Permission of the Antimonopoly Committee

The AMCU's permit for concentration

In order to prevent unfair competition in the market, a business entity must apply to the Antimonopoly Committee for a merger clearance if its turnover reaches certain statutory limits.The AMC is the only government agency that is responsible for ensuring state protection of competition in business and monitoring compliance with the law.

The main legal acts that define the cases when the AMC must be applied for a special permit for concentration are the Law of Ukraine "On Protection of Economic Competition" dated January 11, 2001 and the Regulation on the Procedure for Submitting Applications to the AMC of Ukraine for Preliminary Permit for Concentration of Business Entities, approved by the AMC of Ukraine Order No. 33-p dated February 19, 2002.

Concentration without the AMC's approval, where necessary, results in fines of up to 5% of the income (revenue) from sales of products for the last reporting year.

Pursuant to Article 22 of the Law, concentration is a direct or indirect acquisition, acquisition in another way or obtaining control over shares (stocks, units) that ensures achievement or exceeding 25 or 50% of votes in the supreme management body of a business entity.
Art. 24 of the Law defines the following value indicators that indicate the need for a permit

• the aggregate value of assets or the aggregate volume of sales of goods of the concentration participants, taking into account the control relationship for the last financial year, including abroad, exceeds the equivalent of EUR 12 million, and - the aggregate value of assets or the volume of sales of goods, including abroad, of at least two parties to the concentration, taking into account the control relationship, exceeds the equivalent of EUR 1 million for the last financial year preceding the concentration, each, and
• the aggregate value of assets or the volume of sales of goods in Ukraine of at least one party to the concentration, taking into account the control relationship, exceeds the equivalent of EUR 1 million for the last financial year preceding the concentration;
• regardless of the total value of assets or total sales of goods of the concentration participants, the share in a certain market of goods of any concentration participant or the total share of concentration participants, taking into account control relations, exceeds 35% and the concentration takes place in this or adjacent to it market of goods (clause 2, part 1, article 24 of the Law).

Practice shows that these indicators are currently objectively unreasonable for Ukrainian realities - while in the European Union they are set depending on the level of annual GDP and amount to 0.05%, in Ukraine such a ratio will be achieved only if the total value of assets (total sales of goods) is set at EUR 50 million.

Important.

The parties to a concentration (Article 23 of the Law) are business entities whose shares (stocks, units) are acquired, received for management (use) or are to be acquired, and their buyers (recipients), purchasers, i.e., they may be non-residents. This remark serves as a basis for applying for the AMC's permit in the case of similar transactions outside Ukraine, and by non-residents, if there is an effect on the Ukrainian economy.

The AMC's permit is not required in the following cases:

• Establishment of a business entity, the purpose or result of which is to coordinate competitive behavior between the business entities that established it or between them and the newly established business entity. Such establishment, as well as amendments to the constituent documents on the basis of which business entities are established, are considered concerted actions (Article 5 of the Law);
• acquisition of shares (stocks, units) in a business entity by a person whose main activity is financial or securities transactions, if this is done with the purpose of their subsequent resale, provided that the said person does not participate in voting in the supreme body or other governing bodies of the business entity - the subsequent resale must be made within one year from the date of acquisition of shares (stocks, units);
• actions carried out between business entities related by control relations in the cases stipulated by clause 2.1 of Regulation No. 33-r, except for cases of acquisition of such control without obtaining the AMCU's permission, if provided for by law;
• Acquisition of control over a business entity or a part thereof, including through the right to manage and dispose of its property by an insolvency officer, official or official of a public authority.

Important

The requirements for the content of the application to the AMCU for the issuance of a permit and the list of documents are set out in the Regulation No. 33-r dated February 19, 2002. It is very important that they contain complete and accurate information, as the applicant is liable under Article 52 of the Law for submitting false information. Particular attention should be paid to the requirements for a power of attorney for a representative and the accuracy of calculations, as the AMC always takes an individualized approach to the analysis of documents and, unfortunately, does not always interpret the law unambiguously.

Only highly qualified specialists in the field of antitrust law can properly prepare a package of documents, foreseeing possible controversial issues during their consideration by the Antimonopoly Committee, so it is worth contacting our company. If the concentration does not lead to monopolization or significant restriction of competition, we are confident that we will be able to provide you with the AMCU's merger clearance.

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