1 Relevant Authorities and Legislation
1.1 Who is/are the relevant merger authority(ies)?
The Federal Antimonopoly Service of the Russian Federation ("FAS") is the main merger authority in Russia. The FAS is a Governmental service in charge of merger control, and directly subordinates to the Government of the Russian Federation. The FAS consists of a central office and 84 regional offices that are located throughout the Russian Federation.
The central office of the FAS, based in Moscow, is in charge of merger control over: (i) foreign investments into Russian companies engaged in one of the strategic activities determined by Russian law (e.g., space, military, aviation) (the "Strategic Companies"); (ii) transactions where at least one of the parties is an entity included in the list of strategic enterprises and strategic joint stock companies approved by the Decree of the President of the Russian Federation No. 1009 dated 4 August 2004; and (iii) transactions where certain economic indicators of the parties (e.g., the total assets or an annual turnover of the group of persons of the purchaser and the target) exceed materiality thresholds set out by law. In some cases of foreign investments in the Strategic Companies, the central office of the FAS must engage the Governmental Committee for Control of Foreign Investments into Russia (the "Governmental Committee") for making the final decision. The Head of this Committee is the Chairman of the Government of the Russian Federation.
The regional offices of the FAS are in charge of merger control over transactions that are not subject to control by the central office of the FAS. Generally, the regional offices control transactions relating to target companies that carry on their business in the relevant region.
1.2 What is the merger legislation?
Federal Law No. 135-FZ dated 26 July 2006 "On Protection of Competition" (the "Competition Law") is the primary law providing for the key rules of merger control in Russia.
1.3 Is there any other relevant legislation for foreign mergers?
Federal Law No. 57-FZ dated 29 April 2008 "On the Procedure for Foreign Investments into Companies of Strategic Importance for the National Defence and State Security" (the "Strategic Investment Law") establishes the legal regime for foreign investments into Russian strategic industries and provides for a procedure for granting foreign investors access to such industries. Foreign mergers are also regulated by the Federal Law No. 160- FZ dated 9 July 1999 "On Foreign Investments in the Russian Federation" (the "Foreign Investment Law"). Under the Foreign Investment Law, a pre-completion merger clearance is required for transactions that would allow foreign states, international organisations or any entities under their control to acquire directly or indirectly more than 25% of voting shares (participatory interests) of any Strategic Company or a non-strategic Russian entity or the rights to block decisions of their corporate bodies.
1.4 Is there any other relevant legislation for mergers in particular sectors?
The laws establishing specific merger regulation for particular business sectors in Russia include the following:
a) the Law of the Russian Federation No. 2124-1 dated 27 December 1991 "On Mass Media" prohibits the acquisition of more than 20% of shares in any Russian media organisation or its founders by a foreign person or a Russian entity in which a foreign person owns more than 20% of shares;
b) the Air Code of the Russian Federation dated 19 March 1997 provides that a share of foreign capital in the aggregate equity capital of an aviation enterprise established on the territory of Russia shall not exceed 49%;
c) the Law No. 4015-1 dated 27 November 1992 "On the Organisation of Insurance Business in the Russian Federation" restricts the types of insurance operations that may be performed by insurance companies in which foreign investors own more than 51%; and
d) the Federal Law No. 86-FZ dated 10 July 2002 "On the Central Bank of the Russian Federation (Bank of Russia)" also envisages a special clearance procedure for foreign investments in the banking sector.
2 Transactions Caught by Merger Control Legislation
2.1 Which types of transaction are caught – in particular, what constitutes a "merger" and how is the concept of "control" defined?
Transactions subject to merger control may be grouped in the following way:
a) acquisition of voting shares and participatory interests in joint stock companies and limited liability companies, respectively;
b) acquisition of rights in respect of a legal entity;
c) acquisition of rights in respect of assets of a legal entity;
d) establishment of a legal entity;
e) corporate restructurings in the form of a merger or accession; and
f) conclusion of a joint venture agreement.
The applicable thresholds and other conditions for the above transactions are specified in the answer to question 2.4 below.
