Takeaways
- Igor Artemiev, head of Russia’s Federal Antimonopoly Service, or FAS, told Reorg M&A that the authority is aiming to make its scrutiny of large transnational mergers a priority.
- While a large portion of the authority’s merger work remains focused on Russia’s internal markets, FAS in 2018 imposed remedies on the Monsanto/Bayer transaction following an extensive investigation that Artemiev said involved the examination of big data, network effects and other digital challenges related to the merger.
- Russia’s parliament is currently considering a package of amendments aimed at helping FAS deal with the challenge of enforcing competition in digital markets. FAS deputy head Andrey Tsyganov told Reorg M&A he is hoping Russia’s parliament will approve the package by next spring.
- One of the amendments would introduce a transaction volume threshold, similar to those in Germany and Austria, that would require companies to notify FAS of their deal if the volume of the transaction exceeds 7 billion rubles.
Igor Artemiev, head of Russia’s Federal Antimonopoly Service, or FAS, told Reorg M&A that the authority is aiming to make its scrutiny of large transnational mergers a priority by modifying its merger control procedures through legislation.
The
package of amendments, which are aimed at helping FAS deal with the challenge of enforcing competition in digital markets, have been under development for almost five years and are currently under consideration by the country’s parliament, according to Artemiev and FAS deputy head Andrey Tsyganov.
Artemiev said FAS officials have discussed the package several times in parliament, and that they have strong support from State Duma representatives. Tsyganov stated that he is hoping parliament will approve the package by next spring.
One of the amendments would establish a transaction volume threshold, akin to those recently introduced in Germany and Austria. The amendments are part of the fifth antimonopoly package and will require premerger notifications in cases where: (1) the merging entities have an aggregate balance sheet value exceeding 7 billion rubles; (2) the merging entities’ total revenue for the previous year exceeds 10 billion rubles and the target entity’s total asset value exceeds 400 million rubles; or (3) the transaction value exceeds 7 billion rubles. Another provision would establish procedures for a “trustee” institute to monitor and ensure that FAS’ preliminary conditions and remedies on mergers are efficiently implemented.
The authority’s legislation is “in accordance with the best practices of the European Union and U.S.,” Artemiev said. “ And now we’re like Germany and other countries that are amending their digital legislation.”
In 2017, provisions came into force in Germany that supplemented the authority’s filing thresholds - which had been based on turnover of the target entity in Germany - with an alternative value of consideration threshold. In a
report that year, German Federal Cartel Office President Andreas Mundt called the new transaction volume threshold a consequence of Facebook’s $19 billion purchase of WhatsApp.
Mundt noted that there were only three jurisdictions in the EU that could review this merger due to WhatsApp’s low turnover. “It is not unusual in the digital economy for important companies to start with a very low turnover,” he said. “The transaction volume threshold could enable the Bundeskartellamt to look at such important deals.”
In Russia’s 2019
contribution to the annual session by the Intergovernmental Group of Experts on Competition Law and Policy, the government wrote that the value of merging companies’ assets “may not reflect the real impact on the economic conditions of a transaction,” which is why a size-of-transaction threshold is needed.
While a large portion of FAS’ merger work remains focused on Russia’s internal markets, the authority
imposed remedies on the 2018 Monsanto/Bayer transaction following an extensive investigation. During its probe, FAS analyzed big data, network effects and other digital challenges related to the merger, Artemiev said. The head enforcer also noted that FAS worked with the European Commission on that deal as well as during the Alstom/Siemens transaction.
“We always hold consultations with the European Commission in regard to mergers,” Artemiev said. He added that despite recent developments in international politics, “the antimonopoly sphere is not politicized.”
Artemiev said FAS has more than 50 agreements with countries that enable it to cooperate with competition authorities in merger investigations. While FAS has agreements to start joint investigations with the European Commission and enforcers in countries including the U.S., China, Brazil and India, its “closest partners in investigations and cooperation are CIS countries,” Artemiev said. CIS refers to the Commonwealth of Independent States, a regional intergovernmental organization made up of post-Soviet republics.
--Alex Wilts