3.1. Transactions subject to approval

The following types of transactions, subject to certain conditions, can be recognized as economic concentration:

1. re-organization of a market entity by way of merger or accession;
2. purchase by a person of voting shares (participatory interests, equity positions (hereinafter, when reference is made to shares, it implies participatory interest or equity position)) of a market entity, whereby such person obtains a right to dispose of more than 25% of shares, if prior to such purchase such person disposed of no shares or of 25% or less shares of the said market entity;
3. entering by a market entity into ownership, possession and use, including on account of payment (transfer) of the charter capital, of fixed production assets and/or intangible assets of another market entity, if the book value of the property constituting the subject of transaction (related transactions) exceeds 10% of the balance value of the fixed production assets and intangible assets of the market entity that alienates or transfers the property;
4. acquisition by a market entity of rights (including under a trust management agreement, joint operating agreement, or agency agreement), permitting to issue binding instructions to another market entity in the course of such entity's carrying out entrepreneurial activities, or to perform the functions of such entity's executive body;
5. participation of the same individuals in executive bodies, boards of directors, supervisory boards or other management bodies of two or more market entities, provided that the said individuals define in such entities the conditions of carrying out their entrepreneurial activities.

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3.2. Approval / notification thresholds

Application for the Agency's prior consent is required in cases where the aggregate book value of assets of market entities (group of persons) under re-organization or the purchaser (group of persons), as well as the market entity, whose shares are to be purchased, or their aggregate volume of sales of goods for the past financial year exceeds two million monthly calculation indexes as of the date of application submission (at the time of this review preparation, this amount is approximately US$20,572,000), or where one of the persons participating in the transaction is a market entity holding a dominant or monopolistic position on one of the RoK commodity markets. The aggregate volume of sales of goods is defined as the amount of income (proceeds) from the sale of goods for the past financial year, less value added tax. Separate criteria are established for transactions consummated by financial organizations.

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

As mentioned above, all provisions of the Law on Competition relating to market entities apply to groups of persons.

A group of persons is understood as an aggregate of individuals and/or legal entities satisfying one of the following conditions:

1. a person has the right to directly or indirectly dispose of more than 25% of voting shares in the charter capital of a legal entity;
2. a legal entity or a number of affiliated legal entities have the authority to influence decisions taken by another person, including the opportunity to determine the terms and conditions of such person's entrepreneurial activities, or to exercise the powers of its management body;
3. an individual, his spouse, or close relatives are in a position to influence decisions taken by another person, including the terms and conditions of such person's entrepreneurial activities, or to exercise the powers of its management body;
4. persons, who are in a group with one and the same person on any of the grounds listed above, and other persons, who are in the same group with each such person on any of the said grounds.

The above definition and criteria allow for the authorized agency to construe the concept of a "group of persons" as broadly as possible, which enables demanding the provision of full information when preparing application for consent to an economic concentration (the application).

There is a concern regarding a proper legal definition of the concept of "market entities," which includes individuals and legal entities of the RoK, as well as foreign legal entities (their branches and representative offices) carrying out entrepreneurial activities. Even though foreign individuals and certain formations that do not possess the status of a legal entity are not covered by the concept of market entity, when preparing the application, it is required to provide documents with respect to such persons as well.

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3.4. Exceptions from transaction approval requirements

Requirement for prior approval of transactions by the Agency does not apply to:

1. acquisition of a market entity shares by financial organizations, if such acquisition is made with the purpose of further shares resale, provided, however, that the said organization does not participate in the voting in management bodies of such market entity;
2. appointment of rehabilitation manager, receiver in bankruptcy, or temporary administration;
3. consummation of the above transactions within the same group of persons.

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3.5. General approval procedure

Pursuant to the legislation, application for consent to economic concentration must precede the consummation of transaction.

The duty to apply for consent to economic concentration lies with the buyer under the transaction; no state duty is charged.

Due to unclear definition of the documents and information required for the application preparation, and broad interpretation of the concept of a group of persons, the Agency requests a maximum scope of information on all entities on the same group of persons with the buyer, up to the ultimate individual beneficiary. In case it is impossible to provide full information, a forecast or estimate information is to be provided. Confidential information is to be provided appropriately marked as such.

The total period for review of the application by the Agency is 60 calendar days. The grounds for suspension of review and appropriate extension of the said period are also provided for.

The review of application is a closed procedure. Pursuant to the legislation, third parties may be involved in the review of application, in case the Agency's decision can affect their rights and interests.

Upon review of the application, the Agency may issue a decision on consent to economic concentration or on its prohibition. The Agency's consent may be subject to the economic concentration participants' meeting certain requirements or performing certain obligations. The Agency has the right to issue consent to economic concentration, even if such concentration will result in the establishment or strengthening of the market entity's dominant position or a restriction, in case the participants of economic concentration prove that the positive effect of their actions will supersede the negative implications on the commodity market. In certain cases the Agency may reverse its decision.

Economic concentration must be implemented within one year from the moment of obtainment of the consent; otherwise, a new application is to be submitted.

In some cases, certain actions of authorized agencies depend on the Agency's decision on economic concentration. For instance, state registration and re-registration of market entities and rights to immovable property, may in certain cases be performed only with the consent of the Agency; otherwise such actions may be invalidated upon a claim from the Agency.

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3.6. Implications of a failure to obtain approval

Economic concentration without obtaining the Agency's consent and failure to meet the requirements and perform the obligations, which conditioned the decision to issue consent to economic concentration, entail an administrative fine up to US$20,500.

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