Generally, the FAS applies different concepts of "control" when considering a merger control filing and a filing under Strategic Investment Law. For the purposes of merger control clearance, the FAS pursues a formal test of control prescribed by the Competition Law, which is mainly a possibility to appoint a chief executive officer of a target company and/or to determine key business decisions of a target company, etc. The Strategic Investment Law defines "control" in much broader terms, leading to the situations where "de facto" control and/or "negative" control (i.e. a possibility to block certain decisions of a Strategic Company) may amount to the level of control which is subject to Governmental Committee review.
2.2 Can the acquisition of a minority shareholding amount to a "merger"?
Yes. For example, pursuant to the Competition Law, acquisition of more than 25% of voting shares in a joint stock company or onethird of participatory interests in the charter capital of a limited liability company is subject to merger control if the requirements described in the answer to question 2.4 are met.
2.3 Are joint ventures subject to merger control?
Entering into a contract for joint business activity in Russia requires the preliminary consent of the FAS, particularly if such contract is concluded by business rivals and the aggregate book value of assets of their groups of persons exceeds RUB7bn, or the aggregate book value of their groups' annual turnover exceeds RUB10bn.
One should also note that if a shareholders' agreement with regard to a legal entity grants any of the relevant parties rights to control certain votes of such legal entity (even in the absence of a formal transfer of any shares in such legal entity) or rights to determine key business decisions of such legal entity, entrance into such agreement could be treated as acquisition of "voting" rights or "control" in respect of such legal entity, and may be subject to merger control clearance in Russia if other criteria for merger clearance are met.
2.4 What are the jurisdictional thresholds for application of merger control?
The Competition Law provides for the following standard thresholds for the application of merger control:
a) acquisition of voting shares in joint stock companies (more than 25%, 50% and 75% of the voting shares) and acquisition of participatory interests in limited liability companies (over one-third, one-half and two-thirds of participatory interests);
b) direct or indirect acquisition of rights which enable a person to determine the course of business of a Russian legal entity or to carry out the functions of its executive body;
c) transfer of assets where the balance sheet value of the transferred assets exceeds 20% of the balance sheet value of the total fixed and intangible assets of the transferor (excluding land plots and non-production buildings);
d) conclusion by business rivals of a contract for joint business activity in Russia;
e) establishment of a legal entity if its charter capital is paid by shares, fixed assets or intangible assets; and
f) corporate restructurings (in the form of a merger or accession).
Pre-completion clearance by the FAS is required if the following double-criteria test is met:
a) the purchaser and the target, together with their groups of persons (the "group of persons" is defined rather broadly), exceed materiality thresholds either by the aggregate book value of assets on a worldwide basis or by annual turnover on a worldwide basis (RUB7bn for the assets and RUB10bn for the turnover); and
b) the aggregate book value of assets on a worldwide basis of all companies within the target group exceeds RUB400m.
This criterion b) does not apply to the transactions described in clauses d), e) and f) above, to which test a) is mandatory only.
In the case where a target company is a financial institution (e.g., a bank, a stock exchange or an insurer), other specific materiality thresholds approved by the Government of the Russian Federation shall apply.
Under the Strategic Investment Law, the following foreign investments are subject to pre-completion clearance and require prior FAS consent issued in accordance with the decision of the Governmental Committee:
a) acquisition of direct or indirect control over more than 50% of voting shares of the Strategic Company, or more than 25% of voting shares of the Strategic Company developing subsoil fields of federal importance (the "Strategic Subsoil Company"), or any additional voting shares of the Strategic Subsoil Company, where the investor holds at least 25% and not more than 75% of voting shares at the moment of such acquisition;
b) acquisition by any foreign state, international organisation or any entities under their control of direct or indirect control over more than 25% of voting shares of any Strategic Company or more than 5% of voting shares of any Strategic Subsoil Company;
c) acquisition of the right to appoint the sole executive body, or more than 50%, or more than 25%, of the management board of the Strategic Company or the Strategic Subsoil Company, respectively, or the conclusive opportunity to elect more than 50%, or more than 25%, of the board of directors or other collegial corporate body of the Strategic company or the Strategic Subsoil Company, respectively;
d) direct or indirect acquisition of rights which enables a foreign person to determine the course of business of the Strategic Company or to carry out functions of its executive manager or the management company; and
e) acquisition of rights in respect of the fixed assets of the Strategic Company, the total value of which comprises 25% and more of the total book value of such company's assets.
