FAS abolishes notification requirement for certain transactions
Competition & Antitrust - Russia
On January 30 2014 Federal Law 423-FZ, which amends the Federal Law on the Protection of Competition, entered into force. The new law abolishes the requirement to notify the Federal Anti-monopoly Service (FAS) of a number of transactions involving economic concentrations.
In particular, participating entities with a combined asset value or sales revenues exceeding Rb400 million are no longer required to notify the FAS of transactions pertaining to:
- the creation of a new commercial entity following a merger; or
- the consolidation of two or more commercial entities.
Prior FAS notification is also no longer necessary for purchases of shares, rights or property, provided that the combined asset value or sales revenues of the acquiring entity (or group of entities) and the selling entity (or group of entities) exceed Rb400 million and the overall asset value of the selling entity (or entities) exceeds Rb60 million.
The amendments further abolish the notification requirement for certain transactions of financial organisations. There is now no need to notify the FAS before establishing a financial organisation or consolidating multiple financial organisations, provided that the combined asset value of the participating organisations does not exceed the threshold set by the government.
Notification of the purchase of a financial organisation's shares (interest), rights or assets is no longer necessary if its asset value exceeds the government-set threshold. Notification also need not be given for a consolidation of a financial organisation with a commercial entity if the financial organisation's asset value, according to the latest balance sheet, exceeds the government threshold.
The requirement to notify the FAS still applies to transactions carried out before the entry into force of the new law (ie, January 30 2014). However, pursuant to Article 1.7 of the Code of Administrative Offences, failure to notify the FAS of a transaction carried out before this date does not constitute an administrative offence.
The advance approval of the FAS is now required only for transactions between companies with an overall asset value exceeding Rb7 billion or annual revenues exceeding Rb10 billion.
The simplified approval procedure applies to transactions carried out by companies belonging to the same group of entities.
Prior approval is not required if one company's interest in another company comes to exceed 50% of the total number of votes attached to the voting shares or interest in the charter or share capital. If the companies are part of the same group of entities on other grounds, transactions carried out by such companies must comply with the terms and conditions established in Article 31 of the Competition Law and subsequent notification must be submitted to the FAS.
With this new law, the FAS has lifted a significant administrative barrier for transactions with no significant impact on competition.