In what is another significant step towards the alignment of Ukrainian competition law with the European approach, the Antimonopoly Committee of Ukraine ("AMCU") has published Guidelines on the Assessment of Non-Horizontal Mergers ("Guidelines") on 22 March 2018.

Essentially, the Guidelines provide the relevant criteria used by AMCU in its assessment of vertical and conglomerate mergers. Upon establishing the relevant product and geographical markets, the AMCU shall proceed to evaluate the impact of the potential merger on competition in these markets. This impact may be determined by analysis of the following criteria:

(i) market shares of merging undertakings and concentration levels on relevant markets;

(ii) potential anticompetitive effects on relevant markets,

(iii) possible balancing effects of the buyer's power;

(iv) possible balancing effects of the new undertaking's entry on the market; and

(v) the risk of bankruptcy.

The above criteria should be applied on a case-by-case basis and the Guidelines establish specific guidance on how the cited criteria should apply in case of a simplified merger notification. The Guidelines also provide that if as a result of an analysis of criteria (i) and (ii) above there is a risk of market monopolization or significant restriction of competition, then criteria (iii) and (v) shall be additionally applied by the AMCU.

The market power of the merging entities is also considered, with AMCU being unlikely to identify concerns where the post-merger market share is below 30% and the HHI is below 2000.

However, the AMCU shall consider whether any of the following additional factors, which would increase the risk of anticompetitive effects on the market, are in place:

(i) significant cross-shareholdings or cross-control relations among the market participants;

(ii) one of the entities is likely to disrupt the coordinated conduct among the entities;

(iii) indications of past or ongoing coordination of actions among the merging entities and competitors; or

(iv) one of the entities is likely to broaden its activity in the future (e.g. due to the implementation of innovation technologies). At the same time, even if the postmerger market share exceeds 30% and the HHI is above 2000, the AMCU should still analyse whether a particular merger may affect market competition.

The Guidelines recognize that the anticompetitive effects of non-horizontal mergers may either be coordinated in nature, or non-coordinated (with the latter leading to concerns such as input or customer foreclosure for vertical mergers and foreclosure in related markets for conglomerate mergers). The foreclosure likelihood shall be assessed on a case-by-case basis, taking into account:

(i) the ability to foreclose;

(ii) the incentive to foreclose; and

(iii) the impact on competition.

Notably, the Guidelines do not include non-coordinated theories of harm other than foreclosure. While the Guidelines are modelled after the Guidelines on the assessment of non-horizontal mergers issued by the European Commission in 2008, they do not precisely mirror the latter, which may lead to different assessment standards.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.