The merger of undertakings or the takeover of one undertaking by another;
The acquisition (directly or through other entities) of control over other undertakings, or parts thereof, by means of, among other things, the following:
Any other direct or indirect acquisition of, or acquisition of control over, shares which grant the holder 25% or 50% of the voting rights in the highest managing body of a particular undertaking (stock purchase).
- the direct or indirect acquisition, or acquisition through asset purchase, of ownership of an integral complex of assets or a structural subdivision of an undertaking; or the acquisition of the right to use assets in the form of an integral complex of assets or a structural subdivision of an undertaking through management, lease, rent, concession or any other means, including acquisition of assets of an undertaking in liquidation;
- the appointment or election of a person as the head or deputy head of the supervisory board, the executive board or other supervisory or executive bodies of an undertaking, if that person already occupies one or several such positions in other undertakings; or the creation of a situation where more than half of the positions on the supervisory board, executive board, other supervisory or executive bodies of two or more undertaking(s) are occupied by the same person; or
- the establishment of an undertaking by two or more undertakings engaged in business activities independently over an extended period, if such an establishment does not encourage competitive coordination between the established undertakings or between the undertakings and the newly established undertaking (joint venture); and
Answer ... According to Article 1 of the Competition Law, ‘control’ refers to the decisive direct or indirect influence of one or more undertakings over all or some commercial activities of another undertaking - in particular:
- complete or partial asset ownership or management rights;
- any right resulting in the ability to decisively influence the membership, voting results and decisions of the undertaking’s governing body;
- conclusion of contractual agreements that determine the conditions for conducting commercial activity, provide binding instructions or perform the functions of a governing body;
- substitution of the director or vice director of the supervisory committee, management or any other managerial or executorial body with someone who already holds one or more such positions in another undertaking; and
- substitution of over half the members of the undertaking’s governing bodies with persons who already hold one or more of such positions in another undertaking.
‘Related entities’ are legal entities or individuals engaged in joint or coordinated business activities, including joint or coordinated influence over the commercial activities of an undertaking. In particular, they include spouses, parents, children and siblings.
Joint control occurs where none of the company’s founders or shareholders can unilaterally make decisions through its governing or supervisory body, but each has the right to prevent those bodies from making certain decisions. Specifically, joint control can arise when:
- two founders (shareholders) of the company each have 50% of the votes in the highest governing body of the business entity (joint venture);
- a decision of the company’s highest governing body must be authorised by another body or founder vested with special powers according to the company’s charter. Specifically, this may be a veto right for decisions relating to the appointment of members of the governing body, the company budget, investment activities, the introduction of new products or the use of new technologies and so on; or
- the founders (shareholders) own non-substantial shareholdings and none has the necessary percentage of votes to unilaterally block decisions of the highest governing bodies of the company, so must therefore act together in order to block decisions or to achieve a majority of votes in the highest governing body of the controlled company - for example, by establishing holding structures which transfer relevant corporate rights, entering into shareholders’ agreements on the transfer of voting rights to third parties and organising voting to support joint long-term interests.
Answer ... The threshold for notification is reached in the event of the direct or indirect acquisition of, or the acquisition of control over, a shareholding of 25% or more.
Answer ... Yes, joint ventures are covered by the merger control regime. The establishment of an undertaking by two or more undertakings which will engage in business activities independently over an extended period, where such an establishment will not encourage competitive coordination between the established undertakings or between the undertakings and the newly established undertaking, is considered to constitute a joint venture.
Joint control can arise if one of the founders (shareholders) of the company can effectively block decisions of the governing bodies of the controlled company due to the inability of the shareholders to reach the necessary quorum for meetings of the governing bodies without the participation of that shareholder, as required by the founding documents.
Answer ... Foreign-to-foreign transactions are covered by the merger control regime if one or more participants to the transaction have controlling relations with a participating Ukrainian company, or possess assets or achieve turnover in Ukraine of a value which triggers the requirement to notify the Anti-monopoly Committee of Ukraine (AMCU) (see question 2.6). The AMCU has exclusive authority to determine whether a particular transaction may affect competition in Ukraine; this assessment is conducted in the process of reviewing the merger and granting clearance.
Answer ... Concentrations require merger clearance by the AMCU if the following thresholds are met:
- The combined worldwide value of the participants’ assets or turnover exceeded €30 million in the preceding fiscal year and the value of the assets or turnover of at least two participants exceeds €4 million; or
- At least one of the participants had Ukrainian sales turnover exceeding €8 million in the preceding financial year and the turnover of at least one other participant exceeded €150 million in the preceding fiscal year (in Ukraine and/or worldwide).
Answer ... The following transactions are exempt from the merger control regime:
- the establishment of a new undertaking aimed at the coordination of competitive behaviour of an undertaking or a newly established undertaking;
- a share acquisition that qualifies as a financial buyer transaction (ie, where the shares are acquired by a financial institution for the purpose of further resale within one year (which may be extended further), provided that the acquirer does not exercise the voting rights attached to the shares);
- actions taken between undertakings connected by controlling relations, except where such control is gained without AMCU clearance, if this is required by law; and
- the takeover of an undertaking or a part thereof by an insolvency receiver or state authority official.