The Antimonopoly Committee of Ukraine (AMC) remains inclined to solve one of the key concerns of the Ukrainian merger control regime: to cut the sellers off from the merger control notifiability thresholds. The exclusion of sellers from the calculation of filing thresholds has been widely expected by the business on mostly international and, to a certain extent, local levels for more than a decade and was one of the most long-awaited changes to the Ukrainian merger control regime by the AMC’s new leadership.
On 13 December 2018, the AMC made a draft proposal of changes to its Regulation on Concentration (Amendments) available to the public. It is proposed to exclude the turnover of a controlling seller or controlling sellers when assessing whether the merger filing thresholds are met. In particular, the Amendments suggest not to take into account the turnover of a controlling seller when calculating the target’s turnover for certain types of concentrations such as, for example, (i) the acquisition of shares allowing the acquirer to exceed 50% of votes in the target’s highest governing body (e.g. Board of Directors) and (ii) the acquisition of assets amounting to a going concern.
The Amendments represent a major step forward in aligning Ukrainian merger control rules with the approaches taken in Europe. However, they raise a number of ambiguities and may require thorough attention from the merging parties. A brief analysis of the Amendments shows that in a number of scenarios where, e.g., the purchaser acquires control over the target through an acquisition of 50% shares or less, the seller figures would still need to be taken into account despite losing control over the target. Moreover, the Amendments fail to introduce any changes to calculating the value of the target’s assets (which is a separate financial threshold that is compulsory when assessing whether a transaction is notifiable in Ukraine).
The actual efficiency of the Amendments will be assessed upon adoption of their final wording, as well as their further enforcement by the AMC. Nevertheless, the introduction of the Amendments aims to ease the filing burden for the parties in cases where deals have no or only minimal local effect and should in any event be treated positively.
It is expected that the Amendments will be subject to public consultation and discussion until 3 January 2019. Although the AMC has formally launched the “exclusion of the seller’s turnover” initiative, it remains unclear when the Amendments will enter into force. This is because their approval depends on various factors and is currently subject to public debates and, not least, to consent from the Ministry of Justice of Ukraine.
Given the significant interest to this topic, we will follow up on any notable developments. Please feel free to contact Vladimir Sayenko, Maksym Nazarenko, or Valentyna Hvozd for any further questions.