Merger Control in Russia: Obtaining FAS Approval for Economic Concentration

 

June 10, 2025

BRACE Law Firm ©

 

Control over economic concentration is an essential tool for creating a competitive market environment. FAS Russia exercises powers granted by Chapter 7 of Federal Law No. 135-FZ dated July 26, 2006, On Protection of Competition (the "Law on Protection of Competition"). Such control aims to prevent the emergence of economic entities and associations in commodity markets that could restrict competition.

What Does FAS Control over Economic Concentration Include?

The Law on Protection of Competition does not contain a specific definition of state control over economic concentration; it only lists certain transactions subject to control. However, it defines economic concentration as transactions or other actions that influence the state of competition.

Federal Law No. 248-FZ dated July 31, 2020, On State Control (Supervision) and Municipal Control in the Russian Federation, defines state control as the verification of compliance by a legal entity or individual entrepreneur with mandatory requirements for goods (works, services) established by federal laws or administrative regulations adopted thereunder.

Based on this general formulation, state control over economic concentration can be defined as a verification of an economic entity's compliance with antimonopoly requirements regarding the receipt of prior consent or subsequent notification to the antimonopoly authority for transactions or other actions for which a special procedure is established.[1]

The Presidium of FAS Russia approved FAS Russia Clarification No. 19 dated June 11, 2021, On Peculiarities of State Antimonopoly Control over Economic Concentration (the "Clarification No. 19").

According to Clarification No. 19, the main tool for controlling economic concentration is the antimonopoly authority's power to permit or prohibit a transaction, as well as to impose additional structural or behavioral conditions (orders) on its participants. Consequently, economic concentration control can be defined as preventive antimonopoly control aimed at preventing monopolistic activity.

Please also note that the term "carrying out a transaction", used in the Law on Protection of Competition, is not typical for civil law. The Civil Code of the Russian Federation (the "Civil Code") provides for terms such as "exercise of a right" and "conclusion of a transaction". In this context, "carrying out a transaction" may encompass various meanings, such as "concluding a transaction", "performing an obligation", or "entering into a contract".[2]

In its clarifications dated April 29, 2009, FAS Russia defined the moment of carrying out a transaction as the actual transfer of rights to property. Depending on the specific terms of the deal, this moment may be recognized as the entry into the Unified State Register of Legal Entities (the "USRLE"), a credit entry in a securities account, registration of ownership rights, or the signing of an acceptance certificate.[3]

The most common interpretation in judicial practice, including by high courts, is that carrying out a transaction means concluding a contract. For instance, in case No. A40-151859/2017, the courts "correctly calculated the statute of limitations for administrative liability from the date the offense was committed, defining it as the day of concluding the securities purchase and sale agreement, which should have been preceded by the corresponding consent of the antimonopoly authority".[4]

Which Transactions Are Subject to State Control by FAS?

According to Article 26.1 of the Law on Protection of Competition, state control applies to transactions and other actions involving the assets of Russian financial organizations, as well as production assets and/or intangible assets located in Russia, or voting shares (interests) and rights in Russian commercial and non-profit organizations. This also applies to foreign persons and/or organizations that supply goods to Russia in an amount exceeding 1 billion rubles during the year preceding the date of the transaction or action subject to state control.

Goods are considered supplied to Russia if the place of delivery is within Russian territory. In other cases, goods are considered supplied outside of Russia. The volume of supplies must be determined for the last year preceding the date of the transaction, based on the data from the latest accounting (financial) statements at the end of the corresponding year.

Since foreign companies' financial statements are prepared in foreign currency and the thresholds for transaction approval are set in Russian rubles, the foreign currency supply volume must be converted into rubles to check the necessity of approval. To avoid incorrect financial reporting after conversion due to exchange rate fluctuations, the conversion must be performed based on the exchange rate established by the Central Bank of the Russian Federation (the "CBR") for the relevant currency as of the reporting date of the financial statements used to determine the supply volume. When calculating the 1 billion ruble threshold, both actual income from supplies to Russia and the contract value of goods delivered but not yet paid for are taken into account. [5]

Transactions requiring the prior consent of the antimonopoly authority are defined in Articles 27–29 of the Law on Protection of Competition:

• The creation and reorganization of commercial organizations, and the conclusion of joint activity agreements between competing economic entities;
• Transactions involving shares (interests), property of commercial organizations, or rights regarding commercial organizations;
• Transactions involving shares (interests), assets of financial organizations, or rights regarding financial organizations.

