On June 22, 2023 the Antimonopoly Committee of Ukraine (AMC) imposed a fine of UAH 24,903,494 (approximately EUR 600 000) on a German pharmaceutical producer for a failure to get merger control approval for acquisition of assets of another global pharma company.
This decision was preceded by the following.
According to the information published on the official web site of the AMC, in December 2021 the AMC received an application for merger control approval, which consisted of the acquisition by a German pharmaceutical producer of assets belonging to business entities of another global pharma company. Among such assets were trademarks, patents, licenses and also stocks of the seller of certain medication in many countries including Ukraine.
According to the published data, the acquirer group had a significant market share on Ukrainian market for another medication with the same active substance as that of the seller. Hence, according to the AMC, the implementation of the declared concentration could lead to monopolization or significant restriction of competition on the product markets of Ukraine.
Because of the product market overlap, in January 2022, the AMC opened a second-phase investigation, during which the AMC discovered through public sources that the parties closed the transaction in February 2022 and the territory of Ukraine was excluded from the scope of the transaction.
Apparently, the parties concluded a hold separate agreement. The details of the hold separate agreement are not provided in the public data. However, generally, in assets deal, like in this case, holding separately assets relevant to the specific market is easier than in other types of deals, like, for instance, share purchase deals.
Nonetheless, the AMC opened a case on violation of merger control rules for closing transaction without prior approval of the AMC, despite the fact that the parties excluded territory of Ukraine from the deal. As a result of such investigation, the AMC imposed a fine on acquirer and approved the transaction with the exception of the territory of Ukraine.
The AMC clearly stated that the fact that the parties excluded the territory of Ukraine from the scope of the transaction when they closed it prior to obtaining the AMC merger control approval, did not help, since mere closing of the transaction prior to approval being granted is sufficient ground for violation of the merger control regulation in Ukraine, despite hold separate agreement.
The AMC has also stated that should they find out that the acquirer group sold the sellers relevant medication on the territory of Ukraine, it will be ground for yet another investigation.
This case once again reminds that hold separate is not a sufficient remedy to avoid violation of merger control regulation in gun jumping situations. This is so, even in assets deals, where holding separately relevant assets outside the scope of the deal is practically feasible, unlike in share purchase deals. It also once again reminds that the AMC closely monitors public data on market developments, product distribution as well as information on local and foreign deals.