WHAT IF CONSUMERS AND COMPETITORS ARE INVOVLED IN M&A CONSIDERATION?

The XI Conference – “Antimonopoly Regulation in Russia” included a session – business game that demonstrated merger approval under new rules being drafted by FAS together with the Antimonopoly Experts Association

The backbone of the business game was a merger between foreign companies represented in Russia. The merger affects adjacent markets and contains elements of vertical and horizontal mergers. The companies are involved in productions of base products – milk, cheese and meat.

Head of FAS Legal Department Artem Molchanov was a spokesperson on behalf of consumers – a retailer purchasing meat from a company interested in the merger and its competitor. Nelli Galimkhanova, Head of FAS Department for Industry Control acted as a regulator.

The merger considered at the business game belonged to all three types of mergers: horizontal (both companies produce milk), vertical (companies are at different production stages of the same products), and conglomerate (the company producing milk and cheese buys the meat producer).

According to the fifth antimonopoly package, claimants, consumers and competitors were invited to a mock FAS meeting in person. Each of the parties was able to summarize their concerns and risks associated with the merger.

In the simulated situation, the petitioning companies voluntarily submitted their proposals for a FAS order in case the merger is approved. Consumers and competitors were given a draft order, to which they gave several proposals.

Having listened to arguments of all the parties, the session participants voted for the regulator’s decision – to approve the merger and issue conduct instructions (55%), allow the merger and simultaneously issue an order with structural and conduct conditions (14%), allow the merger giving a structural order (14%).

Commenting a question which order is more efficient, Artem Molchanov pointed out that choosing an order it is important to care for the outcome that should be achieved making a decision on the merger.

The game was moderated by Anna Numerova, a partner at Law Offices “Egorov, Puginsky, Afanasiev & Partners” and Vitaly Pruzhansky, a partner at RBB Economics.

The XI Conference – “Antimonopoly Regulation in Russia” took place in Moscow on 25 October. The event is organized by the “Vedomosti” newspaper and the Antimonopoly Experts Association with support of the Federal Antimonopoly Service.