Ukraine: Competitors Or Accomplices?

Last Updated: 1 October 2019

On 7 February 2019, the Ukrainian Parliament adopted the Law of Ukraine No. 6746 On Amendments to Some Laws on Ensuring Principles of Procedural Justice and Increasing the Efficiency of Procedures in the Case of Violations of Legislation on the Protection of Economic Competition, which is to add a competitive intrigue to the competition law in Ukraine in connection with the notion of concerted actions (e.g., price collusion of oil traders or food products wholesalers).

The key novelty is premised on the principle that a competitor who is approached by another, and is the first one to declare a violation to AMCU would receive exemption from liability.

New competition protection rules

The principle of 'notification about violation' is not new in itself, in fact, it was introduced by the Antimonopoly Committee of Ukraine (hereinafter the AMCU) over 18 years ago, but failed to gain response.

This time, the mentioned principle was 'reloaded' through the incorporation of the Article 52-2 into the Law of Ukraine On the Protection of Economic Competition adding new and crucial content.

In particular, the introduced novelties regulate:

1. the AMCU's detailed actions when receiving a statement of violation;

2. the exemption of liability procedure, as well as the liability reduction scale, in cases where the person was not the first applicant in the case but is the first one to declare the violation. Specifically, a person who is the first to declare a violation receives a total exemption from liability, the second applicant gets 50% reduction in fine, and the third applicant gets 30% reduction, while for the other applicants the fine is reduced by 20%.

It should be noted, however, that none of the applicants (whether the first, the second or any other) is exempted from the responsibility of compensating for the damage caused. This is crucial for avoiding potential illegal advantages, unlawful profit, as well as intentional damage to a competitor.

Application form for notifying violation:

The application can be submitted in an arbitrary form, as long as it contains essential information, i.e. information which is sufficient for the commencement of the consideration, as well as supplies enough evidence of the conspiracy between or among parties. While the law falls short in terms of defining or describing the notion of 'sufficiency' in making decisions, it does, however, provides the parameters for such 'sufficiency', in particular:

  1. The full name of the applicant as well as the cartel's members known to him;
  2. A detailed descriptions of the cartel, in regard to:
  1. the purpose of the cartel
  2. the content of the anti-competitive concerted actions;
  3. the goods or services in which the behavior is/was coordinated;
  4. the cartel's geographical boundaries;
  5. the duration of the cartel;
  6. the cartel's market volume;
  7. the specific dates, places and forms of contract among the cartel's participants;
  8. Name, contact details (phone numbers, places of residence) of the business entities officials', the applicant's contact details, as well as those of other cartels participants having been in contact in the identified coordinated actions.
  1. There are no restrictions as to the additional information the applicant might want to provide, such as recordings like video or audios, notes, letters, electronic documents including e-mails and paper documents at his disposal that suggest evidence of a concerted competitive behavior.

The applications are addressed to the AMCU, the AMCU State Commissioner, the AMCU territorial departments by either the applicant or an authorized representative. When applying, it is expected that the applicant (or the representative) must make a formal request for exemption of liability to AMCU official who is authorized to receive such applications (relating to exemption from responsibility).

What if the information provided is not enough?

The applicant is also entitled to apply for the letter-marker, which confirms his application primacy to the AMCU, having two implications:

  1. the AMCU letter-marker confirms the application primacy.
  2. it establishes and delineates all the additional information that the applicant needs to provide to the AMCU in relation to exemption from liability.

The AMCU's decision

The AMCU, within five days of receiving an application of exemption from liability or the additional information to the AMCU letter-marker, will be required to make a decision on:

  1. exempting an applicant from liability
  2. declining to exempt an applicant from liability, which must be substantiated, and dependent on:
  1. Prevailing circumstances at the point of applications that curtail the exemption from liability or when the information provided by the applicant does not meet the exemption from liability criterion as provided for in the law
  2. The additional information supplied by the applicant under the letter-marker does not meet the demands of the law.

Exemption from liability is impossible if:

1) at the time of application or receipt of a letter-marker, the AMCU has already initiated the case consideration on the same violation;

2) another party has already filed an application of exemption of responsibility, thus moving the applicant to the scale of liability reduction principle;

3) the applicant was the first bargainer of anti-competitive concerted actions, or the one who has forced other participants to commit the violations

4) the applicant has not ceased the anti-competitive concerted actions

5) the applicant has not complied with the requirement for cooperation with the AMCU.

It must be pointed out that a single article, such as this one, cannot exhaustively cover all the nuances related to applying to AMCU such as divulging all information and cooperating with the AMCU so that the applicant can benefit from exemption from liability or get fine reduction. In this regard, case-by-case analysis is critical in exploring such scenarios. Great significance is placed on the introduction of a long-awaited procedure interspersed by actual opportunity to receive either exemption from responsibility or reduction of liability in connection to the violation of anti-cartel rules, especially for the market participants who find themselves in the wrong. Moreover, these rules afford an opportunity to the cartel participants to break the cartel networks, thus protecting their interests as well as improve their competitiveness in the available market spaces.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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