Merger Control in Russia

Authors: German Zakharov and Dmitry Domnin

German Zakharov

German Zakharov is a Partner of the Competition/Antitrust and Foreign Direct Investments Practices at ALRUD Law Firm. German supports clients on a wide range of antitrust issues: coordination of merger control transactions with Federal Antimonopoly Service of the Russian Federation (FAS Russia), cartel investigations, advising on distributorship agreements, and analyzing compliance of commercial agreements with antitrust requirements. German represents companies during dawn raids performed by FAS Russia and its territorial subdivisions as well as in court.



Dmitry Domnin Dmitry Domnin is a Senior Attorney of the Competition/Antitrust and Foreign Direct Investments Practices at ALRUD Law Firm. Dmitry advises on a wide range of antimonopoly issues. His experience includes merger control clearance of global M&A/JV transactions. In addition, Dmitry represents clients during the national security clearance of transactions related to the foreign investments in Russia, including investments in strategic industries. Dmitry has experience in assisting clients during antimonopoly cases, in particular cases on abuse of dominance. Dmitry also has experience in preparation and running mock dawn raids. Dmitry advises clients on the various issues related to the antimonopoly risks of vertical agreements, including risks under the legislation of the Eurasian Economic Union.

1. Legislation and Responsible Authority

The Russian merger control regime is established by Federal Law No. 135-FZ dated July 26, 2006 “On Protection of Competition” (“Competition Law”). Details on merger control procedure and required submissions are provided in various regulations issued by the Russian antimonopoly authority, the Federal Antimonopoly Service (“FAS Russia”). For example, FAS Russia’s Order No. 129 dated April 17, 2008 “On Approval of a Form for Submitting to the Antimonopoly Authority of Information when Filing Applications or Notifications under Articles 27 – 31 of the Competition Law.” In addition, in 2021 FAS Russia published clarifications on merger control rules (“Merger Guidelines”)[1]. While this document is of a non-obligatory nature, applicants are still encouraged to review the Merger Guidelines when analyzing proposed transactions and preparing filings.

In addition to merger control rules, it also is important to analyze a planned transaction from the foreign investment regime perspective, which is established by two primary laws – Federal Law No. 57-FZ dated April 29, 2008 “On the Procedure for Making Foreign Investment into Companies of Strategic Importance for National Defense and State Security” and Federal Law No. 160-FZ dated July 9, 1999 “On Foreign Investments in the Russian Federation.” In 2008, a special body was created to review issues of control by foreign investors: the Government Commission on Monitoring Foreign Investment, chaired by the Russian Prime Minister. Within the process of reviewing such transactions, FAS Russia acts as a supporting authority, analyzing documents submitted by the applicants and providing analytical support to the Government Commission.

Transactions in the banking and financial sectors also may require separate regulatory approvals from the Central Bank of Russia depending on the transaction’s structure.

2 Transactions Subject to Merger Control Rules

All planned transactions must be analyzed by considering both (1) triggering events and (2) filing thresholds. A merger control filing is required if the transaction meets the criteria for a triggering event (2.1 below) and is above the filing thresholds (2.2 below).

2.1 Triggering events (types of transactions subject to review under Competition Law)

  1. Direct acquisitions of shares of a Russian joint-stock company or participatory interest in authorized capital of a Russian limited liability company. This group of triggering events relates to several types of transactions depending on an amount of purchased voting shares (participatory interests). More specifically, the following transactions trigger the merger control procedure:
      • A direct acquisition of more than 25% of shares of a Russian JSC by an acquirer that does not hold any voting shares of the target or holds not more than 25%. For example, an acquirer intends to purchase 30% of company’s shares from a sole shareholder.
      • A direct acquisition of more than 50% of shares of a Russian JSC by an acquirer if it already has not less than 25% and not more than 50% of shares. Referring to the previously described example, the acquirer purchased 30% and one year after decided to increase its stake by acquiring another 30% (60% in total).
      • A direct acquisition of more than 75% of voting shares of a Russian JSC by an acquirer if it already has not less than 50% and not more than 75%. For example, the acquirer decided to increase its stake once again by way of acquiring 30% of shares in addition to the 60% stake that it already has (90% in total).

