4 March 2016
Merger Control 2016. Russia - Trends & Developments | Anna Numerova and Elena Kazak, Chambers and Partners Global Practice Guide

Trends and Developments in Russia


The major trend in the regulator’s merger control approach remains quite liberal. This can be seen in both the regulator’s practice and legislative development. Fines for failure to meet the merger control requirements have not been increased.

The Federal Anti-monopoly Service (the FAS) tends to clear the vast majority of transactions filed, most of them unconditionally, unless a transaction significantly impedes completion in Russia. The number of claims challenging the FAS’s decisions is also as low as it used to be in the past, just one or two cases per year. The FAS also continues to take into consideration any economic efficiencies that are produced by a merger, as a result of which the FAS will clear some competitor’s concentrations on a case-by-case basis. For instance, the FAS promised to clear the contemplated merger of Aeroflot and Transaero. The main reason is to keep the market stable in the current political and economic situation.

In practice, for foreign-to-foreign transactions the FAS applies a slightly more liberal approach to merger control notifications. For example, as it is not always possible to tailor some technical requirements to foreign companies, the regulator usually allows them to provide less information (eg information on passport details of directors of the companies belonging to the parties’ groups).

Therefore, the regulators continue the policy of supporting investments through M&A, including foreign ones.

In comparison to the Europe or the USA, certain matters are still not regulated by the Russian merger control rules. The FAS tends to fill such gaps by way of practice and guidelines as well as by its law-making activity, especially through amendments to the Competition Law and other relevant laws.

One of such unregulated matters is the non-compete clause in SPAs under M&A transactions. The non-compete clause may be considered as violating Article 11.4 of the Competition Law, which prohibits agreements between legal entities that lead or can lead to restriction of competition. However, there are no official guidelines with regard to the non-compete clause within the framework of M&A transactions. Taking into account international practice in 2013, the FAS issued Guidelines on Assessment of Joint Ventures (Guidelines), clarifying under what conditions a non-compete clause may be justified in joint-venture agreements, without contradicting the competition law. Notwithstanding, the Guidelines do not cover share purchase or other agreements used in M&A and may be applied by analogy only, so it is entirely possible that such a clause may constitute grounds for initiation of a separate investigation and/or for clearing a transaction with a condition to remove this from the SPA. In theory, the FAS may also reject clearance, as a transaction can potentially be considered as restricting competition by hindering market access to the seller, which is usually subject to a non-compete obligation. Meanwhile, the Competition Law provides for a separate filing procedure for approval of agreements containing restrictive clauses that may be applied to mitigate possible risks. During consideration of such a filing, it is necessary to justify to the regulator that such an agreement is permissible under legally listed grounds, to respond to the regulator’s concerns and to provide sufficient evidence. This procedure may be undertaken in parallel with the merger control notification consideration.

The applicability of the “hold separate” agreement concept in Russia also remains unresolved. In certain instances, global transactions may need to be closed prior to being cleared by the FAS for various reasons. Under the Competition Law setting out a suspensory regime, a transaction cannot be closed without getting clearance from the regulator. Herewith, a hold separate agreement allows de jure and de facto control over the Russian assets to remain unchanged pending FAS clearance. Thus this mechanism would be very useful. It seems that the regulator may view it positively, as in fact it ensures compliance with Russian law without holding up the implementation of the transaction on a global level.

A significant trend is the increasing importance of economic analysis in merger review. Determining market boundaries, calculating a level of concentration and identifying barriers to entry have become important steps in the merger review process. The law does not formally require the parties to undertake market analysis, but, in practice, the FAS takes into account market analysis reports, particularly those prepared by independent economists. In a recent transaction, the FAS agreed with the market definition suggested by the parties’ counsel and granted unconditional clearance, owing in large part to the market analysis prepared in advance of filing the notification. In another case, the market analysis submitted to the FAS had a significant impact on the scope of remedies imposed.