A mandatory condition for requiring prior consent for the creation of a commercial organization under Article 27 of the Law on Protection of Competition is reaching the financial thresholds specified therein and acquiring rights in the volume provided for in Articles 28 or 29 of the Law on Protection of Competition.

For example, a merger of commercial organizations requires the consent of the antimonopoly authority if the total book value of their assets as of the last reporting date preceding the application exceeds 7 billion rubles, or if the total revenue of such organizations (and their groups of persons) from the sale of goods for the calendar year preceding the merger exceeds 10 billion rubles. Similar financial values apply to transactions with shares (interests), property, and rights of commercial organizations.

The creation of a commercial organization requires consent if its charter capital is paid for with shares (interests) and/or property (production assets and/or intangible assets) of another commercial organization, and the total asset value of the founders (and their groups) and the entities whose shares or property are contributed exceeds 7 billion rubles, or if the founders' total revenue from sales for the last calendar year exceeds 10 billion rubles.

It should also be noted that consent for the creation, merger, or accession of a legal entity must be obtained before the corresponding entry is made in the USRLE. FAS Russia once decided to impose administrative liability on a legal entity for creating a company without prior consent because the application for approval was submitted after the entry regarding the new company's creation had been made in the USRLE. [6]

The Law on Protection of Competition and secondary legislation (regarding financial organizations) establish thresholds for transaction approval in Russian rubles. Therefore, if the financial statements of the transaction participants (their groups) are in foreign currency, the figures must be converted into Russian rubles. In such cases, the asset value is calculated based on the CBR exchange rate for the relevant currency as of the reporting date of the financial statements submitted to the antimonopoly authority.

If determining the total asset value (revenue) requires summing the financial indicators of several companies within one group whose statements are in different currencies, it is recommended to convert these indicators into Russian rubles following the rules above before summation. [7]

Transactions with shares (interests), property, and rights of commercial organizations include those provided for by Article 28 of the Law on Protection of Competition.

The list includes 9 types of transactions and is exhaustive. Here are some examples:

• The acquisition by a person (group) of voting shares in a joint-stock company registered in Russia, if such person (group) obtains the right to dispose of more than 25% of said shares, provided that prior to this acquisition, the person (group) did not dispose of any shares or disposed of no more than 25% of the voting shares. This requirement does not apply to the founders of a joint-stock company upon its creation;
• The acquisition of interests in the charter capital of a limited liability company registered in Russia by a person (group) disposing of at least 1/3 but no more than 50% of the interests, if such person (group) obtains the right to dispose of more than 50% of said interests;
• The acquisition of ownership, use, or possession by an economic entity (group) of production assets located in Russia (excluding land plots and non-industrial buildings, structures, or premises, and construction in progress) and/or intangible assets of another economic entity (excluding financial organizations), if the book value of the property subject to the transaction(s) exceeds 20% of the book value of the production and intangible assets of the entity transferring the property.

When determining the total asset value, the assets of the person selling (alienating) the shares (interests) or rights (the "selling person") and their group are not taken into account if, as a result of the transaction, the selling person and their group lose the rights to determine the business conditions of the entity being acquired.

For transactions involving the shares (interests) or assets of financial organizations (Article 29 of the Law on Protection of Competition), the asset value of the financial organization must exceed the amount established by the Russian Government in coordination with the Bank of Russia.

For example, for a leasing company, prior FAS consent is required if the value of assets (excluding cash) acquired exceeds 10% of the book value of assets as of the last reporting date preceding the application. [8]

Article 29 of the Law on Protection of Competition provides an exhaustive list of such transactions, including:

• The acquisition of voting shares in a joint-stock company by a person (group) disposing of at least 25% but no more than 50% of the shares, if the person (group) obtains the right to dispose of more than 50% of such shares;
• The acquisition of interests in the charter capital of a limited liability company by a person (group) disposing of at least 50% but no more than 2/3 of the interests, if the person (group) obtains the right to dispose of more than 2/3 of said interests;
• The acquisition of voting shares in a joint-stock company by a person (group) disposing of at least 50% but no more than 75% of the shares, if the person (group) obtains the right to dispose of more than 75% of such shares.

