“Amnesty” for mergers closed without clearance announced by the Antimonopoly Committee of Ukraine

13.10.2015

On September 15, 2015 the Antimonopoly Committee of Ukraine (the AMCU) adopted and published on its official website the Recommendations on approaches for calculation of fines for competition law infringements (the Recommendations).

The Recommendations set out the AMCU’s approach to determining the fine amounts for competition law infringements.

Apart from establishing the methodology for the fines amount calculation, the Recommendations initiate the “amnesty” procedure for mergers closed without AMCU approval.

It must be noted that should the AMCU detect a violation in the form of closing mergers without a respective approval, not only substantial fines may be imposed upon the merging parties, but the state registration of the amendments to statutory documents made upon merger may be cancelled. Beyond that, the AMCU sanctions can seriously damage the reputation of the business, especially that of companies operating with international partners or abroad. Given all this the “amnesty” can become an efficient tool for eliminating the areas of concern.

The term within which companies are entitled to avail themselves of the “amnesty” is set for 1 year, namely – until September 15, 2016.

A company that has educed having been a merging party to a merger, acquisition, buyout, incorporation etc. closed without a prior approval of the AMCU (in cases when such an approval is mandatory), now can file for such an approval to the AMCU ex post facto. Should such a company file to the AMCU within the prescribed “amnesty” term, it shall be subject to the following token fines:

  • in case of filing to the AMCU before March 15, 2016 – UAH 20,400 (approx. USD 960); or
  • in case of filing to the AMCU between March 15, 2016 and September 15, 2016 – UAH 102,000 (approx. USD 4,800).

However, the wording used by the AMCU in the Recommendations allows to conclude that the “amnesty” applies to both mergers closed prior to September 15, 2015, as well as mergers closed after the said date, given that the merger parties have become aware of the infringements after September 15, 2015.

As of today the antitrust practice in such “amnesty” cases has not yet been established, which renders any predictions as to how the AMCU shall interpret Clause 14 of the Recommendations and what approach shall be applied as to the defining the mergers subject to “amnesty” impossible.

Besides, it should be taken into consideration that the Recommendations are not a regulatory legal act. This means that AMCU, when considering a case, has the right to back out of the Recommendation it has adopted.

Such discretionary standard applied by the AMCU to the use of recommendation, as well as the recommendatory and not obligatory character of the latter, limits in a certain way the prospects of challenging the AMCU decisions at court, given that the court judges the AMCU’s actions from the point of view of their adherence to the applicable legislation, and not the recommendations. At the same time the official recommendations of government bodies are taken into account by the courts, thus relying upon the Recommendations to substantiate a claim can promote ones position in an action.

Given the above, as well as the broad authorities of the AMCU in matters of establishing fine amounts within the scope prescribed by the Law of Ukraine on Protection of the Economic Competition (5 to 10 percent of the group’s global turn-round depending on the gravity of infringement), the amounts of the “amnesty” fines are indeed to be considered by the business as token fines.

An important positive aspect of the Recommendations is the AMCU’s position to allow the applications of the companies not to disclose the information on the respective decisions, which can help avoid the negative impact on the reputation of the infringers.

Conclusion

Thus the “amnesty” procedure introduced by the AMCU is a great opportunity for companies to legalize the infringements with minimal financial damage and to secure themselves from the infringement to be detected and heavily fined by the AMCU in the future.

Our client alerts are for general informational purposes and should not be regarded as legal advice. If you would like additional information or have any questions, please contact:

olena-kravtsova
Olena Kravtsova
Senior Associate
+38(044) 537 09 10
Olena.Kravtsova@ecovis.com