An important trend is enhanced openness and co-operation of the FAS with the non-governmental organisations aimed at legislation improvement and better understanding of the business realities. The FAS continues to co-operate with Non-Commercial Partnership for Competition Support, AEB and others. At the same time, the most active work goes on with Non-Commercial Partnership for Competition Support which unites competition law lawyers and economists and is involved in law-making activity, the establishment of consistent practices and advocacy, including explanatory works. Guidelines on the Assessment of Joint Ventures became the first document drafted in close co-operation between the Partnership and the regulator. In the coming year it is planned by means of joint efforts to elaborate guidelines regarding the non-compete clause and hold separate agreements. Members of the Partnership are also engaged in work to simplify the formal requirements on documents and information to be submitted together with the merger control notification. 


The most important merger control development is the package of amendments to the Competition Law and other relevant laws (the so-called “Fourth Anti-monopoly Package”).

The FAS has been working on the amendments package for over four years. The Fourth Anti-monopoly Package is the most liberal of them and aimed at supporting business. With regard to merger control, the following changes will take place:

Cancellation of the Russian Register of companies with market share exceeding 35% (the “Register”):During the almost two decades in which it has been maintained by the FAS there have been continual debates about whether it should be abolished. Currently, merger notification is required if a buyer or target (or any company from their groups) is listed in the Register, regardless of actual assets or turnover figures. In recent years, many foreign companies or their subsidiaries have been listed in the Register, including Novo Nordisk, Roche, Hoffmann-La Roche, Baxter Healthcare, Eli Lilly, Fresenius, Edwards Lifesciences and others. Under the Fourth Anti-monopoly Package, the Register will be cancelled, and a filing requirement for any firm in the Register will no longer exist. This change will reduce the administrative burden on business and decrease the number of notifications to be submitted, especially in the Russian regions.

Introduction of a new procedure for joint venture approvals: The Fourth Anti-monopoly Package also proposes to bring joint venture agreements under merger control procedures. Once the Package becomes effective, joint venture agreements between competitors will be subject to prior notification if asset or turnover thresholds are met. Currently, companies seeking legal certainty can submit agreements potentially restricting competition to the FAS for review. The amendments will make notification mandatory. So when foreign companies are planning to establish a joint venture related to Russia with foreign or Russian partners, a preliminary assessment should be undertaken to determine if the joint venture is subject to notification obligation. Clearing a joint venture agreement with the regulator will secure its parties from the declaration of the conclusion of such an agreement violating provisions of the Competition Law, which prohibit restrictive agreements.

Introduction of a new rule allowing companies to submit information on a contemplated transaction to the FAS prior to the filing: This procedure also enables companies to propose remedies aimed at ensuring competition and eliminating the potential competition concerns. Currently, remedies that may be imposed on an applicant are not formalised. The procedure for arriving at an appropriate remedy lacks transparency, and competitors or other interested parties may take advantage of the lack of transparency to attempt to influence the regulator. The FAS is not under a duty to inform an applicant about potential remedies. The applicant may, as a result, first learn of proposed remedies at the last day of the waiting period or shortly before receiving a conditional clearance. In practice, this means that an applicant must be prepared to make important business decisions within a tight timeframe. As a rule, for large deals, the FAS tends to negotiate remedies to ensure compliance and increase the acquirer’s performance level. This is solely out of goodwill on the part of the FAS, however, and not because of any statutory obligation. For foreign companies relying upon counsel and the quality of negotiations held with the FAS, the current procedures entail considerable uncertainty. The procedure to be introduced is expected to enable the FAS to take into account the companies’ suggestions when clearing the transaction and elaborating remedies.

The amendments provide for submitting notifications to the regulator electronically in order to ease the document flow. The relevant procedure is to be established by the FAS separately.

Information on all notifications filed must now be posted on the FAS official website. The purpose of this amendment is to enable the market participants and other parties concerned to provide the regulator with their views on the contemplated transaction, and to let the regulator know about the potential effects of such a transaction before making a clearance decision.


The major trend is the liberalisation of the merger control regime and a reduction of the administrative burden on business. The FAS strives to follow the European approach and best foreign practices in merger control. At the same time, merger review is becoming more sophisticated, especially as markets become more concentrated.

Although the Competition Law and by-laws are frequently amended, there are still a number of issues lacking regulation or still unsettled. The Fourth Anti-monopoly Package does not cover all such issues. Therefore, further amendments, that is, the Fifth Anti-monopoly Package, formalising established practice and guidelines can be expected.

by Anna Numerova, Partner, and Elena Kazak, Senior Associate at Egorov Puginsky Afanasiev & Partners.


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