    These stepped share thresholds relate to any step-by-step increase of a stake in a Russian company. Acquisitions of 100% of shares in a single deal require only one filing.

    The same principle applies to the Russian limited liability companies but the percentages of directly acquired participatory interests differ: the filing will be triggered in case of an acquisition of more than 1/3, 50% or 2/3 of participatory interests in authorized capital of a Russian limited liability company.

    Indirect acquisitions (including foreign-to-foreign transactions with a Russian nexus) are assessed under the rules described in Point (C) below.

  2. An acquisition of fixed production assets located in Russia and (or) intangible assets located in Russia if their value exceeds 20% of the value of total fixed production and intangible assets of a transferring company. Under the Merger Guidelines, the value of assets should be calculated according to the latest available balance sheet of the selling company.In practice this rule usually applies to the transactions that are structured as a direct acquisition of Russian assets connected with a particular business of a company without acquiring a separate legal entity. For example, if an acquirer intends to purchase Russian plants and trademarks for manufacturing of a particular product, and under the latest available balance sheet of a seller the value of these assets constitutes 30% of the value of total fixed and intangible assets of the transferring company, the transaction meets the criteria for this triggering event.
  3. An acquisition of rights enabling an acquirer to control business activity of a target company or an acquisition of rights to exercise functions at the executive body of the target company. The target company here means (1) a Russian legal entity or (2) a foreign company supplying products to Russia for more than RUB 1 billion (approximately USD 13.46 million) during the year preceding the date of closing of a planned transaction.In contrast to the triggering events described in Point (A) above, for this case Competition Law does not provide any quantitative thresholds for acquired shares (participatory interest), and the necessity of merger control clearance depends on the scope of the acquired rights. Generally, a merger control filing under this ground is required if the acquisition of the rights leads to acquisition of opportunity to actively control decisions of the target company.Competition Law and the Merger Guidelines provide examples of what may be considered as an acquisition of rights: a direct/indirect purchase of more than 50% [2] of voting shares of the target company and (or) a direct/ indirect acquisition of rights to appoint a CEO and (or) more than 50% of members of the collegial executive body of the target company. Besides, contractual arrangements may provide the acquirer with the rights to give binding instructions to the Russian target, such as that all terms of business activity shall be defined by the particular person/entity.

    As an illustration of how it works, if a US company would like to purchase 85% of voting shares of a UK company, and the UK company has a Russian subsidiary which is controlled through several intermediary holding companies, this acquisition meets the criteria for the described triggering event because by implementing the transaction the US company will receive rights to control business activity of the Russian subsidiary through the chain of entities.

    It is worth mentioning that the rule described in this point can be interpreted quite broadly depending on the structure of a particular transaction and therefore, each case should be analyzed individually.

  4. Finalizing a joint-venture agreement between competitors, which is related to business activity in the Russian market.
  5. Incorporation of a Russian legal entity if its authorized capital is paid with shares and (or) assets of another Russian entity and upon results of the transaction the newly incorporated entity receives rights described in Points (A) – (C) above in respect of the entity shares of which were transferred.
  6. Reorganization of Russian companies by way of consolidation or accession.