The Strategic Investment Law does not set out any additional materiality thresholds, turnover or other tests for merger control of the above-mentioned transactions.
2.5 Does merger control apply in the absence of a substantive overlap?
competition, and if there are any overlaps in the business of a target company, an acquirer or other parties of the transaction exist. The FAS will assess the real impact of the proposed transaction on economic concentration and competition only if such a transaction meets the criteria for merger control.
2.6 In what circumstances is it likely that transactions between parties outside your jurisdiction ("foreignto- foreign" transactions) would be caught by your merger control legislation?
The Competition Law follows the extraterritorial principle, according to which any "foreign-to foreign" transaction that directly or indirectly relates to voting rights, management, business or assets of a Russian entity is subject to merger control restrictions if such a transaction meets the thresholds and tests described in the answer to question 2.4 above. Such circumstances as a place of completion of the transaction, having no legal presence, assets or business activity in Russia by any of the parties to the transaction, may not exclude the application of Russian merger control legislation.
2.7 Please describe any mechanisms whereby the operation of the jurisdictional thresholds may be overridden by other provisions.
At present, Russia is not a party to any international agreement whereby the operation of the jurisdictional merger control thresholds may be overridden – for example, the "one-stop shop" doctrine under the EU Merger Control Regulation (Council Regulation No. 139/2004).
2.8 Where a merger takes place in stages, what principles are applied in order to identify whether the various stages constitute a single transaction or a series of transactions?
The Competition Law does not directly regulate this issue. However, a general approach of the FAS is that the necessity for merger clearance shall be assessed based on the proposed final result of the transaction or series of transactions. The FAS will assess the "interdependence" of the transactions on a case-by-case basis.
The FAS also clarified that in accordance with the Competition Law, transactions can be qualified as "interdependent" if they meet any of the following criteria:
a) transactions are entered into at the same time or if there is an insignificant period of time between them;
b) each transaction is supposed to achieve the same result or pursue the same aim;
c) transactions are entered into in respect of homogeneous assets or heterogeneous assets that assume the same usage;
d) an acquirer under several transactions is the same entity (group of persons);
e) the seller under several transactions is the same entity;
f) the subject of the transactions is the same; and
g) transactions are of the same type.
3 Notification and its Impact on the Transaction Timetable
3.1 Where the jurisdictional thresholds are met, is notification compulsory and is there a deadline for notification?
Prior FAS consent is the main form of merger control in Russia. An application for receipt of the FAS consent is compulsory. Russian law does not set out any specific deadlines for the submission of such application. The only condition is that the FAS consent shall be obtained before the completion of the proposed transaction or other action, which is subject to merger control.
Previously, the Competition Law provided for an extensive list of transactions and other actions that required post-closing notification of the FAS. However, at the end of 2013, the Competition Law was liberalised, and now post-closing notification of the FAS (instead of prior FAS consent) may be used as an alternative clearance procedure for intra-group transactions or other actions. To apply such a simplified procedure, each of the following conditions has to be met:
- the transaction or other action is an intra-group one;
- the applicant has submitted to the FAS a list of persons comprising the relevant group in a prescribed form (such filing shall be made at least one month prior to the proposed transaction or action); and
- the submitted list of persons comprising the applicant's group is correct as of the date of the transaction or the action, and no changes have been introduced to it since its submission to the FAS.
The deadline for the submission of the post-closing notification is 45 days from the completion of the relevant transaction or action.
