ARMENIA Trends and Developments Contributed by: Hayk Hovhannisyan and Tachat Voskanyan, HAP
announced the completion of the acquisition process of 100% shares of HSBC Bank Armenia CJSC (HSBC Armenia). The dynamics of M&A are also notable in the telecommunications sector. In 2020, Hayk and Alexander Yesayan acquired the complete share package of Veon Armenia, and recently, the sale of 100% shares of MTS Armenia CJSC to the Cypriot company Fedilco Group Limited was completed. Significant acquisitions have also been recorded in the information technology sector, including Microchip Technology’s acquisition of all the shares of Instigate Semiconductors CJSC. Based on the above, local trends are driven by several factors. One of these is changes in the financial system. As mentioned, several banks and insurance companies have merged or been acquired by larger players in recent years. The growth of the IT and startup sector has also had a significant impact. Armenia’s IT sector attracts international investors, boosting startup acquisition deals. The new edition of the “Law on Protection of Economic Competition” is particularly impor - tant from the regulatory perspective. It can be said that the law discussed has been completely rewritten in a new edition. Legislation has estab - lished control over M&A transactions, which is one of the important tools of the Competition Protection Commission. This tool aims to pre - vent the restriction of competition in the market, the emergence or strengthening of a dominant position, and damage to consumer interests. The concentration of economic entities must be declared if the total assets or revenue exceeds
the threshold established by the Commission’s decision. The legislative framework has been clarified and simplified. Previously, there were eight types of thresholds, which made it chal - lenging for companies to determine the appro - priate type of concentration and whether a transaction needed to be declared. Now, there are only two thresholds: if the value of assets or revenue reaches AMD3 or AMD4 billion. The minimum threshold has increased by AMD1 bil - lion. Additionally, transactions must be declared regardless of the threshold if one of the parties holds a monopoly or a dominant position in any product market. It is noteworthy that there is a fine for violations of concentration declaration. For example, in 2022, the Competition Protection Commission identified 13 cases of undeclared concentration. The total amount of the fine was AMD33.5 mil - lion. The total amount of the fine was AMD33.5 million. In 2021, 11 cases were identified. In 2023, the Commission established a new meth - odology for calculating fines: the base amount for undeclared concentrations will be AMD2 mil - lion. Depending on the aggravating or mitigating circumstances of the case, the fine may increase or decrease. Liability for prohibited concentra - tion is up to 10% of the economic entity’s rev - enue. Among other things, the powers to assess concentrations have been expanded from the perspective of M&A transactions. Under the pre - vious law, transactions between companies in the same group were not considered concen - trations. With the new changes, they are only exempt if the participants notify the Commis - sion in advance about their group status and the planned transaction, action, or reorganization. Another important trend is the development of Independent Outside Advice. Currently, many legal and financial companies often come for -
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