Law Digest

Threshold increase to obtain merger clearance

On 26 January 2016 the Act of Ukraine On Introduction of Amendments to the Act of Ukraine on Economic Competition Protection Regarding Improvement of the Economic Concentration Monitoring System1 (the Draft Act No.2168a of 25 June 2016) was adopted. It provides for an increase in existing financial thresholds, the exceeding of which requires a permit from the Antimonopoly Committee of Ukraine.

The Act provides for a two-tier system of financial indicators as opposed to the Act that is in effect.

Under the first criterion, merger clearance must be obtained in case the total sales turnover or the aggregate value of assets of the concentration participants exceeds EUR 30 million and, at the same time, the total sales turnover or the aggregate value of assets in Ukraine of at least two concentration participants exceeds EUR 4 million in each of them.

Under the second criterion, merger clearance will be needed in case the sales turnover or the aggregate value of assets in Ukraine of an economic entity being acquired, an asset seller or one of the founders of a joint venture exceeds EUR 8 million and the sales turnover of at least one alternative participant of the concentration exceeds EUR 150 million globally.

In addition, a requirement to obtain a merger clearance if the share of a certain market of any concentration participant (or the combined share of the concentration participants) in Ukraine exceeds 35%, and the concentration takes place in this commodity market or in an adjacent market, was deleted.

The Act also introduces a simplified procedure for processing an application for merger clearance, which lasts for 25 days from the time the application is filed (instead of 45 days according to the normal procedure). The concentration participants can take advantage of the reduced procedure provided that: only one participant of the concentration carries out its activities in Ukraine, or the combined share of the concentration participants in the same commodity market does not exceed 15%, or a share of any concentration participant or combined shares of concentration participants in those markets that are key markets for them, do not exceed 20%.

The Act provides for the possibility to hold preliminary consultations with the AMCU prior to filing an application for merger clearance regarding information and the documents to be submitted along with the application.

It should be noted that dues for filing a statement of concentration and a statement of concerted practices are increased to UAH 20,400 and UAH 10,200, respectively.

Amendments to the Public Procurement Act

On 25 December 2015 the Ukrainian Parliament adopted necessary amendments to the previously adopted Act that provides for shifting all public procurement to the Prozorro electronic system.

Implementation of this system is supposed to increase competition in the public procurement sector and reduce corruption. The legislator is also planning to improve professional standards of purchasers by ensuring the possibility to make procurements not only by the tender committee, but also by a customer’s authorized agent. It is expected that shifting of procurement to the electronic format should ensure fast exchange of information and documents, as well as create a model of electronic procurement with the participation of the state and the private sector.

The negotiated procurement procedure will be carried out without a previous publication (only an announcement of the intention to draw up a contract is made after negotiations are held with the procedure participant).

The Act provides for carrying out public procurement using two competitive regulation procedures (open tender and competitive dialogue) and a non-competitive one (negotiated procurement procedure).

The Act also provides for the possibility to create centralized procurement organizations (CPOs), which should facilitate enhancement of efficiency of public procurement and savings in the public sector.

The Act also introduces regulation of procurement carried out by separate economic entities, thanks to which the On Peculiarities of Procurement in Selected Areas of Economic Activity Act of Ukraine is abolished.

New law aims to make privatization more open

The Act of Ukraine, No. 2319а-d, authored by Andrei Ivanchuk, was passed in the first reading (at present the Act is prepared for signing by the President). The purpose of this Act is to improve the On Privatization of State Property Act of Ukraine in terms of transparency and openness of the privatization process. In addition, the document provides for an opportunity to involve advisors in the preparation of the privatization process. Involvement of an advisor will enable the full preparation of a facility for privatization with due consideration of existing practices and international standards.

It is also established that legal entities and related persons registered in those countries declared by the Verkhovna Rada as aggressor countries shall not be admitted to the privatization as buyers. In addition, representatives of countries against which sanctions are applied, shall not be admitted to privatization.

Besides, the document enables those companies, in which a share stake of 25% or more is held by the state (other than aggressor states and the state of Ukraine), to participate in the privatization of Ukrainian state companies.

Parliament adopted “visa-free” Act on special confiscation

Parliament adopted of the Act of UkraineNo.4054. On Introduction of Amendments to the Criminal Code and the Code of Criminal Procedure of Ukraine regarding the Improvement of the Procedure of Property Seizure and the Institution of Special Confiscation.

The Draft Act establishes that special confiscation is non-repayable expropriation, by a court resolution, to state ownership, of money, valuables, including funds on bank accounts or in escrow with banks or other financial institutions, other property of a person, with respect to whom a punishment is inflicted in the form of imprisonment for at least four years for committing a crime provided for, particularly by Articles 146-150 (illegal confinement, hostage taking (rarely), Article 365 (excess of powers), 368 (bribery taking).

The Draft suggests introducing to Article 961 of the Criminal Code a possibility to apply the special confiscation subject to committing:

— of an intentional predicate crime or a socially dangerous act containing elements of such a crime;

— crimes, the sanctions for which currently expressly provide for such confiscation.

At the same time, amendments to the CCP are intended to provide a possibility to levy a distress in a criminal proceeding in cases of: the need to retain evidence, applying special confiscation, applying special confiscation as a form of punishment (criminal law measures) to individuals (legal entities); enforcement of a civil action or collection from a legal entity of improper advantage received.