3.2 Please describe any exceptions where, even though the jurisdictional thresholds are met, clearance is not required.
Under the Competition Law, prior FAS consent or post-closing FAS notification are not required if:
a) a transaction is to be entered into by a company and an individual or a legal entity holding more than 50% of the voting shares or participatory interests in that company. The FAS has clarified that this rule also applies to transactions within a vertical chain of companies, where more than 50% of the voting shares of a company are controlled directly or indirectly by the same person or legal entity, as well as to the transactions between the subsidiaries, in which more than 50% of the voting shares are owned by the same person or legal entity; and/or
b) any act of the President or the Government of Russia provides for the execution of such a transaction.
3.3 Where a merger technically requires notification and clearance, what are the risks of not filing? Are there any formal sanctions?
The FAS may challenge in court the transaction entered into without the required merger clearance. The court may invalidate the transaction if the FAS proves that such a transaction restricted or may restrict competition in Russia. The limitation period is one year from the moment when the FAS became aware of the violation.
The FAS may learn about the completion of a transaction from the documents and information submitted with regard to any other subsequent transactions regarding the same object of economic concentration.
An administrative fine may be imposed upon a person violating merger clearance procedure. The maximum amount of the administrative fine for the legal entity is RUB500,000 and RUB20,000 for responsible officers of the legal entity.
The Strategic Investment Law provides for more severe sanctions. Transactions executed in violation of the requirements of the Strategic Investment Law are null and void. In this case, the general consequences of invalidity of the transaction set out by the Russian Civil Code will apply, and each party of the transaction will have to return to the other party all received under such transaction. If the general consequences under the Civil Code cannot be applied, the court may restrict the voting power of shares held by a foreign investor in the relevant strategic entity and invalidate decisions made by the shareholders of such an entity.
The maximum amount of an administrative fine for the legal entity that has violated the Strategic Investment Law requirements is RUB1m and RUB50,000 for the responsible officers.
3.4 Is it possible to carve out local completion of a merger to avoid delaying global completion?
The only way to avoid delaying global completion in the absence of Russian merger control clearance (where it is required) is to "carve out" the "Russian" part of the transaction, i.e., either to spin-off Russian assets and leave them with the seller until the Russian FAS application is made, or to suspend the acquisition of Russian assets until the completion of the Russian merger control clearance, if the target business structure allows for this.
3.5 At what stage in the transaction timetable can the notification be filed?
As stated above, the application for prior FAS consent shall be submitted to and considered by the FAS before the completion of the transaction, incorporation or other action, which is subject to merger control. A FAS decision is generally valid for one year from its issuance date; preparation of filing may take about two weeks on average, and the FAS reviews the application within the timeframe described in the answer to question 3.6.
As a matter of practice, if the parties have a strong intention to complete a transaction in accordance with the timetable, it is recommended to apply for FAS clearance (where required) at a stage of negotiations when a purchase price and other conditions of the deal may still be under discussion, but after the structure of the transaction is agreed and the parties of the transaction are duly incorporated.
The post-closing FAS notification shall be made within 45 days after the completion of the transaction (please see the answer to question 3.1).
When applying for consent under the Strategic Investment Law, an applicant may indicate a period of time for which such consent is sought in the application. Therefore, consent under Strategic Investment Law may be granted for a period longer than one year. As opposed to merger control consent, the consent given under the Strategic Investment Law may be extended based on an application filed with the Governmental Committee.
3.6 What is the timeframe for scrutiny of the merger by the merger authority? What are the main stages in the regulatory process? Can the timeframe be suspended by the authority?
According to the Competition Law, the standard period for consideration of an application for prior FAS consent is 30 days after the applicant has provided all required documents and information. Otherwise, the FAS, within five business days, notifies the applicant that the application is incomplete and cannot be considered.
The FAS may extend the period for review of the application up to two months at its own discretion. In such cases, the FAS will typically disclose the proposed transaction on its website for collecting comments from other interested parties.