2.2 Filing thresholds

Each of the above types of transactions may trigger an obligatory merger control filing in the event the filing thresholds (below) also are met. The filing thresholds provided by Competition Law can be divided in two types:

  1. General thresholds which are applicable to any types of triggering events: (1) the total value of assets from the parties to a transaction (an acquirer and a target, parties to a JV agreement, parties to the reorganization etc.) together with their groups exceeds RUB 7 billion (approximately USD 94.2 million) or (2) the worldwide aggregate turnover of the parties to the transaction together with their groups exceeds RUB 10 billion (approximately USD 134.6 million).
  2. An additional threshold—the value of the assets of the target company (together with its group) exceeds RUB 400 million (approximately USD 5.4 million). This threshold applies together with one of the general thresholds described above to the triggering events (A), (B) and (C) described in Point 2.1.There are two important notes to this threshold which should be considered when analyzing a transaction. First, if a seller loses control over a target company, the value of assets of the seller and its group should not be added to the value of the target’s assets for the purposes of the analysis. Second, FAS Russia developed and suggested a bill aimed to increase this threshold up to RUB 800 million (approximately USD 10.8 million). We expect this bill will be adopted in the nearest future.

The above figures are established based on an applicable financial year. Please note that there are special thresholds for financial organizations, which are provided by Governmental decrees as opposed to Competition Law.

3. Filing Procedure

If a transaction meets the trigger and thresholds, the parties must file the proposed merger with the antimonopoly authority, which must clear the transaction before it can be completed. For example, in case of a share deal, the clearance should be obtained before a date of transferring the shares to an acquirer.

Once the merger application is submitted, FAS Russia has 30 calendar days to consider it (Phase I). Generally, if the entities being combined do not have overlaps, a transaction should be cleared within Phase I, even though FAS Russia may still extend its investigation to analyze impacted markets. In the case of overlaps, FAS Russia has a right to extend its investigation for an additional two month to conduct an in-depth analysis of the notified transaction and related markets (Phase II).

In exceptional cases, when the antimonopoly authority determines that the transaction may restrict competition, FAS Russia may delay clearance until the parties fulfil certain preliminary conditions within a period that cannot exceed nine months. Such an option is rarely used in practice.

As for the documents that should be submitted to the antimonopoly authority, Competition Law provides an exhaustive list. This law requires parties to file several formal documents such as notarized (and apostilled for foreign companies) copies of constituent documents of an acquirer and a target company and notarized translations into Russian of documents prepared in foreign languages. Preparing such documents may be time consuming and should be factored into any merger planning. Failure to provide the required documents can result in the return of the application as incomplete within 10 days from the date of submission.

FAS Russia also has broad powers to request additional information from the applicant and from third parties (for example, the authority can request information about volume of sales from other market players to calculate market shares and the concentration ratio).

4. End of the Procedure and Liability

After reviewing the transaction, FAS Russia may (1) grant an unconditional clearance, (2) grant a conditional clearance (subject to remedies) or (3) prohibit the transaction. The decision is delivered to the applicant and published on the FAS Russia’s official website.

FAS Russia has the power to issue any necessary remedies to mitigate competition concerns. Usually the authority develops behavioral remedies, while structural remedies (e.g., divestment of shares/ assets) are imposed quite rarely. The remedies are generally issued along with a clearance decision and are implemented after the transaction’s closing. In rare cases, FAS Russia issues remedies in a form of preliminary conditions, and compliance with them is a key condition for granting the clearance.

Failure to comply with Russian merger control rules may lead to several consequences. First, the imposition of an administrative fine on an entity responsible for submission of the application of up to RUB 500.000 (approximately USD 6.540) for legal entities and up to RUB 20.000 (approximately USD 261) for its management. Second, FAS Russia may file a lawsuit asking a court to invalidate a transaction closed without the required merger clearance. Courts typically only grant such a remedy if FAS Russia proves that the transaction might lead to a restriction on competition. Finally, there are also reputational risks since FAS Russia regularly publishes information on transactions closed in violation of the Competition Law on its official website.

[1] FAS Russia’s Clarifications No. 19 “On the Specifics of State Antimonopoly Control over Economic Concentration” dated June 11, 2021, available in English on the official website of FAS Russia via the following link:

[2] In this point direct acquisitions of shares relates to foreign targets only because direct acquisitions of voting shares of Russian entities should be analyzed under Point (A).

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