GILS Antitrust law: Mongolia

MONGOLIA

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

In Mongolia, if legal entities in a dominant position restructure through a merger or consolidation with other entities, or purchase more than 20% of common shares and/or more than 15% of preferred shares in competitor companies that sell the same type of goods and products, or merge with interdependent entities, they must apply to the Authority for Fair Competition and Consumer Protection.

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

The Authority for Fair Competition and Consumer Protection of Mongolia is responsible for merger control in Mongolia. 

3. What is the definition of concentration?

"Market concentration" means a percentage of sales of certain goods and products in the market, by a single entrepreneur solely or with other entities or by inter-dependent entities.

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

In Mongolia, a pre-merger filing is required. This means that companies in a dominant position must notify the Authority for Fair Competition and Consumer Protection and obtain approval before proceeding with a merger or consolidation.

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

In Mongolia, key types of concentrations caught by merger control rules include:

• Horizontal merger refers to the merger of legal entities operating in the same market for the production or sale of goods.
• Vertical merger refers to the merger of legal entities involved in different stages of the supply chain, such as suppliers, manufacturers, and distributors, who do not operate in the same market for the production or sale of goods.
• Complex merger refers to the merger of legal entities that are not related in terms of production, services, or sales and operate in different markets.

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

A dominant legal entity will be granted permission if it is determined that the merger or complex merger does not restrict competition. 

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

No, the Authority for Fair Competition and Consumer Protection is not obligated to review or assess transactions that do not meet the notification thresholds. The dominant legal entity is only obligated to notify and apply for approval of mergers and consolidations to the Authority for Fair Competition and Consumer Protection in accordance with the Law on Competition.

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

No, the merger control rules in our jurisdiction do not apply to foreign-to-foreign transactions. However, the Law on Competition shall apply equally to entities who have been proven to conduct prohibited activities outside of Mongolia that impact the Mongolian market.

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.)?

No. The general rules of merger control apply to all business entities in a dominant position.

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

The application for merger and consolidation is free of charge.

11. Whether there is a filing deadline in Mongolia 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)?

There is no specific filing deadline for the application; however, the application must be submitted and approval obtained before the transaction is completed.

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

For the purposes of merger clearance interested parties shall submit in particular:

• A brief presentation of the activities of each legal entity involved in the merger or consolidation and the purchase of shares;
• A copy of the state registration certificate for each applying legal entity, along with a reference from the state administrative body responsible for registration, detailing the highest authority and executive management of the legal entity;
• Decisions and agreements made by authorised higher authorities and officials regarding mergers and consolidation;
• Audited financial statements of each legal entity for the last two years;
• Information on the field of activity. 

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? 

The Authority for Fair Competition and Consumer Protection makes a decision to accept or reject the application within 30 days. If needed, this period can be extended by an additional 30 days.

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

Failure to notify the Authority for Fair Competition and Consumer Protection will result in a fine of MNT 4 million (or USD 1183) for individuals and MNT 40 million (or USD 11 831) for legal entities.

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

On July 10, 2024, the Law on Competition was amended to address mergers and consolidations involving dominant legal entities, as well as the acquisition of shares in other companies. Under the amended law:

• Article 8.1: If a dominant legal entity merged or consolidated with other entities, acquired more than 20% of ordinary shares or more than 15% of preferred shares in a competing company selling similar products, or merged with a related entity, it must apply to the Anti-Monopoly Authority.
• Article 8.2: The Anti-Monopoly Authority will review the application within 30 days of receipt, with the possibility of extending this period by up to 30 additional days if needed. The authority may also request further information as required.
• Article 8.3: The Anti-Monopoly Authority will assess the application and may reject it if the merger or consolidation is found to potentially restrict competition. The Government will establish the procedure for issuing the final decision.

Author: Enkhzaya Ganbaatar