FAS Russia Publishes Merger Control Guidelines

• Published date: 26 July 2021
• Subject Matter: Corporate/Commercial Law, Anti-trust/Competition Law, Government, Public Sector, M&A/Private Equity, Inward/ Foreign Investment, Corporate and Company Law, Antitrust, EU Competition , Shareholders
• Law Firm: Dentons
• Author: Marat Mouradov and Valeria Ponomareva

The Federal Antimonopoly Service (FAS Russia) has published merger control guidelines¹ (the "Guidelines"). This is the first time over the fifteen-year existence of the modern Competition Law² that the service has published guidelines of such scope and depth in this area. The document not only summarizes the decade and a half of the antimonopoly authority's practice of considering mergers, but also provides insight into the regulator's position on a number of questions for which the laws and regulations did not give straightforward answers. Parties would ask the regulator to clarify them on a case-by-case basis,³ but those clarifications were not always consistent. Or, parties had to rely on common sense and the overall logic of the Competition Law to interpret the unclear provisions.

Practical aspects of evaluating transactions requiring antimonopoly clearance

The first section of the Guidelines, which describes the transactions (or practices) subject to antimonopoly control, provides answers to purely practical questions. In particular, what financial statements should be used to calculate the asset/revenue thresholds of the parties to the transaction, how to convert foreign currencies to rubles, how to calculate the amounts of foreign entities' supplies to the Russian Federation (including supplies by entities in the same group and supplies made through distributors), what formal requirements should be followed when valuing assets whose acquisition is subject to antimonopoly control, etc. It has been clarified that an individual's personal assets unrelated to his business activity are not included in the asset calculation, in contrast to the assets of the companies controlled by that person.

The part of the document that clarifies the parameters of transactions falling under antimonopoly control is crucial. In particular, the regulator calls attention to the need for approval (if asset/revenue thresholds are exceeded) of acquisition of rights enabling to determine the terms on which an entity does business as a result of a participant exiting a limited liability company, the company's shares (or participatory interests) being distributed among shareholders (or participants), conversion of preferred shares into ordinary shares, inheritance, and other cases. Government control of the placement of shares (or participatory interests) in trust, in investment funds or pledge is further explained. FAS Russia has for the first time presented a generalized...