GILS Antitrust law: Kazakhstan

KAZAKHSTAN

1. Is the mandatory merger control regime in force in Kazakhstan?

Yes, the mandatory merger control regime is in force in Kazakhstan.

2. Which authority is responsible for the merger control regime in Kazakhstan?

Agency for the Protection and Development of Competition of the Republic of Kazakhstan.

3. What is the definition of concentration?

The economic concentration is:

1) reorganisation of a market entity by merger or accession;

2) acquisition of more than 50% of voting shares in a legal entity;

3) obtaining ownership or use of fixed production assets located in Kazakhstan and/or intangible assets of a market entity, if the book value of the property that is the subject of the transaction exceeds 20% of the book value of fixed production assets and intangible assets of such market entity;

4) acquisition by a market entity of rights allowing it to give binding instructions to another market entity in the course of its business activities;

5) participation of the same individuals in the management bodies of two or more market entities, provided that the said individuals determine the business activities of such entities.

4. Is pre-merger filing or post-merger filing required?

In cases 1) and 2) above, the pre-merger filing is required. 

In cases 3) - 5) above, the post-merger filing is required.

5. Examples of key concentration types caught by merger control rules in Kazakhstan.

The most common concentration types in Kazakhstan are:

1) acquisition of more than 50% of shares in a foreign company which has a subsidiary in Kazakhstan;

2) acquisition of more than 50% of shares in the charter capital of a limited liability partnership;

3) acquisition of a significant fixed production asset.

6. What are the notification thresholds, which a concentration must trigger for a merger control filing to be required?

The merger control filing is required in case any of the following exceed approx. USD 80 million:

1) current global assets of the (a) acquirer; (b) market entities from the acquirer’s corporate group; (c) target company; and (d) market entities controlled by the target company; 

2) a previous year global turnover of the (a) acquirer; (b) market entities from the acquirer’s corporate group; (c) target company; and (d) market entities controlled by the target company.

7. Does the authority have any discretion to review transactions that do not meet the notification thresholds?

No, the authority does not have any discretion to review transactions that do not meet the notification thresholds.

8. Do the merger control rules apply to foreign-to-foreign transactions taking place outside Kazakhstan?

In accordance with Article 161.2 of the Entrepreneurial Code of the Republic of Kazakhstan, the rules for merger clearance established by Kazakhstan law apply to transactions between foreign companies executed outside of Kazakhstan in the following cases:

1) fixed assets and/or intangible assets or shares in market entities located in the territory of the Republic of Kazakhstan, property or non-property rights in relation to legal entities of the Republic of Kazakhstan are directly or indirectly affected as a result of the transaction; or

2) competition in the Republic of Kazakhstan is restricted as a result of the transaction.

In particular, this means that a wholly foreign transaction may require merger clearance in Kazakhstan.

9. Are there specific merger control rules relating to the notification thresholds (e.g., specific merger control notification thresholds for specific sectors; different rules to calculate turnover for specific industry sectors such as banks and insurances or retail, specific rules relating to foreign subsidies, companies, etc.)?

Specific thresholds ​​apply to economic concentrations involving a financial institution. Consent to economic concentration in such cases is required if the value of assets or the amount of equity capital of the financial institution exceeds the amounts established in the joint order of the Agency of the Republic of Kazakhstan for the Protection of Competition dated 15 May 2009 and the resolution of the Agency of the Republic of Kazakhstan for Regulation and Supervision of the Financial Market and Financial Organizations dated 26 May 2009. For example, consent to economic concentration involving a bank is required if the value of the bank's assets is 2% or more of the total value of assets of banks in Kazakhstan, or the amount of the bank's equity capital is 2% of the total amount of equity capital of banks in Kazakhstan.

10. Whether Kazakhstan requires the payment of filing fees and if yes, when?

No filing fee is required.

11. Whether there is a filing deadline in Kazakhstan requiring a notification to be filed within a certain period of time following a particular transactional event (e.g., signing a share and purchase agreement)?

If a pre-merger filing is required, it must be done before the transaction is closed. 

If a post-merger filing is required, it must be done within 45 calendar days after the transaction was completed.

12. What information and documents must be disclosed or provided to the authority for the purposes of merger clearance? 

In order to obtain merger clearance, the following must be submitted to the antimonopoly body:

1) information on the subject of the agreement (other document) confirming the transaction, the parties, the main conditions for the transaction, as well as the value of the transaction;

2) for the acquirer and for each market entity included in the same group of persons with the acquirer, engaged in the production, sale, export and import to Kazakhstan of goods similar to goods or interchangeable goods produced, sold, exported and imported by the market entity in which the shares are acquired, and the market entities under its direct or indirect control, the following shall be indicated:

- for an individual:

• details of the document certifying his/her identity;
• information on citizenship;
• place of residence and legal address;

- for a legal entity:

• name, legal and actual addresses;
• size of the authorised capital and share of participation in the authorised capital;
• types of shares;
• volume of production and sales, export and import to Kazakhstan of goods similar to goods or interchangeable goods produced, sold, exported and imported by the market entity whose shares are acquired, as well as by market entities under its direct or indirect control;

3) volume of production and sales, export and import of goods to Kazakhstan of the market entity whose shares are acquired;

4) volume of production and sales, export and import to Kazakhstan of the same or interchangeable goods produced, sold, exported and imported by market entities under the direct or indirect control of the market entity whose shares are acquired.

Please note that the documents and information specified above are provided in the case where economic concentration is made in the form of acquisition of more than 50% of voting shares in a legal entity (the most common type of economic concentration in Kazakhstan). For other types of economic concentration, the list of documents and information may differ slightly.

13. What are the time periods within which the authority must reach a decision on the merger clearance? Is any fast track or simplified procedures available? 

Within 5 business days from the date of receipt of the application, the antimonopoly authority must check the submitted materials for completeness and accept the application for consideration (or refuse to accept it).

The period for consideration of the application must not exceed 15 business days from the date of acceptance of the application for consideration.

However, the antimonopoly authority has the right to suspend consideration of the application for the purpose of requesting additional information or conducting an analysis of competition in the commodity markets. Therefore, in practice, the period for consideration of the application is usually 3-4 months.

At the same time, in accordance with the Entrepreneurial Code, the total period for consideration of the application, taking into account suspensions, shall not exceed 12 months.

14. What are the penalties which the authorities may impose for "failure to file" or "late notification"?

In case of a "failure to file" or "late notification", the following sanctions may follow:

1) a person who was obliged to seek for the merger clearance (e.g., an acquirer) may be fined for 1,600 monthly calculated indexes (KZT 5 907 200 in 2024 - approx. USD 12 000); and

2) the relevant transaction may be invalidated upon a Kazakhstan court’s decision.

15. Have there been any recent developments regarding the merger control regime in Kazakhstan?

On 8 June 2024, amendments were made to the Entrepreneurial Code of the Republic of Kazakhstan that simplify the procedure for obtaining merger clearance. In particular, shorter deadlines were established for considering the application and the amount of information that must be submitted to the antimonopoly authority was reduced.

Author: Igor Lukin