These transactions and actions may be carried out without prior consent but with subsequent notification if the following conditions are met cumulatively:

• The transactions or actions are carried out by persons within the same group;
• The list of persons in the group, including the grounds for their inclusion, was submitted by any member (the "applicant") to the antimonopoly authority in the approved form[9] no later than one month before the transactions or actions;
• The list of persons in the group remains unchanged at the time of the transactions or actions compared to the submitted list.

Within 14 days of receiving the group list, the antimonopoly authority sends the applicant one of the following notifications:

• A confirmation of receipt and the posting of the list on the official FAS website, provided the list was submitted in the approved form;
• A notification regarding a violation of the submission form.

The antimonopoly authority must be notified of the transactions or actions no later than 45 days after they are carried out.

If information about the group of persons is found to be unreliable, it will be removed from the official website.

Procedure for Obtaining FAS Consent for Economic Concentration

To obtain prior consent, applicants submit an application for approval of the transactions or actions to the antimonopoly authority.

The application or notification may be submitted electronically via the Unified Portal of State and Municipal Services (the "Gosuslugi"). Documents and information must be signed with an Enhanced Qualified Electronic Signature (the "UK(E)P"). Upon receipt, the antimonopoly authority must send the applicant a registration number by the end of the next business day. [10]

When filing electronically, documents requiring notarization must follow the formatting requirements for electronic notarized documents. [11] Such documents are created in PDF format. In certain cases, they consist of linked XML and PDF files. Electronic copies of paper documents are filed as a single PDF image. Scanning must be done at 300 dpi in grayscale with 8-bit color depth. The document must be signed with the notary's UK(E)P in PKCS#7 format (detached signature in DER encoding). [12]

When filing in person, there are no specific requirements for the type of electronic storage device used. Information can be submitted on a USB flash drive or a CD. [13]

A state duty is paid for the decision regarding the transactions or actions. Under subparagraph 89 of paragraph 1 of Article 333.33 of the Tax Code of the Russian Federation, the state duty is 400,000 rubles.

The documents specified in paragraph 5 of Article 32 of the Law on Protection of Competition must be submitted along with the application or notification, including:

• Notarized copies of the applicant's constituent documents;
• Documents and/or information defining the subject and content of the transactions or actions;
• Information on the total book value of the assets of the applicant and their group as of the last reporting date preceding the application;
• A list of commercial organizations in which the applicant disposes of more than 5% of shares (interests), or a written statement that the applicant holds no such interests;
• A document confirming payment of the state duty;
• Disclosure of the beneficiaries of the applicant and the targets of economic concentration.

FAS has approved a specific form for submitting this information. [14]

If the required documents are not provided in full, the application is considered not submitted, and FAS notifies the applicant within 10 days. The applicant has 14 days from the notification date to reclaim the submitted documents.

Information about the received application, including the participants and the subject of the transaction (excluding personal data of individuals), must be posted on the FAS website. Interested parties may submit information regarding the transaction's impact on competition. The Government may define cases where FAS is not required to post such information. For example, this applies if the materials involve entities fulfilling state defense orders and are subject to restrictive measures, provided a corresponding statement is submitted with the application.[15]

The applicant may withdraw the application for any reason. In such cases, the documents are returned, but the state duty is not refunded. The state duty is also not refunded if FAS determines during the review that the transaction did not require prior consent.

Part 10 of Article 32 of the Law on Protection of Competition provides the right to inform FAS of an upcoming transaction before filing an application. This may be advisable if the applicant believes the transaction could potentially restrict competition.

Under Part 1 of Article 33 of the Law on Protection of Competition, FAS must review the application within 30 days, make a decision, or extend the review period based on an exhaustive list of grounds, and notify the applicant in writing.

FAS may also issue an order under paragraph 2 of Part 1 of Article 23 of the Law on Protection of Competition. This may include an order to terminate agreements that restrict competition or to take actions aimed at ensuring competition.

