3.1. Transactions subject to approval

Transaction Types falling under Local Merger Control Rules

The following transactions may require prior merger clearance:

1. merger or consolidation of a business entity;
2. acquisition of direct, or indirect, control over a business entity, by means of:
   • acquisition of the title to assets comprising the integral property complex or its part (structural subdivision), as well as the rent, lease, concession or acquisition by other means of the right to use such assets, including the acquisition of such assets from a business entity being liquidated;
   • appointment/election to the senior management position of an individual who already holds a similar level position in another legal entity;
   • actions resulting in the cross-over of more than half of the members of the supervisory board, management, or another supervisory or executive body of two or more business entities;
3. establishment of a business entity, a JV between two or more business entities that are independently engaged in business activity for an extended period of time, provided that establishment of such JV is not aimed at, and shall not result in, the coordination of competitive behaviour (a) of its founders; or (b) of the legal entity and its founders; and
4. direct or indirect acquisition, obtaining ownership of, or management over, the shares (participating interest) of the business entity, if such acquisition results in the obtaining of over 25 % (but under 50%) or 50% (or more) of the voting rights of the target business entity.

Are there any industries specifically regulated?

The thresholds are the same for all markets in Ukraine. No specific sectoral requirements, including specific procedures for transactions in particular sectors, are established under the laws of Ukraine.

Are all JVs notifiable if the relevant thresholds are met?

According to Ukrainian law, a JV is subject to merger control if: (a) two or more entities jointly set up a unit of business activity; and (b) the relevant turnover thresholds are satisfied; and (c) setting up a business unit does not result in the coordination of competitive behaviour between the founders of the business unit or between these founders and the business unit itself. In case the incorporation of a JV aims at (or results in) the coordination of competitive behaviour (a) of its founders or (b) of the legal entity and its founders, under Ukrainian law it is considered to be a concerted action requiring the prior approval of the AMCU.

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3.2. Approval / notification thresholds

Prior approval of a business concentration is mandatory where:

1. • the combined worldwide total asset value or aggregated sales turnover for the last financial year of all participants in the concentration, taking into account their relations of controls, exceeds €12 million; and
   • the worldwide total asset value or aggregated sales turnover for the last financial year of at least two individual participants in the concentration, taking into account their relations of controls, exceeds €1 million; and
   • the total asset value or total sales of goods in the Ukraine for the last financial year of at least one individual participant in a concentration, taking into account its relations of controls, exceeds €1 million.

   Or, irrespective of the above thresholds,

2. One or all the participants of the concentration-together with controlled or controlling entities have a market share which exceeds 35% of this or an adjacent product market.

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3.3."Groups" and "intra-group deals"

The transaction between business entities associated by relations of control is not subject to prior approval, provided that the relations of control were initially established in accordance with the requirements of Ukrainian antitrust legislation. A group of companies is a group controlled by one holding company. Control usually implies holding more than a 50% shareholding, or control through managing bodies (e.g. the same person occupies CEO position in two companies), or control through agreements.

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3.4. Exceptions from transaction approval requirements

The following transactions are exempted from the prior approval of the AMCU:

• acquisition of shares (participation interest) of a business entity by an entity (person) whose principal business is the performance of financial or securities operations, provided that such acquisition has been made with a purpose of subsequent resale of the above shares; and that such entity has voting rights in the governing body; and that the shares are to be resold within one year after their purchase;
• acquisition of control over a business entity or its division, including the right to manage and to administer the property of such business entity, by an appointed receiver in bankruptcy proceedings or by a State official.

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3.5. General approval procedure

Is notification mandatory or voluntary?

If a transaction falls within the parameters of an economic concentration that requires clearance, the parties must file an application with the AMCU requesting its prior approval of the transaction. The transaction cannot be completed before the AMCU issues its approval.

When should AMCU be notified of a transaction?

A complete notification must be submitted to the AMCU no more than one year, and no less than 45 calendar days, prior to a transaction. In practice, it is advised to file a notification several months in advance.

Is it possible to obtain formal or informal guidance before notification?

The subjects of economic activity may, at their own discretion, apply to the AMCU to obtain a preliminary determination on the planned concentration. Consideration of such application takes one month. Obtaining a preliminary conclusion does not release the parties from having to apply to the AMCU for granting a formal merger clearance approval. The fee for such application is UAH 3,740 (approx. €346).

Who should notify?

Any party to a transaction can file the notification. However, the usual procedure is for the acquirer and the seller, or their parent companies, to jointly file the notification. Any participant in a transaction can file the notification, because the AMCU approves transactions in general, rather than approving any given participant's role in a transaction. Current practice is that the acquirer usually files; less often, the acquirer and seller, or their parent companies, file jointly.

What form of notification is used?

Recently the AMCU has changed the procedure for submission of applications for the clearance of concentrations and concerted actions by introducing an electronic filing system. Under the amended procedure, the application and all supplementary documents should be submitted to the AMCU both in hard copy and in electronic format. Failure to submit the application in electronic format amounts to sufficient grounds for a refusal without any obligation to consider its substance.

