Merger Control Of International Transactions Or Risk Associated With Gun Jumping In Kazakhstan

Overview

As per the European Commission Press Release, the European Commission has recently fined Altice €125 million for gun jumping conduct — breaching the EU rules and controlling PT Portugal before obtaining merger approval.

The Uber - Grab merger in Southeast Asia could be another known example of gun jumping in this part of the world. According to publicly available information, the parties were subject to interim measures resulting in the suspension of the merger process until relevant notification was filed.

The above are only a few examples of how the merger control can affect a deal, add cost, or even block it. In addition, the competition authorities can require divestments or impose other restrictive measures or sanctions (e.g. fines).

By way of a quick reminder, gun jumping relates to pre-merger coordination/ integration between the parties to an M&A transaction before it is lawful. It is widely accepted that this term describes the following two possible scenarios:

The first scenario is when there is a prior coordination (of effort, actions) between the parties (being competitors or not) of a future merger transaction; and The second scenario is when the parties of a merger transaction fail to observe respective filing requirements with respect to such transaction which qualifies for respective filing requirements. Potential risks

In view of the aforementioned European practice and given recent amendments to Kazakhstan's competition law, the Kazakhstan competition authority has started taking a tough line on gun jumping and merger control.

The Kazakhstan competition law legislation provides for several instances which may be regarded as economic concentration and require either obtaining a prior approval of, or filing a post notification to, the Kazakhstan competition authority. Such instances include, inter alia: (i) merger, (ii) acquisition of voting shares (interests), (iii) acquisition, receipt into possession or use of assets, (iv) participation of the same individual(s) on the executive bodies, boards, supervisory councils, or other management bodies of two or more legal entities as well as (v) acquisition of rights allowing to issue obligatory executive orders, to legal entity, on performance of the certain market participant's business activities or to serve as the latter market participant's executive body.

The item (v) clearly states that the obtaining of any "decision making power" (i.e. to give the purchaser...