An important clarification on economic concentration has been recently published on the website of the competition authority. A case from our practice was a basis for this publication.
Foreign Company A aquired shares of foreign Company C that belonged to a foreign Company B. It was a foreign transaction that did not directly involve Belarus and its entities apart from the fact that the foreign company C had a Belarusian subsidiary.
And this fact was a trigger and drew the attention of the Belarusian competition authority. As the result of transaction, Company A via corporate control chain gained powers allowing to give binding instructions to the Belarusian company, so the Company A through Company C would control its Belarusian subsidiary. Belarusian competition authority ruled out that Belarusian Competition law was applicable to this situation and it was necessary to obtain a consent to economic concentration and it was given for the transaction. In other words competition authority approves not acquisition of the shares of foreign company (not shares transaction) but acquisition of the rights in respect of Belarusian company.
Summarizing the above, the current position of the Belarusian competition authority is the following: if, as a result of a foreign transaction the acquirer (a business entity, an individual or a group of persons) gets powers to give mandatory instructions to a Belarusian entity, a prior consent of the Belarusian competition authority will be needed for such a transaction even in case the transaction does not directly affect a Belarusian entity and provided the thresholds established by law have been exceeded.
Please consider that it does not matter:
- where the transaction is made and who are the parties to it (for example, the transaction could be made outside Belarus and between foreign entities);
- that a Belarusian entity is not directly involved, for example, its shares are not transferred but the shares of the parent company or the shares of the entity that holds shares of the parent company.
The following should be early signs:
- your foreign target has a subsidiary(ies) in Belarus;
- your foreign target has opportunity to give mandatory instructions to a Belarusian entity (for example, there are provisions in the articles of association or power of attorney, shareholder agreements, etc.).
P.S. The consent of the Belarusian competition authority to acquire rights in respect of a Belarusian entity will be needed if any of the following thesholds has been exceeded:
- the balance assets value of either the acquirer or a Belarusian entity as of the last reporting date exceeds 5.4 million BYN (approximately 1.9 million euros at the end of the quarter) or
- the turnover of either the acquirer or a Belarusian entity from the sale of goods for the reporting year preceding the year of acquisition exceeds 10.8 million BYN (approximately 4.6 million euros at the end of the previous year); or
- one of these entities is included in the State register of dominant entities or the State register of natural monopolies.