Is there a filing fee? If so, what is it?

There is a filing fee of UAH 5,100 (approximately €490).

Is there an obligation to suspend the transaction pending the outcome of an investigation?

The transaction cannot be completed worldwide before the AMCU grants its approval. Ukraine cannot be severed in terms of clearance, i.e. it is not permissible to complete the transaction everywhere in the world except for Ukraine, where the completion occurs after the AMCU permit is granted. Until clearance is obtained, the parties can only enter into a binding agreement if it contains a condition precedent whereby the transaction can only proceed after the AMCU has given its prior approval.

Scope of information to be disclosed

An application shall contain a brief description of the transaction, a request to the AMCU to grant a prior approval thereto and several special forms that must be filled in. These contain information on the parties, their managing bodies, the amount of sales in, and share of, Ukrainian markets, a detailed description of the economic concentration, including its financial aspects, information about shares, assets, time frames, etc. These forms include:

• Information about the parties to the concentration, their control relations, corporate groups to which they belong and their ownership interests in other companies; a detailed description of the transaction; vertical and horizontal relationships concerning the goods the parties manufacture; financial aspects of the concentration; a calculation of the aggregate values of the parties' assets and aggregate sales in the last fiscal year; and market share calculations.
• Information about the parties' principal activities in Ukraine.
• Lists of members of supervisory councils or other managing bodies who serve as directors, deputy directors and chief accountants of the parties, and of other individuals affiliated with the parties.
• Lists of individuals who are spouses, parents, children or siblings of members of the parties' management who are authorized to vote in the supreme management body.
• Foundation documents and certificates of registration (excerpts from trade/court registers) for all parties.
• Balance sheet of the acquirer for the most recent reporting period.
• Feasibility study of the transaction.
• All transactional documents (i.e. an agreement with a condition precedent concerning the AMCU's prior approval, or a draft agreement with or without such condition precedent, and any other relevant documents).
• Bank confirmation that the state fee for reviewing the application has been paid.
• Other specific documents that the AMCU requests to be provided, which depend on the nature, type and specifics of the concentration. The AMCU has the right to request any documents or information that it deems necessary.

Stages of merger clearance procedure timetable

Normally, the duration of the review procedure is up to 45 calendar days after filing the notification with the AMCU (the "45-day procedure"). This term can be split into two main stages:

1. The first 15 days – the AMCU decides whether to accept the application (it checks whether all relevant documents have been filed, and all formalities observed) and then
2. The next 30 days – the AMCU considers the application on its merits and decides whether to grant its approval.

If a transaction is very complex/unclear, or if it requires expert evaluations, or there is a risk that competition can be negatively affected, the AMCU may request additional documents/information from the parties and initiate a "case on economic concentration" (the "in-depth procedure"). In this case, clearance may take up to a total of three calendar months beginning from the date when the parties provided the AMCU with all additional documents.

If the AMCU refuses to grant its approval, the parties have the right to appeal to the Cabinet of Ministers of Ukraine to grant the approval. go to top

3.6. Implications of a failure to obtain approval

What are the penalties for Implementation before approval?

Fines of up to 5% of revenues from sale of products (goods, works, services) for the past fiscal year of all participants to the concentration including their groups may be applied. If the revenue cannot be determined or the violator does not provide authorities with the details of its revenue, then the fine is imposed in amount up to 10,000 times of the non-taxed lowest income of individuals, i.e. 17 UAH X 10,000 = 170,000 UAH (approx. €16,200) or it can be calculated on the basis of other sources of information to which the AMCU has access.

In addition to imposing fines, the AMCU is authorized to oblige the parties to eliminate the negative consequences (losses) of the failure to obtain prior merger clearance, in case there are any.

A transaction which is closed without merger clearance with the AMCU is legally binding on the parties. However, the AMCU may apply to the court in order to recognize the transaction as invalid if the aforementioned transaction has adversely affected/may adversely affect competition in Ukraine.

What are the penalties for failure to notify correctly (incomplete notification)?

If the parties do not present all documents/information required by law, the AMCU (during the first 15 calendar days after the filing) can ask the parties to present such documents/information without stopping the clock. However, if the parties ignore this request, the AMCU has the right to refuse to accept the notification. In this case, the parties will have to prepare a new notification.

In this case, the fine is imposed in amount of up to 1% of the annual revenue of the relevant party's entire group of companies.

If the incomplete or misleading information materially affects the AMCU's previous findings, the AMCU can cancel its prior approval and initiate an "in-depth procedure". Then it can either confirm its approval or cancel it. In the latter case, the AMCU can demand that the parties terminate the transaction contract. If the incomplete or misleading information is not material, the AMCU can collect the fine, but permit the transaction to proceed without any other negative consequences for the parties.

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