In Clarification No. 19, FAS recommends that applicants provide sufficient information in the transaction description to allow a conclusion regarding its potential impact on competition. FAS should determine this potential within the 30-day period to decide whether a full market analysis or an extension is necessary.

Consequences of Violating the Prior Consent Procedure

Obtaining prior FAS consent for transactions specified in Articles 27–29 of the Law on Protection of Competition is a mandatory obligation.

The consequences of violating the prior consent procedure or the notification procedure are set out in Article 34 of the Law on Protection of Competition.

Specifically, a commercial organization created without prior consent may be liquidated or reorganized (via spin-off or division) by court order following a FAS lawsuit, if its creation led or could lead to the restriction of competition, including through the emergence or strengthening of a dominant position. Currently, there is no established enforcement practice for this provision.

Transactions under Articles 28 and 29 carried out without prior consent may be declared void by a court following a FAS lawsuit if they restricted or could restrict competition. There is also no established enforcement practice for this provision.

Transactions or actions under Article 31 carried out by a group in violation of the notification procedure may be declared void if they led or could lead to the restriction of competition.

Failure to comply with a FAS order issued under Article 33 is also a ground for declaring transactions void in court.

In addition to these consequences, failure to follow FAS orders or violating the requirements of Articles 27–29, 31, and 32 entails administrative liability under paragraph 2.3 of Article 19.5 of the Code of Administrative Offenses of the Russian Federation (the "CAO RF").

Failure to comply with a FAS order regarding non-discriminatory access to goods or an order issued during economic concentration control results in a fine for officials ranging from 12,000 to 20,000 rubles or disqualification for up to 3 years. For legal entities, the fine ranges from 300,000 to 500,000 rubles.

Failure to obtain prior consent also results in administrative liability under Part 3 of Article 19.8 of the CAO RF: a fine of 1,500 to 2,500 rubles for individuals; 15,000 to 20,000 rubles for officials; and 300,000 to 500,000 rubles for legal entities.

Carrying out a transaction after filing an application but before receiving prior consent also triggers liability under Part 3 of Article 19.8 of the CAO RF, as this violates the application requirements.

In case No. 068/04/19.8-711/2020, the Tambov FAS initiated proceedings based on a notification of a gift agreement for a 100% interest in Company "C". The group's asset value was 4.5 billion rubles, and the revenue for 2019 was over 13 billion rubles. Thus, the transaction required prior consent under Article 28. The individual responsible for filing failed to do so, resulting in liability under Part 3 of Article 19.8 of the CAO RF.[16]

In case No. A76-20029/2024, a FAS order imposing liability was challenged. A 100% interest purchase agreement was signed and notarized on December 27, 2023, and registered on January 26, 2024. The buyer filed a notification instead of an application. FAS initiated an administrative case for failing to file an application under Article 28.

The cassation court noted that "consent must be prior. This is because before the transfer of rights, the transaction and the contract itself trigger multiple legal consequences and involve sequential actions. The Law on Protection of Competition links the state control institute specifically to the transaction, not just the right". [17]

Prior to the notarization on December 27, 2023, the buyer should have obtained consent. However, under Federal Law No. 46-FZ dated March 8, 2022, the regulation was changed for 2022–2023. Transactions under Article 28 where the target's asset value is between 800 million and 2 billion rubles could be carried out without prior consent but with subsequent notification within 30 days.

Since the contract was notarized on December 27, 2023, and the notification was filed within the deadline, the courts concluded that the simplified procedure was applicable. Therefore, no administrative offense was found. [18]

Failure to submit notifications, submitting notifications with deliberately false information, or violating deadlines results in a fine under Part 4 of Article 19.8: 800 to 1,200 rubles for individuals; 5,000 to 7,500 rubles for officials; and 150,000 to 250,000 rubles for legal entities.

Failure to provide or the late provision of information required by antimonopoly law (unless covered by other parts of Article 19.8) results in a fine of 1,500 to 2,500 rubles for individuals; 10,000 to 15,000 rubles for officials; and 50,000 to 500,000 rubles for legal entities.