Under the Strategic Investment Law, the FAS must assess whether a transaction requires the approval of the Governmental Committee as a mandatory part of the merger clearance procedure in respect of foreign investments into Strategic Companies. If such approval is necessary, the FAS may complete the scrutiny process only after the Governmental Committee issues its decision. Although the Strategic Investment Law provides for six months as a maximum period for making decisions by the FAS and the Governmental Committee, in practice, such process may take up to nine months.
3.7 Is there any prohibition on completing the transaction before clearance is received or any compulsory waiting period has ended? What are the risks in completing before clearance is received?
Transactions subject to merger clearance in the form of prior FAS consent cannot be completed before such consent is obtained and any who decides to proceed with the transaction in the absence of such a clearance (where required) shall also bear in mind the invalidation and other risks described in more detail in the answer to question 3.3 above.
3.8 Where notification is required, is there a prescribed format?
The Competition Law, the Strategic Investment Law and relevant FAS regulations specify in detail the list of documents and information that the applicant must submit along with the application and set out the prescribed format for almost all of these particular documents and required information. Among such documents are basic documents and information on: (i) the acquirer (or entities participating in merger or incorporation) and its respective group; (ii) the target and its group; and (iii) the transaction (drafts containing material terms of the transaction in the case of prior FAS consent, and a copy of the transaction documents in the case of postclosing notification).
If the set of submitted documents is not complete, the FAS notifies the applicant on such incompleteness and considers the application as not being duly filed.
3.9 Is there a short form or accelerated procedure for any types of mergers? Are there any informal ways in which the clearance timetable can be speeded up?
Russian laws do not provide for any such forms or procedures.
3.10 Who is responsible for making the notification?
The obligation to apply with the FAS for a merger clearance falls on: (i) the acquirer of voting shares, participatory interests, assets or "control" rights in cases of acquisition; (ii) the surviving entity in cases of a merger or accession; (iii) one of the founders of a company where the incorporation of such a company requires prior FAS consent; and (iv) one of the parties to a joint venture agreement where conclusion of such a joint venture agreement is subject to merger control.
3.11 Are there any fees in relation to merger control?
The amount of fees which shall be paid by the applicant before making a filing with the FAS is RUB35,000. No fee is applicable to the post-completion FAS notification and any filing under the Strategic Investment Law.
3.12 What impact, if any, do rules governing a public offer for a listed business have on the merger control clearance process in such cases?
Russian legislation does not provide for any specific rules of merger control in relation to public offers.
3.13 Will the notification be published?
The FAS does not normally publish any applications for merger clearance. However, as of January 2016, the Competition Law provides that the FAS shall publish the information on submitted applications for prior FAS consents on its official website, and any interested third party may provide the FAS with any information with respect to the impact of the proposed transaction on the market competition.
The FAS discloses its decisions on pre-completion clearance in most cases. As a matter of practice, the FAS may publish its decision even in the situation where an applicant has specifically requested the FAS to keep the parties and the subject matter of the transaction confidential.
One must also note that the FAS always publishes its decision on extension of the merger clearance review of the transaction, in addition to a list of persons comprising the relevant group that was submitted with the FAS for merger clearance of the proposed intragroup transaction (please see the answer to question 3.1 hereof).
4 Substantive Assessment of the Merger and Outcome of the Process
4.1 What is the substantive test against which a merger will be assessed?
The substantive test against which the merger is assessed is its impact on market competition in the Russian Federation. The transaction may not pass the merger clearance if it restricts or may lead to restriction of competition in the Russian Federation. The Competition Law specifies the following criteria for restriction of competition:
a) reduction of independent participants number on a particular commodity market;
b) increase or decrease of the particular goods' price that are not connected with other general terms and conditions of commodity circulation;
c) failure of market participants that do not belong to the same group to independently conduct business activity on a particular commodity market;
d) determination of general terms and conditions for commodity circulation on a particular goods market by an agreement between market participants; or
e) any other circumstances enabling one or several market participants to affect the general terms and conditions for commodity circulation on a market in its sole discretion.
