Ukraine Clarifies Merger Review Process in Wartime (UPDATED: Guidance is Published – See More Details Below)

Following announcement (see our previous alert here), on 1 April 2022 the Antimonopoly Committee of Ukraine (AMC) published the guidance on merger control and antitrust review procedures while the martial law is in effect (Guidance). Below we outline its most important points and also provide Q&A for prospective filers.

General

According to the Guidance, the merger control and antitrust regimes remain in force and parties should file respective notifications to the AMC. The usual notifiabilty thresholds apply and there are no exemptions from the filing obligation.

The Guidance introduces minimum disclosure requirements to new filings, special procedure for their review, and clarifies possible fines for closing a transaction prior to clearance.

Minimum Requirements to New Filings

The notification must be filed not less than 15 calendar days before closing of the transaction and contain at least the following (in summary):

• information regarding the transaction, its structure, and expected effects;
• information regarding the parties, their activity, control structure, beneficiary owners, and information on any Russia-related parties or shareholders involved;
• documents: confirmation of payment of filing fee, powers of attorney or other documents of the signors.

The executed notification and accompanying documents should be filed in hard copy to the AMC’s office (currently located in Lviv, Ukraine). If parties are unable to file in hard copy, they can make submission electronically by sending the scan-copies of all relevant documents to AMC’s new email address.

Procedure for Review

The review of filed notifications will be suspended until the end of the martial law. Within 3 months after the martial law ceases to apply parties need to supplement their submissions with all other information and documents that are required under the Merger/Antitrust Regulation (to the extent these were not provided with the original notification). The AMC will resume the review after it received all the materials, but not later than 3 months after the end of the martial law.

Possible Fines

Because the AMC cannot arrange introduction of amendments to the Competition Law now, it is still required to impose fines for pre-clearance closing. Given that delays with the review and clearance are outside of control of the parties who would duly file notifications, the AMC will treat such cases leniently and cap fines for closing of non-problematic transactions (i.e., those not resulting in monopolization or significant restriction of competition) as follows:

• around EUR1,500 if parties filed during the martial law according to the Guidance;
• around EUR10,500 if parties did not file during the martial law.

Fines may be higher if misleading information is provided along with the notification. Also, the maximum fines (up to 5% of group’s turnover) will apply incases, where Russia-linked parties that supported the aggression are involved.

Q&A

Below we provide responses to some practical questions in relation to the Guidance that we most often receive from filers and their global counsel:

• Standard or fast-track procedure? The Competition Law provides that Phase I review may take up to 45 calendar days (in standard procedure) or up to 25 calendar days (in fast-track procedure). Considering that standard procedure notifications usually receive a more favourable treatment by the AMC than the fast-track ones, and that the main advantage of the fast-track (shorter review period) anyway becomes unavailable under the Guidance, it is generally recommended to file new notifications during the martial law under the standard procedure.
• Hard copy or electronic submission? The Guidance allows to submit hard copies to Lviv officeor send the scans by email. In the latter case parties may need to explain why they are unable to make a hard copy submission. It should also be noted that the AMC’s email address indicated in the Guidance (amcu.in@ukr.net) is hosted on the servers of a private third-party provider, thus, it may be less secure than authority’s own email at the governmental domain (currently inoperable). So, unless the parties have objective reasons to make an electronic submission (e.g., issues with delivery of documents because of military combats or otherwise), it is generally recommended to file in hard copy.
• Does the "tacit" clearance apply? Under the Competition Law, the clearance is deemed to be granted with the lapse of Phase I review period (25^th or 45^th day after submission, depending on the procedure), unless (i) the notification is rejected as incomplete during first 15 days after submission, (ii) the AMC issues formal (written) clearance before lapse of Phase I, or (iii) the AMC initiates Phase II. The Guidance, however, clearly shows authority’s intention to disregard possibility of such "tacit" clearance for new notifications filed during the martial law. Nevertheless, considering the Competition Law has the higher legal force than the Guidance, an argument that parties closed the deal during the martial law relying on "tacit" clearance should help keeping the potential fine at its minimum or, in the best case, avoid the fine at all. As regards the notifications that were filed before the martial law – the Guidance is silent on those. Though, it is quite broadly worded and potentially allows applying the same rules also to such cases.
• Do parties need to inform the AMC of closing if it happened before clearance? No. Though, the AMC may ask about it after the martial law ends.
• Can parties provide more info&docs with the filing than provided by the Guidance? Yes, the Guidance provides only for minimum requirements to new filings. Remaining materials, which are required by the Merger/Antitrust Regulation, may be filed either with the filing itself or as a supplement within 3 months after the end of the martial law. If complete set of the info&docs required by the respective regulation was filed from the start, then after the end of the martial law parties would need to update only those materials that have changed over time. Also, filing a complete notification that complies with all disclosure requirements under the Merger/Antitrust Regulation may (i) reinforce the argument that the "tacit" clearance rule should have applied, and (ii) allows to complete the submission at a stroke with no need of additional work afterwards. Still, the AMC has the right to request additional information when the review resumes.
• What cases are likely to attract highest fines? The Guidance says that higher fines are possible if parties provide false information and that the maximum fines will apply to Russia-linked transactions. Also, higher fines may be expected for closing without clearance of transactions that raise competition concerns (e.g., where Phase II review was warranted).
• Do notarization and apostille requirements continue to apply? Generally, yes. The Guidance says that it may be possible to deviate from certain obligations (including apostille and notarization) if there are objective reasons for this, which will need to be explained to the authority. However, the notarized and apostilled originals will nevertheless need to be filed after the end of the martial law.

• If parties don’t file during the martial law and pay the higher fine for that (up to ~EUR10,500) would they still be required to file after the end of the martial law? Yes, clearance requirement applies irrespective of whether a fine was imposed. The AMC will likely insist on parties making a filing and may threaten with even higher fines if they fail to do so. They used this approach in similar cases in the past.
• Is the statute of limitation for imposing fines suspended during the martial law period? No.

If you have questions, please contact Alexey Pustovit, Igor Svechkar or Pavlo Verbolyuk.