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9 April 2021

Merger control in Ukraine: 2020 highlights

Traditionally, in March 2021, the Antimonopoly Committee of Ukraine (the “AMC“) issued its Annual Report for 2020 (the “Report“) presenting summary and statistics of the AMC’s activities last year. The Report illustrates examples of the most extraordinary cases and highlights important upcoming trends of the competition policy for Ukraine.

Overall, 2020 turned out to be a dynamic year for the AMC.  Introduction of the new practices, high fines imposed on both international and local players and further harmonisation with the EU principles were just a few issues that kept it busy.

An additional challenge emerged in 2020 for both business and the AMC that was impossible to predict. Similar to other countries, COVID-19 pandemic and quarantine restrictions had its effect on the AMC and the competitive environment in Ukraine. While the work of many authorities suffered during the pandemic, the AMC managed to operate more or less smoothly without significant interventions in general. In light of this, the AMC also actively advocated the principles of fair competition in the markets most vulnerable to the pandemic.

The below overview is devoted to the AMC’s key 2020 practices and trends in merger control and concerted (non-compete) practice in the upcoming future.

Merger control

2020 featured enhancement of the new trends both in the worldwide and Ukrainian economies, including the field of mergers and coordination of joint activities.

Noteworthily, despite the COVID-19 pandemic the AMC’s merger control departments worked at full pace in 2020 without any significant delays.

Number of merger filings has increased, as compared to 2019. The AMC reviewed 602 merger filings in 2020. Local companies took the lead and filed 379 applications, while the foreign applicants have submitted 223 applications to the AMC, which creates 37 per cent of the overall number. Ratio of foreign merger applications in 2020 slightly increased (in 2019 the number of applications from foreign undertakings amounted to 34 per cent).

Out of 602 concentration notifications submitted to the AMC:

  • 581 were for approval of concentrations
  • 21 were for preliminary conclusions (the AMC’s preliminary conclusion clarifies whether a particular transaction requires notification under the circumstances described by the parties and is becoming ever more popular)

The total number of mergers finally approved by the AMC in 2020 was 477, against 439 in 2019. According to the Report, 104 out of 602 notifications were returned as incomplete.

In 2020, the most common types of concentrations were: (i) acquisition of shares (72.5 per cent), (ii) acquisition of control (16.1 per cent) and establishment of joint ventures (2.7 per cent). Other types of concentrations (which cover asset deals, including lease deals) has doubled as compared to 2019.

Interestingly, the majority of  the notified mergers (87.4 per cent) were cleared within Phase I.

Number of Phase II investigations slightly decreased, as compared to 2019. In 2020, the AMC reviewed 18 cases within Phase II, all of them were approved by the AMC. 10 of such cases resulted in granting conditional clearances.

As to the merger notifications review procedure:

  • ~ 58 per cent (275 applications) were reviewed under the regular review procedure
  • ~ 39 per cent (184 applications) were reviewed under the fast track, which is 4 per cent more than in 2019 and
  • ~ 4 per cent (18 applications) were reviewed under the Phase II, which is 1 per cent less than in 2019

In 2020, within merger control the most popular areas under the AMC’s review were:

  • industry (20.3 per cent of approvals)
  • agriculture (18.2 per cent of approvals)
  • transport (13.8 per cent of approvals)
  • land and real estate (8.6 per cent of approvals)
  • other markets (20.4 per cent of approvals)

The AMC also reviewed three relatively “new” processes for the Ukrainian merger control area in 2020, in particular:

  • privatisation of state and communal property (mainly, in distilling industry)
  • concession of state property (for instance, seaports) and
  • digitalisation of economic activities (informatisation and integration of digital solutions into economic activity by product manufacturers and service providers)

Sanctions for failure to notify

In 2020, the AMC has imposed a number of relatively high fines for failure to notify reportable transactions in Ukraine, inter alia:

foreign-to-foreign transactions, e.g.:

  • a fine amounting to approx. EUR 30,972 was imposed on Element Solutions Inc (Platform Specialty Products Corporation) (Fort Lauderdale, USA) for acquisition of shares in Percival SA (Brussels, Belgium) and Arysta LifeScience Limited (Ireland). The concentrations took place on the market of plant protection products;
  • a fine amounting to approx. EUR 15,486 was imposed on Limedell Limited (Nicosia, Cyprus) for acquisition of less than 50 per cent of shares in Northwalk AB (Malmö, Switzerland). The concentration took place on the market of commercial real estate within the city of Kyiv;

transactions, which were conducted in Ukraine, e.g.:

  • a fine amounting to approx. EUR 36,438 was imposed on an individual for acquisition of 50 per cent of shares in Agrosem LLC. The concentration took place on the market of wholesale trade in mineral fertilisers, seeds, agricultural machinery;
  • a fine amounting to approx. EUR 7,743 was imposed on International Airport Dnipropetrovsk LLC for acquisition of control over Aviation Company Roza Vitriv LLC through appointment of an individual acting as the General Director of International Airport Dnipropetrovsk LLC to the position of Deputy General Director – Chief Financing Officer (part-time) at an Aviation Company Roza Vitriv LLC, without obtaining prior approval for concentration. The concentration took place on the markets of ground handling services for aircraft and passengers, cargo handling and terminal services.

Concerted (non-compete) practices

Number of applications for the approval of concerted practices has not changed significantly, as compared to 2019.

In particular, in 2020 the AMC has reviewed 70 concerted practices applications, 63 of which were approved. By comparison, in 2019 the total number of such applications constituted 68, 62 have been approved.

7 out of 70 concerted practices notifications were returned in 2020 due to incompleteness of the information submitted by the applicants.

In 2020, the AMC also provided 11 preliminary conclusions related to the proposed concerted practices.

The most common types of concerted practices notified in 2020 were: (i) any agreed behaviour, including non-compete (activity, inactivity) of undertakings (57.1 per cent); and (ii) concluding agreements in any form (39.7 per cent).

60 concerted practices applications were approved by the AMC without in-depth Phase II analysis and imposing any additional remedies on the applicants.  Only three further investigations were launched by the AMC due to availability of certain grounds for prohibiting concerted practices or conducting an in-depth Phase II research.

The most popular sectors of the concerted practices notified to the AMC in 2020 were:

  • industry (14,3 per cent of approvals);
  • life Science & Healthcare (9,5 per cent of approvals);
  • transport (9,5 per cent of approvals);
  • agriculture (7,9 per cent of approvals);
  • other markets (55,6 per cent of approvals).

Please contact Vladimir Sayenko, Maksym Nazarenko or Valentyna Hvozd for any questions and clarifications.

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