4.2 To what extent are efficiency considerations taken into account?
Efficiency considerations may be taken into account. The FAS has clarified that even when a proposed transaction or agreement may lead to a restriction of competition, the FAS may grant its consent to the transaction or agreement if the criteria provided in Article 13 of the Competition Law are met, including: (i) the proposed transaction or agreement do not allow any persons to eliminate competition on the relevant commodities market; (ii) no restrictions irrelevant to the purpose of the proposed arrangement will be imposed on the parties of such an arrangement or any third parties; and (iii) the proposed transaction or agreement may result in benefits for the customers or achieve other positive gains specified in Article 13 of the Competition Law.
4.3 Are non-competition issues taken into account in assessing the merger?
Non-competition issues are not taken into account by the FAS when assessing a merger under the Competition Law. However, if the Strategic Investment Law applies, the issues relating to national defence and the security of the state will be taken into account. One should, however, note that the FAS shall scrutinise any other issues which come to its attention while considering a merger control application, particularly if such issues may amount to a violation of the Competition Law. Although such findings shall not affect an outcome of a merger control filing per se, should the FAS reveal elements of potential violations, it shall initiate separate proceedings to consider them.
4.4 What is the scope for the involvement of third parties (or complainants) in the regulatory scrutiny process?
Third parties may participate in the regulatory scrutiny process by providing the FAS with information on the influence of the proposed transaction on the competition in cases where the FAS publishes the information on submitted applications for prior FAS consent or decides to prolong the term of merger clearance review (see the answers to question 3.6 and 3.13). The Competition Law also provides that the FAS may send public requests to third parties to obtain certain information concerning the relevant transaction.
4.5 What information gathering powers does the merger authority enjoy in relation to the scrutiny of a merger?
The FAS may request any information from any person, including information comprising commercial secrets. As a matter of practice, the FAS requests information on ultimate beneficial owners of an acquirer in most cases. Furthermore, the FAS often asks the acquirerto submit information about the market share of a target company and the acquirer (where appropriate), and about their competitors. Fines may be imposed upon the responsible persons for failure or refusal to provide the requested information. The FAS may refuse to approve a transaction if an applicant has submitted misleading or non-complete information to the FAS, or if the applicant did not submit all the requested documents and information.
4.6 During the regulatory process, what provision is there for the protection of commercially sensitive information?
As a general rule, no information submitted with the FAS is automatically kept confidential. The applicant shall notify the FAS of the necessity to keep the submitted documents and information confidential. In this case, the FAS shall mark the relevant application, documents and information as "For Official Use Only" and comply with the request for confidentiality. However, the FAS may disclose its decisions and other information that Russian laws directly require the FAS to disclose, even if the submitted documents and information were marked as confidential (please also see the answer to question 3.13 above).
5 The End of the Process: Remedies, Appeals and Enforcement
5.1 How does the regulatory process end?
Upon the accomplishment of the merger clearance review under the Competition Law, the FAS may:
- satisfy the application for prior FAS consent if it decides that the transaction will not restrain competition;
- extend the merger clearance review if additional documents or information are required or if the merger clearance needs additional scrutiny;
- extend the merger clearance review until the satisfaction by the parties of pre-completion conditions prescribed by the FAS (the period for satisfaction of such conditions shall not exceed nine months);
- extend the merger clearance review if the Governmental Committee's review is required in accordance with the provisions of the Strategic Investment Law;
- satisfy the application for prior FAS consent and issue prescriptions of behavioural or structural type that are mandatory in the case of completion of the proposed transaction or action;
- prohibit a transaction if such transaction restricts or may restrict the competition or the applicant has submitted misleading or non-complete information or did not submit the documents and information requested by the FAS; or
- prohibit the transaction if the result of the merger control clearance under the Strategic Investment Law is negative (i.e. if the Governmental Committee refused to approve the relevant transaction).
