The Russian Government submitted to the State Duma (Parliament's lower chamber) a long awaited draft law amending the Law on Limitation of Anti-Competition Activity on Commodity Markets (the "Law"). The amendments aim to significantly increase the threshold set for obtaining prior approvals from the State anti-competition agency for carrying out certain transactions.
Currently, the Law provides that companies must obtain at least 30 days prior approval from the Federal Antimonopoly Service ("FAS") for mergers and acquisitions where the total balance sheet value of the assets of the target company and the purchaser is greater than 200 000 times the Russian minimum monthly wage (RUR 20,000,000, or approximately USD 700,000). Additionally, prior approval is required for: (i) any further purchase of a stake in a target company where the purchaser or its affiliates already hold a 20% stake; (ii) the acquisition of more than 10% of the assets of a company; and (iii) any other ways of gaining control over the target company's business or over the actions of its CEO. If the total balance sheet value of assets of the purchaser and the target is greater than 100,000 times the Russian minimum monthly wage (10,000,000 Rubles or USD 350,000), then FAS needs to be notified after the transaction.
The existing threshold has proved to be quite low resulting in many transactions requiring the prior consent of FAS, which is both time-consuming and burdensome for businesses.
The amendments plan to increase the threshold for prior approval to RUR 3,000,000,000 (around USD 100,000,000). The threshold for subsequent notification will also be increased to RUR 200,000,000 (around USD 6,900,000). It is expected that this will significantly reduce the volume of transactions reported to FAS, thereby decreasing the administrative burden on businesses and allowing FAS to concentrate on more important transactions that may have an anti-competitive effect.
The amendments still have to pass all three readings in the State Duma, get approval of the Parliament's higher chamber and be signed by the RF President. However since the Government strongly supports the draft, it is expected that it will be passed shortly.
For further information on this issue please contact David Griston at [email protected]
Social Media cookies collect information about you sharing information from our website via social media tools, or analytics to understand your browsing between social media tools or our Social Media campaigns and our own websites. We do this to optimise the mix of channels to provide you with our content. Details concerning the tools in use are in our privacy policy.