What are Anti-Monopoly Rules in Armenia?

Introduction: Entrepreneurs aiming for growth often engage in strategic actions such as mergers and acquisitions to expand their businesses and increase market share. These transactions require antimonopoly clearance in Armenia to regulate market concentration, ensuring fair competition and preventing monopolistic practices that could harm the market or consumers.

The primary legislation governing anti-monopoly activities in Armenia is the Law on Protection of Economic Competition (Competition Law). Understanding the concept of concentration and identifying transactions that require a concentration declaration under the Competition Law is essential. Failure to obtain the required antimonopoly clearance can result in penalties or invalidation of the transaction, emphasizing the importance of careful navigation through the complexities of the Competition Law.

Anti-Monopoly Regulator: The Commission for the Protection of Competition of Armenia (Commission) is the primary state regulator for the protection of economic competition. The Commission evaluates the competitive impact of concentrations and assesses risks to consumer interests. Its role extends beyond merely approving or rejecting transactions; the Commission actively monitors market conditions to prevent any single entity from dominating the market to the detriment of competitors and consumers.

Criteria for Concentration Actions and Declarations

 1. Transactions Requiring Concentration Declaration

• Merger between economic entities
• Consolidation of economic entities
• Acquisition by an economic entity of 20% or more of the assets or unit share of another economic entity
• Acquisition of the right to use intellectual property
• Establishment of a legal person in the Republic of Armenia by more than one economic entity
• Any transaction that enables one entity to influence another's decision-making process or competitiveness 

 A declaration is required when:

•  The combined assets or total revenue of the parties involved exceed AMD 4 billion
• The assets or total revenue of at least one party exceed AMD 3 billion
• One of the parties holds a dominant market position in Armenia

2. Types of Concentration

•  Horizontal Concentration: Occurs within the same goods market among companies offering similar products or services.
• Vertical Concentration: Occurs in different but related markets, often involving firms at different levels of the same industry.
• Mixed Concentration: Involves companies operating in completely different sectors.

Timeline for Concentration Declarations Declarations must be submitted to the Commission before executing the relevant transactions. The Commission's decision period ranges from one to three months, extendable by up to an additional three months, with a total review period not exceeding six months.

Group of Persons Transactions between a group of persons are classified as concentrations unless documentation is submitted to the Commission at least one month before the transaction. The Commission reviews these submissions within 10 working days.

Statistics In 2023, the Commission authorized 60 concentrations, including various types of concentrations. The Commission's annual report shows a significant increase in concentration approval assessment procedures, as well as unreported concentrations over the years.

Judicial Practice An increasing number of the Commission's decisions have been challenged in courts, reflecting the growing complexity of competition law. However, most court rulings (73% in 2019-2023 period) have favored the Commission.

Penalties for Violations Related to the Declaration of Concentrations Violations can lead to fines ranging from 2.5 to 5 million AMD for failing to declare a concentration, and up to 10% of the previous year's revenue for executing a prohibited concentration. The Commission also has an authority to invalidate a transaction.

Conclusion Navigating the complexities of antimonopoly regulations is crucial for sustainable growth and market competitiveness. Compliance with Armenia’s Competition Law enables companies to effectively manage market concentrations, avoid penalties, and contribute to a fair competitive environment.

KPMG Law Armenia Antimonopoly Services KPMG Law Armenia provides expertise in antitrust and Competition law, offering services such as filing concentration declarations, conducting compliance analyses, consulting on antitrust issues, and representing clients before the Commission and other administrative bodies.