UKRAINIAN COMPETITION LAW REFORM TO COMMENCE IN 2024

29/12/2023

Starting on January 1, 2024, the Law of Ukraine No. 3295-IX (the “Law”) will come into effect, bringing significant enhancements to the powers of Antimonopoly Committee of Ukraine (AMCU) and a comprehensive revision of Ukraine's competition legislation to align with EU standards and improve the country's business environment.

A stricter control over concentrations, enhanced leniency policy, introduction of a modified settlement procedure, clear time limits for AMC investigations are the key elements of this reform, i.e. the noteworthy alterations are:

Strengthened Control Over Concentrations.

• The Law introduces an additional threshold based on market shares, which will give the competition authority more control over potentially anticompetitive mergers. (Currently, Ukrainian competition law requires companies to get merger control clearance if their merger leads to a certain threshold of combined assets or turnover.)
• The concept of "concentration" will now include the acquisition of control over a company, even if it does not involve the transfer of assets or shares. This expansion of the definition will allow the competition authority to scrutinize a broader range of transactions and prevent potential anticompetitive practices.
• If multiple companies form a joint venture that operates as a fully functioning business entity over the long term, obtaining AMC merger clearance will be necessary.
• A concentration permit will not be required for the cases of the acquisition of 25% or more share in the authorized capital when this will not result in substantial influence.
• Transactions that occur within a 2-year period between the same parties and fall within the definition of a "concentration" will be treated as a single transaction, with the effective date being the date of the most recent one.
• Financial indicators of the seller may be excluded when calculating the threshold value for the application for an entity that has not have any assets or has not engaged in activities in Ukraine for previous 2 financial years.
• Starting from January 1st, the merger application fee will double its current amount and reach approximately EUR 1,100; the new fee for non-competition applications and other concerted actions will be approximately EUR 550.

Leniency Program. The leniency program provides incentives such as reduced fines or immunity for cooperating with authorities, promoting greater enforcement and detection of anticompetitive behavior. Defendants will be allowed to request fine reduction from the AMCU in exchange for substantial evidence. The level of discount will be determined based on the order in which they collaborate.

Modified Settlement Procedure. A settlement procedure provides companies with shorter investigative proceedings and a discount of 15% on imposed fines. In order to take advantage of it, respondents must give their prior consent to pay a fine.

AMCU Inspections Requirements. The Law stipulates that in order to conduct an inspection, it is necessary to obtain a commercial court decision and an AMCU order.

Time Limits for AMC Investigations. AMC investigations are bound by a strict time limit of 5 years. As the general rule, AMC investigations should be taken into account within a 3-year time frame. However, if there is a need for supplementary information, the time limit for an AMC investigation can be prolonged by 2 years.

The anticipated Law guarantees also concern evidence-gathering requirements, executive power of the decision of the AMCU, joint and several liability for the payment of fines, expanded access to registers, and a new procedure for setting fines based on the current AMCU's clarifications.

 

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