Verkhovna Rada Proposed to Revise Efficiency of Economic Concentration Control

On 12.11.2015 Ukrainian Parliament approved in principle the Draft Law № 2168а as of 25.06.2015 «On Amendments introduction into the Law of Ukraine "On Economic Competition Protection" (regarding the improvement of control over economic concentrations)».

The Draft Law revised the requirements to eligibility for concentration. In particular, it has been proposed to substantially increase the maximum figures, the exceeding of which shall result in obligatory authorization.

In view of the abovementioned the Draft Law provides for implementation of two-tier model of concentration control:

• The first tier targets the control over concentrations of large Ukrainian companies with the total annual turnover or value of assets (of at least two companies) in Ukraine exceeding EUR 4 million, while their total turnover or assets value in the world exceed EUR 30 million;
• Another tier exercises control over the concentrations comprising of Ukrainian enterprises taken over by foreign companies with a worldwide turnover of more than EUR 100 million, and with a sales volume in Ukraine exceeding EUR 8 million (the value of assets is not considered).

Another novelty of the Draft Law is the simplified consideration of the concentration authorization application within 25 days after the application submission (instead of currently designated 45 days). Such simplified procedure may be applied only in exceptional cases:

• Only one concentration participant conducts business activities in Ukraine, or
• Joint partnership interest in concentration at the same goods and geographical market does not exceed 15%, or
• The shares or joint partnership interests of concentration participants operating in higher or lower level markets, in comparison to any other participants’ market, does not exceed 20%.

Moreover, the provisions of the Draft Law specify the AMCU decision making procedure for the concerted actions and concentration permission. In particular, it was proposed to bind the AMCU to provide the permission for the concerted actions and concentration if there are no grounds for their prohibition.

The Draft Law specifies in details the AMCU actions when there are sufficient grounds for the concerted actions and concentration prohibition. In such cases AMCU shall notify the participants and designate the term for participants’ proposals on their liabilities to eliminate the negative impact of the concerted actions on the competition. Upon fulfillment of these liabilities the AMCU will be able to provide the permission for the concerted actions and concentration. Herewith, these proposals should be negotiated between the participants and the AMCU in the course of joint consultations.

It is worth to mention that the applicable part 2 article 31 of the Law of Ukraine «On Protection of Economic Competition» sets forth the requirements and obligations for the participants in order to obtain the permission for the concerted actions and concentration. At the same time, this Law does not bind the AMCU to provide explanations for the prohibition of the concerted actions and concentration, to designate the term for proposals submission by the participants, and to conduct mutual consultations aimed at negotiation of the corresponding proposals.