On April 4, 2012 the Superior Economic Court of Ukraine Issued Its Review Letter No. 01-06/418/2012 "On Certain Issues of the Practice of Dispute Resolution Connected with Application of the Competition Legislation".
Taking into account different application of the competition legislation by court authorities in different instances issues referred to in the Review letter concerning accrual of fines for violation of the competition legislation, begin of the term for voluntary payment of the fine and other aspects of the appeal against decisions of AMCU on cases about unfair competition and abuse of monopolistic position seem to be really urgent.
As to court settlement of cases about violation of the legislation on protection of economic competition, the Review letter considers issues regarding qualification of actions of economic entities under article 1 of the Law of Ukraine "On Protection against Unfair Competition" (hereinafter – the Law), and states, in particular, that current legislation does not contain an exhaustive list of actions which would fall into definition of unfair competition and, therefore, indication of trade or other fair business practices directly in the Law complies with requirements of the Civil Code of Ukraine about possibility to indicate such a practice in a document.
Thus, pursuant to the position of the court by qualification of certain actions as an act of unfair competition the Law directly contains references to respective fair business practices (in particular, regarding illegality of use of someone else's business reputation (chapter 2), creation of obstacles for business entity in course of competition and obtaining illegal advantages by competition (chapter 3), illegal collection, disclosure or use of commercial secrets (chapter 4) etc.). At this, reference to such practices directly in the Law complies with requirements of part one article 7 of the Civil Code of Ukraine about possibility to indicate such a practice in a document, while interpretation of its content shall be made with use of the general conceptual framework (in particular, through interpretation of used words, definitions and expressions). The Superior Economic Court of Ukraine points out that due to lack of an exhaustive list of actions falling into definition of unfair competition under article 1 of the Law in the current legislation conclusion of local economic courts and economic courts of appeal (presented by the courts by consideration of the case analysed in the Review letter) that the decision of AMCU did not contained reference to a practice to which actions of the Company are contradictory and necessity of additional qualification for actions of the Company under articles 4 and/or 6 of the Law are disproved by the actual circumstances determined by the very same courts.
Anchoring this position in the Review letter is of key importance for further qualification of actions as a violation provided in article 1 of the Law because recent court practice1 regarding this issue is ambiguous. By qualification of actions under article 1 of the Law the court often asked for proof which rule, trade or fair business practice was violated exactly, it was necessary to determine content of such practice or rule and provide evidence for existence of such practices in general. It is considered that such court practice unreasonably increases the standards of proof in such cases, levels down the role and deprives this provision of its enforcement value.
Therefore, anchoring in the Review letter conclusion that the list of actions falling into definition of unfair competition is not exhaustive, application of legal provisions as source of practices and rules in business activity and qualification of actions as such violating article 1 of the Law without additional qualification under other articles of the Law is legal, will in our opinion facilitate more effective and wider application of article 1 of the Law by the Committee.
The Review letter also covers the issue of declaring decision of AMCU about violation of legislation on protection against unfair competition invalid and states, in particular, that the economic court is obliged to examine whether reasons as determined by the law to declare AMCU's decision are invalid and not to determine whether there is a fact of unfair competition act itself on the part of the infringer. In particular, in the case presented in the Review letter the Superior Economic Court points out the necessity for courts to examine completeness of the research and justification of the conclusion of AMCU's decision regarding: manufacturing of products with use of the disputable package design (in particular, fact of its use and begin of its use); priority in actual use of the disputable package design in business activity (with determination of the availability of the respective product); continuance of the use (during manufacturing) of the disputable package design; correctness of legal qualification of actions of the subject.
The Review letter of the Superior Economic Court of Ukraine also specifies what information is misleading. Thus, pursuant to the Court misleading information includes, in particular, data that: contain incomplete, inaccurate or untrue information about peculiarities of distribution of goods, works, services, prices and discounts for them; attribution of powers of rights one does not have or relations one is not in.
The Review letter also covers issues of qualification of actions as violation provided in article 13 of the Law "On Protection of Economic Competition". Thus, position expressed in the letter confirms once again that article 13 of the Law of Ukraine "On Protection of Economic Competition" does not contain any restrictions as to number of facts (events) necessary for qualification of actions of economic entities as abuse of monopolistic (dominant) position. Consequently, even one short violation that was duly determined and proven can be a basis for such qualification.
Regarding court consideration of cases related to the procedure of accrual of fines provided by article 56 of the Law of Ukraine "On Protection of Economic Competition" the Review letter states that not only a fine has no alternative but it also does not require a decision of the authorized body about its imposition, due to which it does not fall into definition of administrative and economic sanctions in the meaning of article 238–239, 249–250 of the Economic Code of Ukraine.
The Review letter also raises the issue of the fine accrual, in particular explains provision of article 56 of the Law of Ukraine "On Protection of Economic Competition" about temporary stop of fine accrual for the time the economic court of first instance considers the case about declaring decision of AMCU on fine imposition invalid and the time economic appeal and cassation appeal courts review the respective ruling of the local economic court. Thus, the Review letter analyses a case when during making contested decisions previous court instances dismissed collection of the fine accrued for certain periods and at this wrongfully applied following provision of part 5 article 56 of the Law about temporary stop of fine accrual for the time the economic court of first instance considers the case and mistakenly equalled the day of return without consideration of the initial claim of the Company, period after filing a repeated claim before day of initiation of proceedings on the case by the court, period of issuance of the complete text of the decision of the local court on the case with court consideration.
Regarding issue of the terms for voluntary payment of a fine imposed by AMCU the Review letter states that provisions of the Law of Ukraine "On Protection of Economic Competition" connect begin of such term to the day of receipt by a business entity of the respective AMCU's decision. At this, as the Superior Court points out, by consideration of such cases the exact day of receipt by a business entity of the AMCU's decision shall be determined with duly means of proof and then, proceeding form this, any further conclusions shall be made, including such as to expiration of the two months term for payment of the fine and connection of the respective circumstance with court consideration of the case.
Altogether, generalization of the court practice is positive and allows business entities to estimate possibility of application of one or another provision of the legislation more precisely.
Footnote
1 See, for example, Resolution of the Superior Economic Court of Ukraine dd. 08.06.2010 No. 21/17-54/220 , Resolution of the Superior Economic Court of Ukraine dd. 13.12.2011 No. 6/519-45/183-34/130
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