Pursuant to the Strategic Investment Law, the FAS shall issue its decision based on a decision of the Governmental Committee that may:
- approve the transaction or an acquisition of the control;
- approve the transaction or an acquisition of the control on the condition that the applicant shall enter into agreement with the FAS, under which the applicant undertakes to perform certain obligations (e.g., establish corporate bodies of the Strategic Company in a certain way, perform particular services or measures, or conduct business activity in compliance with an agreed business plan); or
- reject the request for granting consent to the transaction or acquisition of control.
5.2 Where competition problems are identified, is it possible to negotiate "remedies" which are acceptable to the parties?
As a matter of practice, the parties may offer certain undertakings in order to accommodate concerns raised by the FAS before the adoption of a final decision by the FAS. However, the FAS is not bound to accept such proposals of the parties.
Under the Competition Law, a formal procedure for the revision of the FAS prescriptions can be initiated only after the FAS has issued its final decision. Upon a formal request of the applicant or on its own initiative, the FAS may revise the issued prescriptions if there was a significant change of conditions that exclude the possibility of fulfilment of such prescriptions or diminish their purpose or efficiency.
5.3 To what extent have remedies been imposed in foreign-to-foreign mergers?
There is no difference in the approach of the FAS towards remedies in relation to foreign-to-foreign or internal transactions.
5.4 At what stage in the process can the negotiation of remedies be commenced? Please describe any relevant procedural steps and deadlines.
As a matter of practice, we would recommend the parties to start the negotiation of remedies with the FAS at an earlier stage of the merger clearance review and certainly before the adoption of the final decision. However, the parties will be able to initiate a formal revision procedure only once a final decision and prescription are issued by the FAS.
The FAS shall review the request for the revision of the issued prescription within one month from the date of receipt of the relevant request. The form and content of the request, as well as the revision procedure, are regulated by a FAS regulation. The revised prescription by the FAS shall not be more strict towards its recipient than the original prescription.
5.5 If a divestment remedy is required, does the merger authority have a standard approach to the terms and conditions to be applied to the divestment?
There is no standard approach to the terms and conditions to be applied to the divestment. The Competition Law enables the FAS to require a spin-off or liquidation of relevant companies as a condition for the clearance of a transaction or after the completion of the transaction if a necessary FAS approval was not obtained and if the transaction led to restriction of competition. However, in practice, such remedies are not frequently used.
5.6 Can the parties complete the merger before the remedies have been complied with?
As specified in the answer to question 5.1 above, the FAS may extend the merger clearance review until satisfaction by the parties of pre-completion conditions prescribed by the FAS. The timeframe
for satisfaction of such conditions shall not exceed nine months. Once the parties satisfy the prescribed conditions within the set time limit, the FAS will grant consent to the proposed transaction and the parties will be able to complete the merger.
In cases where the FAS prescribes post-closing conditions, the parties may complete the merger if they accept such remedies.
5.7 How are any negotiated remedies enforced?
Measures of administrative liability (including administrative fines) may be imposed on individuals or legal entities that fail to comply with a lawful FAS decision on remedies.
The FAS is not entitled to withdraw its merger clearance decision if a party has failed to comply with the issued prescription. However, the FAS may seek (in court) enforcement of its prescription or challenge the transaction, in respect of which the FAS granted a consent.
The FAS also monitors performance of the prescribed remedies by requesting additional information from the parties to the transaction.
5.8 Will a clearance decision cover ancillary restrictions?
Together with a consent to the proposed transaction, the FAS may issue a prescription containing ancillary restrictions, such as procurement of access to production facilities or certain information, restriction on transfer of rights to certain assets, or request to notify the FAS in advance of the intention to perform the prescribed actions.
5.9 Can a decision on merger clearance be appealed?
A decision and/or a prescription issued by the FAS in connection with merger clearance could be appealed either in administrative procedure to the Head of the FAS or in court. If a decision and/or prescription in connection with merger clearance is appealed to the Head of the FAS, the FAS shall review the relevant complaint within 30 days from the date of its receipt and may extend such term for an additional 30 days.
If the FAS prescription is appealed in the court, performance of such prescription is postponed until the court decision comes into effect. The parties may also apply for a voluntary settlement with the FAS to resolve any court disputes that may arise from the FAS decisions and prescriptions. The settlement agreement with the FAS takes effect after its approval by the court.
5.10 What is the time limit for any appeal?
Any company whose rights or interests are infringed by a FAS decision and/or prescription may appeal it in court within three months following the date of issue of the relevant decision or prescription, or the date on which a person became aware of the infringement of its rights by such FAS decision and/or prescription.
5.11 Is there a time limit for enforcement of merger control legislation?
The limitation period for challenging a transaction in court is one year from the date on which the FAS learned or should have learned that such a transaction was completed without the required FAS consent. As described in the answer to question 3.3 above, the FAS may learn about the completion of a transaction from the documents and information submitted with regard to any other subsequent transactions regarding the same object of economic concentration. The limitation period for administrative violations under the Competition Law, such as a failure to apply for FAS consent before the closing of a transaction where such consent is required, or a failure to provide true and complete information to the FAS under its requests or when applying for FAS consent, etc., is one year from the date on which the infringement occurred. The limitation period for certain material infringements of the Competition Law, which may or may not accompany violations of merger control rules, such as entering into cartel agreements, overpricing of goods, etc., is much longer and equals to three years from the date on which the infringement occurred, or the date on which the continuing infringement ceased or is revealed by the FAS.
6.1 To what extent does the merger authority in your jurisdiction liaise with those in other jurisdictions?
The FAS cooperates with antimonopoly authorities of other countries based on bilateral and multilateral agreements. Cooperation between competition authorities is exercised in different forms such as the exchange of non-confidential and confidential information, signing agreements and memoranda of understanding, holding consultations, conferences and bilateral meetings, and establishing working groups on the key markets.
Historically, the FAS has close interaction with antimonopoly authorities of the countries within the Commonwealth of Independent States (the "CIS"). It participates in the Interstate Council for Antimonopoly Policy that adopted the Regulation on Cooperation of the States in Suppression of the Monopolistic Activity and the Unfair Competition – an integral part of the CIS Governments' Treaty on Implementation of the Coordinated Antimonopoly Policy.
The FAS is also a member of the International Competition Network (the "ICN"). The ICN members discuss practical antitrust enforcement and policy issues, develop practice proposals for the promotion of convergence among the laws, processes and policies of different authorities.
Russia is a party to the Treaty on the Eurasian Economic Union of Belarus, Kazakhstan, Armenia, the Kyrgyz Republic and the Russian Federation signed in 2014. The Treaty sets out general principles and rules of competition of its member states and establishes, among other things, the provisions on the interaction of the Eurasian Economic Commission and national competition authorities, including the conduct of joint inspections and investigations in cross-border markets. Since January 2016, the Competition Law does not apply with respect to cross-border markets, which are now under the control of the Eurasian Economic Commission.
6.2 Are there any proposals for reform of the merger control regime in your jurisdiction?
A major reform of merger control in Russia was completed in January 2016 after the so-called the "Fourth Antimonopoly Package" came into force. In particular, Federal Law No. 275-FZ dated 5 October 2016 "On Amendments to the Federal Law "On Protection of Competition" and Certain Legislative Acts of the Russian Federation" introduced, among others, the following major changes:
a) joint venture agreements between business rivals became subject to merger clearance by the FAS;
b) cartel agreements not only between competing sellers, but also between competing buyers are now forbidden;
c) a more detailed description of the types of unfair competition was introduced;
d) the FAS no longer maintains the Register of dominant businesses with a market share exceeding 35%;
e) the FAS may no longer recognise companies with less than 35% of the market share as individually dominant (exceptions apply);
f) it became possible to challenge decisions of the FAS regional offices in the central office of the FAS; and
g) some administrative penalties and fines were increased.
6.3 Please identify the date as at which your answers are up to date.
These answers are up to date as of 5 September 2016.
The authors would like to thank their colleagues Anna Shirokova and Maria Krugovykh for their assistance in the preparation of this chapter.
Published and reproduced with kind permission by Global Legal Group Ltd
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