On 18th of June 2012 the Antimonopoly Committee of Ukraine (the "AMC") published on its official website a press release whereby the AMC warned the market players on the upcoming increase of fines for the failure to comply with merger control regime in Ukraine.

Basically, starting from July 1, 2012 a failure to obtain prior merger control approval in Ukraine if such an approval is required[1], will lead to the imposition by the AMC of the maximum allowed fine for this type of infringement, i.e. fine in the amount of up to 5% of the parties' group turnover for the fiscal year preceding the year in which the fine is imposed.

The foregoing AMC's statement is yet another signal from the authority supporting the general trend of rapidly increasing fines for the competition law infringements. Recently the AMC has set up several "records" by imposing heavy fines on the market players for various types of competition law infringements. Thus, in May 2012 the AMC fined Ukrspirt, a state-owned spirit manufacturing company in the amount of approximately Euro 20 million for the abuse of dominant position (excessive pricing). In June 2012, the authority fined the members of an industry association of wood furniture producers in the amount of approximately Euro 42 million for the collusion (allocation of public procurement bids among the members of the association).

Recent developments in the field give ground to expect that the fines for the competition law infringements, particularly failure to comply with merger control regime, in Ukraine may increase further.

Considering the above, we recommend market players to duly inquire on whether a proposed transaction may trigger merger control approval in Ukraine while planning and negotiating a deal.

Additional notes
This LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.

[1] According to the effective competition law of Ukraine (Part 2 of the Article 22 of the Law of Ukraine On Protection of Economic Competition, dated 11 January 2001), the following transactions may be subject to a prior merger control approval of the "AMC": (i) merger of legal entities; (ii) acquisition of control over a legal entity by any means; (iii) establishment of a joint venture by two or more legal entities/persons; and (iv) acquisition by any means of 25 percent or more, or 50 percent or more of the voting rights of the legal entity, only if all of the following financial or market share thresholds are exceeded:

Financial Thresholds:

(1) the aggregate worldwide asset or sales for all parties to the transaction, including related entities, exceeds EUR 12 million; and

(2) the aggregate worldwide asset or sales for each of at least two parties to the transaction, including related entities, exceeds EUR 1 million; and

(3) the asset or sales in Ukraine of at least one party to the transaction, including related entities, exceeds EUR 1 million.

OR

Market Share Thresholds:

The merger control approval is also required for any transaction, if the market share of any party or the combined market share of all parties to the transaction including related by control entities on any product market exceeds 35 percent, and the transaction takes place on this or adjacent product market.