition, is 10% of the turnover on the relevant (and/or adjacent) Ukrainian market.
The base fine can be further increased or decreased, subject to the application of coefficients and the existence of aggravating or mitigating circumstances (see above, Failure to notify correctly).
In addition, the CEO (or a top manager) of the infringing party may be subject to a nominal administrative fine for failure to implement the AMC decision or its untimely implementation. However, an efficient mechanism for the implementation of this rule has not been created to date (see above, Failure to notify correctly).
12. Is there a right of appeal against the regulator's decision and what is the applicable procedure? Are rights of appeal available to third parties or only the parties to the decision?
Any AMC decision can be appealed by the parties or third parties within two months following the receipt of the decision.
Decisions of the AMC can be appealed to the commercial courts. The new procedural rules governing the review of the case in commercial courts entered into force in late 2017. Now, the consideration of cases in the first instance may last:
In practice, these terms are not always strictly adhered to due to the courts' heavy workload and insufficient personnel. In complicated cases, the timelines can be longer due to the additional time required for investigations, collection of documents and information, and so on.
Third parties can appeal an AMC decision (see above, Rights of appeal and procedure).
13. If a merger is cleared, are any restrictive provisions in the agreements automatically cleared? If they are not automatically cleared, how are they regulated?
Restrictive provisions, including ancillary restraints, such as non-compete or other negative covenants, are not automatically covered by the AMC merger clearance decision. They usually qualify as concerted practices and require a separate anti-trust clearance.
14. What industries (if any) are specifically regulated?
Some industry-specific requirements may apply. In particular, there are special rules for calculation of thresholds for banks and insurance companies (see Thresholds).
15. Has the regulatory authority in your jurisdiction issued guidelines or policy on its approach in analysing mergers in a specific industry?
There are no industry-specific guidelines or policy for the analysis of mergers in a specific industry.
16. How are joint ventures analysed under competition law?
Under the Competition Law, a joint venture may be considered a concentration or concerted practice, in which case the relevant general rules apply.
A concentration is notifiable and requires prior approval of the AMC if the relevant thresholds are exceeded (see Thresholds).
A joint venture is considered a concerted practice if it is established with an objective of, or results in, co-ordination of competitive behaviour of its parents or the joint venture, on one hand, and its parents, on the other. Such joint ventures require the AMC anti-trust (as opposed to merger) clearance prior to their establishment.
17. Does the regulatory authority in your jurisdiction co-operate with regulatory authorities in other jurisdictions in relation to merger investigations? If so, what is the legal basis for and extent of co-operation (in particular, in relation to the exchange of information, remedies/settlements)?
The AMC can co-operate with regulatory authorities from other jurisdictions, including by transferring the information to foreign competition authorities where the relevant international treaty exists. Confidential information can be provided to a foreign competition authority, but only if that authority:
The law does not expressly provide for co-operation relating to remedies or settlements.
18. What notable recent developments, trends or notable recent mergers or proposed mergers have been reviewed by the regulatory authority in your jurisdiction and why is it notable? Are there any statistics published on annual merger reviews conducted in the jurisdiction?
The key policy developments are:
The most notable recent merger cases in Ukraine include:
As regards publicly available statistics on merger review: in 2017 the AMC reviewed 666 merger notifications. Of these applications, 602 (90%) were cleared and 64 were rejected by the AMC or withdrawn by the parties. The vast majority of applications did not raise competition concerns and were cleared within Phase I. Phase II investigations were initiated in 11 cases (approximately 1.5% of the overall number of applications submitted to the AMC).
19. Are there any proposals for reform concerning merger control?
Current proposals for merger control reform concern the following:
In addition, the following issues may be raised in the nearest future (most likely in late 2018 or early 2019):
Description. This is the AMC's official website. The information is available in Ukrainian only.
Description. This website is maintained by the OECD and contains the Law of Ukraine on Protection of Economic Competition 2001 (Competition Law) and certain legislative acts in English. English translations are for guidance only and not up to date.
Head. Yuriy Oleksandrovych Terentyev (Chairman)
Contact details. 45 V Lypkivskoho Street
T +38 044 251 62 62
Outline structure. The AMC is the principal state authority entrusted with ensuring protection of competition in entrepreneurial activities and state procurement. It comprises the Chairman and eight State Commissioners. The AMC has territorial divisions and administrative boards. The central office of the AMC has a number of departments, sections and industry-specific working groups (for example, concentrations and concerted practices, unfair competition, state procurement).
Responsibilities. The AMC's responsibilities include:
Procedure for obtaining documents. The following are published on the authority's website: