Russia: Merger Control

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This country-specific Q&A provides an overview to merger control laws and regulations that may occur in Russia.

It will cover jurisdictional thresholds, the substantive test, process, remedies, penalties, appeals as well as the author’s view on planned future reforms of the merger control regime.

This Q&A is part of the global guide to Merger Control. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/merger-control

  1. Overview

    Merger control in Russia is exercised by the Federal Antimonopoly Service of the Russian Federation (the “FAS” or the “authority”) and is governed by the Federal Law “On Protection of Competition” and a number of internal FAS regulations covering the procedure, application and also requirements for certain documents.

    Filing is mandatory in Russia and, in most cases, clearance should be obtained before closing a deal. In certain cases (a number of intragroup transactions only), the law provides for the possibility of sending the authority a notification within 45 calendar days of closing (instead of filing before closing). Yet the latter method is very rarely used in Russia since such a procedure provides for public disclosure of the group on the FAS website a month prior to closing.

    The following transactions are covered by the Russian merger control regime (taking into the account that turnover/asset value thresholds are also met):

    • mergers between Russian companies and incorporation of a new company in Russia, if the authorised capital of such company is paid by shares or production or intangible assets of another company;
    • establishment of a JV in Russia by competitors;
    • acquisition of more than a 33% or 50% or 66% share in a Russian limited liability company;
    • acquisition of more than a 25% or 50% or 75% share in a Russian joint stock company;
    • acquisition of a 50% share in or control over a foreign entity that has supplied to Russia, over the last year, goods or services worth more than RUB 1 bn;
    • acquisition of control over a Russian company;
    • acquisition of more than 20% of the company`s production and/or intangible assets located in Russia (for intangible assets, this means that they should be protected in Russia).

    Russian law provides for two types of threshold: turnover and asset value. In general, both of them are calculated on a worldwide basis; in certain cases, however, the Russian turnover/asset value should also be taken into the account (for more detail, please see item 3.1, 3.3).

    The application to the authority should be filed by the acquirer or parties participating in the merger or setting up a JV and, in most cases, only such parties may be held liable for violations of the merger control regime.

    The ordinary review period for an application is one month. Formally, it could be extended for up to two months or even more; in practice, however, in most cases it does not exceed 1.5-2 month.

    In the majority of cases, clearance decisions in Russia are positive and are issued without any remedies. Even so, the FAS may, along with a positive decision, issue an obligatory order if it decides that competition in Russia might be affected by the deal.

    Violation of the merger control regime may entail imposition of fines, disqualification of officials (in certain cases) and also invalidation of the transaction.

    Please note, that this overview relates to merger control regime only and does not cover foreign investments control regime (regulating foreign investments in Russian strategic entities) providing for specific regulation which should be analysed separately.

  2. Is mandatory notification compulsory or voluntary?

    Filing is mandatory in Russia. Violation of the merger control regime may entail imposition of fines, disqualification of officials (in certain cases) and also invalidation of the transaction.

  3. Is there a prohibition on completion or closing prior to clearance by the relevant authority? Are there possibilities for derogation or carve out?

    In general, clearance should be obtained before closing the deal. In certain cases (a number of intra-group transactions only), the law provides for the possibility of sending the authority a notification within 45 calendar days of closing (instead of filing before closing). Yet the latter method is very rarely used in Russia since such a procedure provides for public disclosure of the group on the FAS website a month prior to closing.

    The practice of “carving out” certain assets in the transaction is not frequently used specifically for the purpose of obtaining clearance in Russia, since the merger control procedure does not take long time and is predictable enough. Consequently, in general, the parties have enough time and a good opportunity to prepare and successfully obtain a clearance decision. Also, in practice, some consequences of closing before clearance could be mitigated by obtaining of a positive clearance decision afterwards.

    The Russian law does not provide for the possibility of the FAS to grant derogation, therefore such an instrument does not exist in Russia in the form similar to the EU one.

  4. What are the conditions of the test for control?

    The following transactions are covered by the Russian merger control regime (taking into the account that turnover/asset value thresholds are also met):

    • mergers between Russian companies and incorporation of a new company in Russia, if the authorised capital of such company is paid by shares or production or intangible assets of another company;
    • establishment of a JV in Russia by competitors;
    • acquisition of more than a 33% or 50% or 66% share in a Russian limited liability company;
    • acquisition of more than a 25% or 50% or 75% share in a Russian joint stock company;
    • acquisition of a 50% share in or control over a foreign entity that has supplied to Russia, over the last year, goods or services worth more than RUB 1 bn;
    • acquisition of control over a Russian company;
    • acquisition of more than 20% of the company`s production and/or intangible assets located in Russia (for intangible assets, this means that they should be protected in Russia).

    Acquisition of control means that the acquirer obtains the possibility of “determining the general conditions for the target to do business”. In particular, this could be achieved through a management or agency agreement made with the company or through acquisition of a foreign company that has a subsidiary in Russia. The latter constitutes the most popular grounds for filings in Russia made by foreign acquirers.

    Please note, however, that the control test may formally also be satisfied by acquisition of de facto control, since the law does not provide a definition of the term “control”. In any case, however, such control should provide a possibility of “determining the general conditions for the target to do business”.

    Please also note that the Russian merger control regime does not set rules for joint control, only sole control being covered. Consequently, if more than one entity acquires control over the target, this should be regarded as separate deals, which might require separate clearances.

    The concept of negative control (when control is achieved through veto rights) does not in general trigger antimonopoly filing in Russia. In certain cases, however, such possibility need to be preliminary discussed with the FAS.

    Please note that intragroup transactions are not covered by the merger control regime if the group is based on structural criteria. This means that the companies participating in the transaction should be directly or indirectly connected by holding a more than 50% share. All other intragroup transactions should be cleared in the ordinary way or by using a special procedure providing for the possibility of sending the FAS notification within 45 calendar days of closing.

  5. What are the conditions on minority interest in your jurisdiction?

    Minority interests are also covered by the Russian merger control regime in certain cases. In the absence of specific structural links between the shareholders and also any specific circumstances connected with, e.g., de facto control, 33% in a Russian limited liability company and 25% in a Russian joint stock company are the lowest shareholdings that might trigger clearance in Russia.

    Acquisitions of interests amounting to “decisive influence” might be covered by the merger control regime if such acquisition could be regarded as acquisition of control. Please note, however, that control generally means the ability to make (pass) certain decisions, so the possibility of blocking decisions should not, as a general rule, be regarded as such.

  6. What are the jurisdictional thresholds (turnover, assets, market share and/or local presence)?

    The Russian merger control regime is based on both turnover and asset value thresholds, while market shares or the fact of overlapping businesses are not considered. For the purpose of this overview, below are stated the thresholds for acquisition deals, which constitute the majority of deals actually cleared by the FAS.

    The thresholds for acquisition deals are considered to be met if:

    • the global turnover of the acquirer and its group and the seller and its group for the calendar year preceding the transaction calculated together or separately exceeds RUB 10 bn; or
    • the total value of the assets of the acquirer and its group and the seller and its group taken together or separately for the calendar year preceding the transaction exceed RUB 7 bn; and
    • the total assets of the target and its group exceed RUB 0.4 bn.

    Please note that, if the seller loses its control over the target as a result of the transaction (e.g., sells a 100% share), its own assets/turnover and those of its group are not considered when checking if the RUB 0.4 bn. threshold has been met.

    There is only one case when the thresholds can be satisfied by one party only. As clear from the above, the Seller’s group turnover/assets and the target’s assets may alone satisfy the thresholds mentioned.

    The turnover/asset thresholds in Russia are rarely updated and refer to all revenues worldwide, not to the relevant product market. Consequently, neither the physical location of the assets nor the place of their registration is relevant for calculating the abovementioned thresholds.

    Even so, this should be taken into account when analysing whether the transaction itself is covered by the merger control regime. In particular acquisition of a foreign company could fall within merger control regime if such company supplied to Russia in the last year goods and services worth more than RUB 1 bn. Therefore such criteria could be viewed as an additional threshold applied to concrete transaction.

    Please note that the jurisdictional thresholds are somewhat different with regard to financial organisations (banks, stockbrokers, insurance companies, micro financial institutions, etc.). In this case, only the target’s assets are considered, while the threshold for the target’s assets varies depending on the type of business it runs.

    For calculating the thresholds, the parties should always use the most recent annual financial statements.

  7. Is there a particular exchange rate required to be used for turnover thresholds and asset values?

    There are no specific rules in place as to the exchange rates for calculating assets and turnover estimated in currency. In practice, 31 December of the relevant year has been commonly used for this purpose.

    In particular, the 31 December 2015 exchange rates as per the Russian Central Bank are as follows:

    • 1 US dollar was equal to RUB 72.8827;
    • 1 EURO was equal to RUB 79.6972.

    Other options including calculating of average exchange rate or calculating such rate on the execution date also may be considered under specific circumstances.

  8. Do merger control rules apply to joint ventures (both new joint ventures and acquisitions of joint control over an existing business?

    Establishment of a JV in Russia by competitors is covered by the Russian merger control regime. Since the definition of a JV is quite general, it covers new joint ventures, existing entities and even contractual arrangements made by the parties without incorporation of any legal entity.

    The jurisdictional thresholds for JVs are the same as for acquisition transactions with one exception: the RUB 0.4 bn threshold does not apply, since a JV is not established at the time of filing, so there is no target. Consequently, the relevant thresholds are met if:

    • the global turnover of the parties to the JV and their groups calculated together or separately for the calendar year preceding the establishment of the JV exceeds RUB 10 bn; or
    • the total asset value of the parties to the JV and their groups taken together or separately for the calendar year preceding the establishment of the JV exceed RUB 7 bn.

    Please note once again that the concept of JV clearance in Russia is quite general and the relevant thresholds could be met, e.g., based on the asset value of the head companies of the parties’ groups. The only connection with the Russian market is that such a JV should be established for activity on the Russian market. This means that establishment of a foreign JV by competitors that will, in particular, be active in Russia might fall under the merger control regime in Russia if the relevant thresholds are met.

    Moreover the concept of competition in the context of JV clearance is also not fully clear. In practice, competition test is met if the parties compete in Russia.

  9. In relation to “foreign-to-foreign” mergers, do the jurisdictional thresholds vary?

    “Foreign-to-foreign” transactions are covered by the Russian merger control regime if the acquired foreign company has a subsidiary in Russia (this will be regarded as acquisition of control over such a subsidiary) or supplied to Russia in the last year goods and services worth more than RUB 1 bn.

    The jurisdictional thresholds for “foreign-to-foreign” transactions are the same as for any other transactions covered by the merger control regime. Please note, however, that, as mentioned above, additional criteria relating to the turnover of the foreign company in Russia may be applied in certain cases.

  10. For voluntary filing regimes (only), are there any factors not related to competition that might influence the decision as to whether or not notify?

    If the JV between competitors is not formally covered (or not expressly covered) by merger control rules, the parties to such JV are entitled to make a voluntary filing in order to check whether it might affect competition on the market or in order to clear certain contractual provisions. This option is quite reasonable for JVs since in the absence of clearance, the JV might be later reviewed by the FAS as a cartel. Consequently, if the JV is cleared by the authority, the abovementioned accusation cannot be applied.

    Also please be informed that Russian law provides for the general possibility to clear the draft agreement containing certain anticompetitive clauses with the FAS.

  11. Additional information: Jurisdictional Test

    Please note that the Russian law provides for the general possibility of the applicant to contact the FAS before filing in order to preliminary inform the authority about the deal, check the completeness of the package, discuss provision of additional information and potential remedies (the applicant may propose them to the authority). The FAS is not obliged to accept or officially confirm anything at this stage, but it shall take the provided information into account when considering the deal. Since there is no detailed procedure for such communication, in practice, it depends on the deal in question and arrangements with concrete FAS’ department.

  12. What is the substantive test applied by the relevant authority to assess whether or not to clear the merger, or to clear it subject to remedies?

    While considering a deal, the FAS is obliged to proceed with a formal market analysis in order to get actual information on the current situation on the market and also the shares of the parties to the deal on such market.

    If the authority comes to the conclusion that the deal may lead to restriction of competition, it might decide to reject the deal (if the negative consequences of the deal are quite substantial) or to clear the deal and also issue an order with a certain obligation that would protect competition on the market.

    In particular, the FAS may reject the deal if it leads to creation of a dominant company with a substantial share (such risk exists for deals resulting in acquisition of more than 50% market share). In practice, however, the FAS may prefer to clear the deal and issue an accompanying order containing certain divestment and behavioural obligations (e.g., to sell certain assets, to adopt a public trade policy or to establish and clear with the FAS a selective distribution system).

    Please note that the parties to the deal may help the FAS analysis by providing the relevant information on the market to the FAS. We always recommend including such information with the initial application since, in practice, the FAS does not have enough time to analyse the market, so, in most cases, it is happy to review the information provided by the parties (in certain cases, it requests such information from the parties if it was not provided in the initial package of documents, so, in order to avoid any extension of the review period, we recommend including it in the initial package).

  13. Are non-competitive factors relevant?

    The authority might take into the account certain non-competition matters, however, in practice this is not relevant for merger control regime since this is quite standard and technical procedure in Russia. Yet, such practice exist within foreign investments control regime.

  14. Are there different tests that apply to particular sectors?

    There are no specific tests for certain sectors. Yet, please note that since the threshold for dominance is lower in some sectors (e.g. electric power industry) it may affect the FAS analysis of the potential consequences of the deal.

  15. Are ancillary restraints covered by the authority’s clearance decision?

    The possibility of including ancillary restraints in the agreement is not officially provided by the Russian law, in practice, however, such restraints are admitted by the authority. Generally for consideration of ancillary restraints the FAS uses the approach adopted by the EC (Commission Notice on restrictions directly related and necessary to concentrations), which makes the procedure quite predictable for the parties.

    Please note that since the clearance decision is Russia is quite short, it does not contain specific reference to ancillary restraints, however, if they were provided to the authority in the SPA or draft documents and the FAS issued a positive clearance decision this means that such restraints are in line with current antitrust legislation.

  16. For mandatory filing regimes, is there a statutory deadline for notification of the transaction?

    Merger control in Russia is mostly executed in the form of preliminary (prior) control, so there is no filing deadline for such control. Each deal that meets the thresholds stipulated by law should undergo preliminary approval by the FAS any time before completion.

    As for post factum notification, it should be filed within 45 calendar days of completion of the deal.

  17. What is the earliest time or stage in the transaction at which a notification can be made?

    The parties may submit the filing once they agree on the material terms of the deal.

    If the transaction documents are not signed at the time of filing, the parties could provide the authority with the current drafts of the relevant documents containing the material terms of the deal (draft of the SPA or master agreement will suffice for filing purposes).

    Please note, however, that since a clearance decision is valid for one year from issue, we do not recommend filing earlier than 3 months prior to completion. So the optimum period for filing is 3 month prior to completion.

  18. What is the basic timetable for the authority’s review?

    By default, it takes 30 calendar days for the FAS to consider a filing after its submission.

    Should the applicant file an incomplete package of documents, the FAS notifies the applicant about this within 10 calendar days of the filing and returns the package of documents to it.

  19. Under what circumstances the basic timetable may be extended, reset or frozen?

    The duration of a review may be prolonged by the FAS up to two months (three months in total). In such a case, the FAS issues a decree containing the grounds for such extension.

    The term for a review may be prolonged for the following reasons:

    • Need for further analysis of all competition aspects of the deal;
    • Request for further information.

    Should the FAS determine a negative impact on competition, it may also delay clearance until the parties perform certain conditions (e.g., adoption of access conditions to production facilities). In this case, the FAS will set a term for performance of such conditions, which may not exceed nine months. Please note, however, that such an instrument applies to mergers or incorporation of a company only.

    If a transaction is also subject to preliminary approval in accordance with the foreign investment control regime, the review period will be prolonged until the foreign investment control clearance is granted. Formally, the foreign investment control procedure takes six months but, in practice, might take much more - up to one year.

  20. Are there any circumstances in which the review timetable can be shortened?

    It is almost impossible to shorten the initial 30 day review period (very rare cases in practice). If the review period is extended for two months, the applicant may get a decision earlier (the specific time “discount” depends on the circumstances of the deal and/or the speed at which additional information is provided to the authority).

    Please note that in order to avoid the extension of the review period or shorten the extended period, the parties may indicate the completion date in the initial application to the authority.

  21. Which party is responsible for submitting the filing? Who is responsible for filing in cases of acquisitions of joint control and the creation of new joint ventures?

    In acquisition deals, the acquirer is responsible for filing. In cases of mergers and JV`s incorporation, all parties participating in such a merger or JV. In the event of incorporation, all or any entity taking a decision on incorporation of the company. Please note that only a responsible party may be held liable for non-submission of the filing.

  22. What information is required in the filing form?

    The specific scope of the information to be included on the filing form depends on the nature of the deal. For example, slightly different information may be required for mergers and acquisition of production assets of the company. Also as mentioned above, acquisition of financial organisations has its own features.

    Yet, in general, it is necessary to provide the following information:

    • Information on the deal, its parties and their groups;
    • Information on the financial figures of the parties (their groups);
    • General information on the market in question;
    • Information on the activities of the parties (their groups) on the Russian market;
    • Information on the applicant`s beneficiaries.

    Russian law does not provide any template form for filing; it just provides a list of information and documents required. Consequently, the volume of the filing depends on the deal and the applicant`s approach to such filing.

  23. Which supporting documents, if any, must be filed with the authority?

    Again, as with the information to be included on the filing form, the specific list of documents depends on the deal. Yet there are certain standard documents always provided to the authority. In particular:

    • Power of attorney (for the applicant`s representative);
    • Certificate of incorporation (for both the applicant and the target);
    • Articles of Association (for both the applicant and the target);
    • Financial statement or balance sheet for the last reporting period (for the applicant, the target and consolidated statements for their groups);
    • Transaction documents;
    • Licences (government permissions to perform certain types of activity) (for the applicant, the target and companies of their groups);
    • Tables with information on activities on the Russian market for the last two years (information on sales and purchases) (in general, required for all entities acting on the Russian market);
    • Group charts (for both the applicant and the target);
    • Information on more than 5% shareholders in the applicant and the target and also information on more than 5% shareholdings held by the applicant and the target in any company.

    All documents provided to the FAS should be valid on the filing date. Documents containing information on the activities of the parties on the market should include the information actually available at the time.

    All documents filed with the FAS should be provided in Russian or translated into Russian (the translation should be notarised). Foreign official documents should also be notarised and apostilled (or otherwise legalised when the apostille option is not available).

    The application and the whole package of documents are provided to the authority by the applicant and may be signed by the applicant`s authorised representative acting on the basis of a PoA. Yet, please note that the specific documents issued by certain companies (not the applicant) should be signed by the director or duly authorised person of such company.

  24. Is there a filing fee? If so, please specify the amount in local currency.

    The filing fee in Russia is fixed at RUB 35,000 (thirty-five thousand).

  25. Is there a public announcement that a notification has been filed?

    Information on the filing should be disclosed on the FAS website. The deadline for such disclosure is not stated in the law. Please note, however, that, since this is a new requirement (effective from January 2016), in practice, there still might be instances when filing is not announced.

    The resolution on extension of the review period and the final decision of the FAS are also publicly announced on its website.

  26. Does the authority seek or invite the views of third parties?

    Any third parties are entitled to provide the FAS with information on the deal’s impact on competition. This relates to any deal considered by the authority.

  27. What information may be published by the authority or made available to third parties?

    The applicant or any other company that provides commercially sensitive information to the FAS may mark it as confidential and the FAS will be obliged not to disclose such information to any third parties.

    Information disclosed on the FAS website is quite limited. In most cases, this is general description of the deal, including the names of the parties and the target, information on their activities and the number of shares to be acquired. The authority does not disclose any confidential information. In particular, the FAS does not publish applications (notifications) or any documents provided to the FAS together or in connection with the application (notification). The FAS’s decision that is officially published also contains only general information on the deal and the parties thereto.

  28. Does the authority cooperate with antitrust authorities in other jurisdictions?

    The FAS has entered into a number of bilateral agreements with antitrust authorities in different states (e.g., China, Bulgaria, Poland, Brazil, France, EEU countries). This means that, theoretically, the FAS may consult with and in certain cases request information from (e.g. from EEU countries) the authorities in other jurisdictions.

  29. What kind of remedies are acceptable to the authority? How often are behavioural remedies accepted in comparison with major merger control jurisdictions, such as the EU or US?

    The merger control legislation provides for two kind of remedies:

    • determination of the conditions that shall be fulfilled by the parties before clearance (e.g., adoption of access conditions to production facilities or IP rights, requirements on sale of certain assets to the third parties). This instrument applies only to mergers or incorporation of a company and is rather rare (only a few cases when the FAS has determined such conditions).
    • possibility of issuing an order (behavioural or structural) together with the clearance decision. Such a possibility is rarely used by the authority.

    The FAS is free to determine the conditions of the specific order, so the content always depends on the deal in question. Most orders are behavioural, contain preventive provisions and also reporting obligations on key changes in the activity of the company (pricing policy, cancellation of current agreements with customers, etc.). Structural orders are also possible when one party to the deal is a dominant company and the market is not sufficiently competitive.

    Such orders may prescribe divestment obligations; in practice, however, the FAS does not define in detail the conditions of a future sale; it only determines the deadline for this. This means that, generally, closing of the deal is not conditional upon such sale.

  30. What procedure applies in the event that remedies are required in order to secure clearance?

    The decision whether or not to issue a remedy and on its content is made by the FAS. Such a decision may be made any time within the review period. The FAS is not obliged to consult with (or even to inform) the parties or any third parties when making a decision to use a remedy and such a decision is not market tested. Yet the parties may send the FAS their own proposals in relation to potential remedies and, in practice, the FAS is ready to discuss the approach to the remedies with the parties. Please note that, in general, remedies issued by the FAS do not depend on and are not connected with remedies in another jurisdictions (excluding the situation when they contradict each other).

  31. What are the penalties for failure to notify, late notification and breaches of a prohibition on closing?

    Russian law provides for three types of negative consequences for violations connected with the merger control regime. They are: fine, disqualification of the company’s official (in certain cases) and invalidation of the transaction.

    The maximum fine for failure to submit a filing, perform the FAS’s order, closing before clearance, late notification, failure to provide the information requested by the authority or provision of inaccurate information amounts to RUB 500,000 for legal entities and RUB 20,000 for officials. The fine is usually imposed on the applicant or company that failed to provide the information requested by the authority or provided inaccurate information. Please note that, in practice, the maximum fine is rarely applied (only for repeat violations), so the actual amount is often lower.

    Disqualification may be imposed on officials for failure to perform the FAS’s order only in certain exceptional cases (e.g. repeated violation or existence of several aggravating circumstances). The maximum term of disqualification is three years. Please note, however, that in practice disqualification is rarely used in Russia for such violations.

    The limitation period for imposition of a fine and disqualification is one year from the date of the violation.

    Along with imposition of a fine, in the event of failure to submit the filing, perform the FAS’s order, closing before clearance, late notification or even provision of misleading information (entailing a wrong decision), the FAS (not third parties) may also apply to the court for invalidation of the transaction if it proves to have a negative effect on competition. The limitation period for such a claim is one year after the FAS becomes aware of the violation.

    Invalidation is rarely used in practice since most deals do not contain any competition implications. Consequently, for certain deals, such a risk is initially theoretical. Nevertheless, we always recommend undergoing the clearance procedure even with late filing, since a positive clearance decision eliminates the risk of invalidation of the deal in the future.

    Please note that, if closing occurs before the clearance decision but the final decision is ultimately positive, it is almost impossible to invalidate the deal on these grounds. Yet a fine still might be imposed.

    Also, we would like to draw your attention to the following practical consequences, which should be taken into account at the preparatory stage of the deal:

    • In the event of direct acquisition of shares in Russian limited liability companies, the notary public (such deals should be notarised) might request the parties to provide the FAS clearance decision or confirmation that the deal does not require any consent from the authority (e.g., in the form of representation in the SPA);
    • Since information on the relevant violation is often announced on the FAS website, this might have certain reputational consequences for the applicant and the target.
  32. What are the penalties for incomplete or misleading information in the notification or in response to the authority’s questions?

    Russian law provides for three types of negative consequences for violations connected with the merger control regime. They are: fine, disqualification of the company’s official (in certain cases) and invalidation of the transaction.

    The maximum fine for failure to submit a filing, perform the FAS’s order, closing before clearance, late notification, failure to provide the information requested by the authority or provision of inaccurate information amounts to RUB 500,000 for legal entities and RUB 20,000 for officials. The fine is usually imposed on the applicant or company that failed to provide the information requested by the authority or provided inaccurate information. Please note that, in practice, the maximum fine is rarely applied (only for repeat violations), so the actual amount is often lower.

    Disqualification may be imposed on officials for failure to perform the FAS’s order only in certain exceptional cases (e.g. repeated violation or existence of several aggravating circumstances). The maximum term of disqualification is three years. Please note, however, that in practice disqualification is rarely used in Russia for such violations.

    The limitation period for imposition of a fine and disqualification is one year from the date of the violation.

    Along with imposition of a fine, in the event of failure to submit the filing, perform the FAS’s order, closing before clearance, late notification or even provision of misleading information (entailing a wrong decision), the FAS (not third parties) may also apply to the court for invalidation of the transaction if it proves to have a negative effect on competition. The limitation period for such a claim is one year after the FAS becomes aware of the violation.

    Invalidation is rarely used in practice since most deals do not contain any competition implications. Consequently, for certain deals, such a risk is initially theoretical. Nevertheless, we always recommend undergoing the clearance procedure even with late filing, since a positive clearance decision eliminates the risk of invalidation of the deal in the future.

    Please note that, if closing occurs before the clearance decision but the final decision is ultimately positive, it is almost impossible to invalidate the deal on these grounds. Yet a fine still might be imposed.

    Also, we would like to draw your attention to the following practical consequences, which should be taken into account at the preparatory stage of the deal:

    • In the event of direct acquisition of shares in Russian limited liability companies, the notary public (such deals should be notarised) might request the parties to provide the FAS clearance decision or confirmation that the deal does not require any consent from the authority (e.g., in the form of representation in the SPA);
    • Since information on the relevant violation is often announced on the FAS website, this might have certain reputational consequences for the applicant and the target.
  33. Can the authority’s decision be appealed to a court? In particular, can third parties who are not involved in the transaction appeal the decision?

    The FAS decision and/or order may be appealed to a state arbitration court by the parties to the deal and the target within three months of its issue. Formally, third parties may also challenge the FAS decision and/or order if they prove that such a decision/order affects their rights.

  34. What are the recent trends in the approach of the relevant authority to enforcement, procedure and substantive assessment?

    The enforcement policy of the FAS in relation to the clearance control procedure in Russia is quite stable. The vast majority of decisions are positive and are issued within the initial 30 calendar day period without any orders. Consequently, invalidation of the transaction or appeal against the FAS decision are very rare cases.

  35. Are there any future developments or planned reforms of the merger control regime in your jurisdiction?

    The FAS has recently adopted rules allowing an application to be filed in electronic format which should speed up communication process between the companies and the authority. No other changes are anticipated at the moment.