Ukrainian competition regime: update and priorities for 2023
When the war started in February 2022, the Antimonopoly Committee of Ukraine (the “AMC“) faced unprecedented challenges to continue its operations and maintain control over competition law enforcement. After a short period of chaos, by June 2022 the AMC managed to restore its full-scale activity.
Now, the AMC is already thinking how to preserve competition environment post war and implement best international practices. According to Olga Pischanska, the AMC’s Chair, “as the result of war, the markets have transformed substantially. And we can only assume what they will look like after the war ends. At the same time, there is already an understanding that many of them will not be rebuilt on the old foundation but will be recovered based on the new technological standards. For this reason, we are focusing our attention on those areas that will play key role in the process.”
At its final year-closing panel in December 2022, the AMC identified the following priority markets and areas of concern for 2023:
- banking and financial services;
- energy markets (electricity supply and natural gas);
- fuel (light petroleum products);
- construction materials; and
- privatization of state property via public tenders.
Based on recent AMC’s activities and stated priorities, we observe the following trends:
Merger control review
- No excuses for failure to notify. Merger control review is conducted in the ordinary course, similarly to pre-war times. In the absence of any exemptions in the law, the AMC expects all transactions that trigger existing financial thresholds to be submitted and approved in time prior to closing.
- Merger control 2022 in numbers. Thenumber of merger filings decreased insignificantly. In 2022, around 600 applications were submitted which is close to 2021 figure (683). Exact statistics will be available after the AMC releases its annual report around April 2023. Notably, around 150 applications were submitted by a single state-owned applicant, while around 450 (75%) were filed by applicants from the private sector.
- Review process is efficient. Based on our own experience, less than 10% of applications were rejected as incomplete and required refiling, which is less than in 2021. No repeated refilings were necessary. In-depth investigations (Phase II) were rare and did not last long. Case handlers try to be efficient and less formalistic. Delays can be expected if sanctioned persons or other Russian businesses are involved.
- Review timeline. The AMC observes statutory time limits and does not fail to meet deadlines. Regular Phase I review takes 45 calendar days, expedited lasts 25 calendar days but is less common.
- Seller attribution rule. The AMC continues lobbying amendments to the law that would cut out the seller’s turnover from the threshold calculation. The draft law is still at the Parliament under review. While other priorities for the parliamentarians arise daily, there are high chances that the draft law may be passed in the first half of 2023. Until then, the seller’s turnover should not be abandoned from the analysis process.
- Fines. The AMC announced the intention to increase the level of fines for transactions that have or could have impact on Ukrainian markets. Fines for transactions with no effect on local markets are likely to remain relatively low. Fines for sanctioned persons or other Russian businesses are likely to be close to maximum.
- Additional attention to priority markets. The AMC is likely to put mergers on the above mentioned priority markets under tighter scrutiny. Investigations into these markets can also be expected. Both local players and subsidiaries of international companies active on prioritized markets in Ukraine should expect market probe RFIs and additional attention to their day-to-day operations.
Control over state aid has also been named as one of AMC’s top priorities for the upcoming year. The agency’s focus on compatibility of state and municipal aid offered during wartime has been an important and resource-consuming task over the last year, while its practice in the area has developed to a relatively high standard, at least pre-war.
Cooperation with other competition agencies
The AMC proclaims further expansion of its cooperation with European NCAs and other competition agencies across the world. In addition to the ongoing Twinning program, an increase of one-to-one exchanges with other competition agencies is expected. This means that applicants to mergers notified in Ukraine should be prepared for open exchange of data they were notifying in other jurisdictions, making the filings more aligned. Procedural and substantial approaches trailblazed by prominent competition agencies such as the European Commission, FTC, CMA, Bundeskartellamt, and others, are also expected to be employed by the AMC, at least to certain extent.
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Without a doubt, the AMC has shown to the world its unbreakable will for victory and preserving its functionality despite the circumstances, as well as its readiness to face new challenges post war.