According to current practice, the offense of failing to file a transaction approval application is not considered a "continuing offense" under Part 2 of Article 4.5 of the CAO RF. Therefore, the one-year statute of limitations begins on the day the filing obligation should have been performed, not the day the offense was discovered. [19]

The statute of limitations starts from the moment the transaction is carried out (transfer of shares, interests, or assets) or from the moment of creation/reorganization.

Please note that if there is evidence of an offense under Parts 3 – 5 of Article 19.8 of the CAO RF, FAS officials may not release the violator from liability based on "insignificance" under Article 2.9 of the CAO RF. [20]

Insignificance is an evaluative concept defined by authorities based on the circumstances. An insignificant offense is an act that formally contains the elements of an offense but, given its nature, the role of the violator, and the lack of harm, does not represent a significant violation of protected public relations. [21]

In qualifying an offense as insignificant, courts must evaluate specific circumstances. Insignificance exists if there is no substantial threat to protected relations. Factors such as the violator's personality, financial status, or voluntary remediation are not grounds for insignificance but are considered when determining the penalty. [22]

In the practice of antimonopoly authorities, some cases have been terminated due to insignificance. [23]

The Law on Protection of Competition establishes the procedure for filing applications and notifications. Violating this procedure, including deadlines, leads to administrative liability and the risk of transactions being declared void or newly created entities being forcibly liquidated.

___________________________

References

[1] Efimtseva T.V. Some Aspects of State Control over Economic Concentration in the Commodity Markets of the Russian Federation. Journal "Bulletin of the Kutafin University (MSAL)", 2022, No. 7.

[2] Vinchkovsky E.V. On the Concept of "Carrying Out a Transaction" within the Framework of State Control over Economic Concentration. Journal "Russian Competition Law and Economy", 2020, No. 4 (24).

[3] Ibid.

[4] Ruling of the Supreme Court of the Russian Federation dated October 8, 2018, in case No. A40-151859/2017.

[5] FAS Russia Clarification No. 19 dated June 11, 2021, On Peculiarities of State Antimonopoly Control over Economic Concentration.

[6] Resolution of FAS Russia dated April 2, 2018, in case No. 4-19.8-1935/00-18-17.

[7] FAS Russia Clarification No. 19 dated June 11, 2021, On Peculiarities of State Antimonopoly Control over Economic Concentration.

[8] Government Decree No. 1621 dated September 27, 2021, On Establishing Asset Values for Leasing Companies for Antimonopoly Control Purposes.

[9] FAS Russia Order No. 293 dated November 20, 2006, On Approving the Form for Submitting the List of Persons in One Group.

[10] FAS Russia Order No. 1081/16 dated July 28, 2016, On Approving the Procedure for Submitting Applications or Notifications to the Antimonopoly Authority in Electronic Form.

[11] Ministry of Justice Order No. 227 dated September 30, 2020, On Approving Requirements for the Format of a Notarized Electronic Document.

[12] Ibid.

[13] Information from the official FAS Russia website.

[14] FAS Russia Order No. 129 dated April 17, 2008, On Approving the Form for Submitting Information to the Antimonopoly Authority when Filing Applications and Notifications Provided for by Articles 27–31 of the Federal Law On Protection of Competition.

[15] Government Decree No. 956 dated June 10, 2023.

[16] Resolution of the Tambov FAS Russia dated November 24, 2020, in case No. 068/04/19.8-711/2020.

[17] Resolution of the Arbitration Court of the Ural District dated April 11, 2025, in case No. A76-20029/2024.

[18] Ibid.

[19] FAS Russia Clarification No. 19 dated June 11, 2021, On Peculiarities of State Antimonopoly Control over Economic Concentration.

[20] Resolution of the Moscow Regional FAS Russia dated April 4, 2024, in case No. 050/04/14.32-113/2024.

[21] Resolution of the Plenum of the Supreme Court of the Russian Federation No. 5 dated March 24, 2005, On Certain Issues Arising for Courts when Applying the Code of Administrative Offenses of the Russian Federation.

[22] Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation No. 10 dated June 2, 2004, On Certain Issues Arising in Judicial Practice when Reviewing Cases on Administrative Offenses.

[23] Resolution of FAS Russia dated November 13, 2018, in case No. 4-19.8-1410/00-05-18.