Practice as usual

Changes to the legislation regarding oversight over concentration and development of the legal framework on regulation of state aid have significantly affected the volume of work of external lawyers in leaps and bounds. The number of "competitive cases" in local economic courts has decreased, but it still has no impact on the higher authorities. Direct application of customs in economic legal relationships has become the new phenomenon for economic courts


Last year, lawyers said that dialogue between the regulator — the Anti-Monopoly Committee of Ukraine (AMCU) — and business entities reached a qualitatively new level. But, as they say, there's no limit to perfection: the Anti-Monopoly Committee of Ukraine opened its doors for market entities even wider in 2016. This is supported by the introduction of such tool as a public opinion poll. For example, the regulator requested to comment on reasonable grounds on the fact as to how concentration of two foreign pharmaceutical companies influenced the Ukrainian pharmaceuticals market. Another tool, that of the questionnaire, has also been introduced. In particular, the Committee was interested in the opinion of users of the services of Chambers of Commerce and Industry regarding the issue of certificates by the CCI on the passing of goods and their cost.

The rapid cheapening of oil on world markets has caused the cost of oil products to fall. The fact that there is something wrong about the Ukrainian market does not escape the attention of the Anti-Monopoly Committee of Ukraine. The regulator's activities in 2016 began with research on compliance with legislation on protection of economic competition on the gasoline and diesel markets. The "petrol case" remained in the spotlight of the Committee’s work for the entire year.

Looking ahead, we note that in early fall, operators on the light oil products market even proposed the development of rules on professional conduct. The Anti-Monopoly Committee of Ukraine welcomed such an initiative, and the market has kept its promise. The regulator adopted professional rules of conduct in competition regarding honesty and transparency of the retail fuel market in Ukraine, but completed the "petrol case": oil traders were fined to the tune of over 204 million UAH for concerted actions on the market.

Neither has the Anti-Monopoly Committee of Ukraine stayed on the sidelines in matters of mergers in the banking sector — the regulator has practice of considering applications on the issuing of permits on concentration with the participation of banking institutions.

At the same time, work on ensuring transparency in the Committee’s activities has continued. The authority focused on the need to establish a practice of interaction between the Committee and persons who provide information, and search for balance in the processing of restricted data.

Implementation of the EU Twinning Project "Support of the Institutional Capability of the Anti-Monopoly Committee of Ukraine on Conducting Market Researches and Efficiency of the Competitive Legislation Application to Approach EU Standards" began on July 1, 2016. The project will last 32 months.

One of the biggest milestone events was the extension of the so-called penal amnesty for the business entities that have committed violations of the law in the form of concentration without the permission of the Anti-Monopoly Committee of Ukraine.

There were also high-profile "anti-monopoly" cases in this year. "The high profile of cases has different shades and aspects, — Igor Svechkar, the partner of Asters Law Firm, says in his comments. — There was a high-profile case of state and I would even say, of  international scale — the multi-billion penalty imposed on Gazprom. Cases connected with administrative services concerning municipal monopolists, etc. caused public outcry. But we, advisors, are definitely, first ­of all, ­interested in investigations and cases, in which participants need aid from outside lawyers and economists, and have the resources to attract them".

By the way, Gazprom has not paid the penalty. The Anti-Monopoly Committee of Ukraine appealed to the Economic Court of Kyiv in October 2014 with a recovery suit from Russian Gazprom for not only the main amount of a penalty in the amount of 86 billion UAH, but also a penalty fee for late payment: the amount has increased to 172 billion UAH.

According to Mr. Svechkar, the specific feature of such cases is usually either the risk of a large penalty, or a potential prohibition to follow convenient, rational and effective business practices, that developed for years. "From this perspective, my ‘'pedestal’ of the markets is as follows: gasoline, pharmaceuticals, tobacco", — the lawyer emphasizes.

Legislative focus

What events in the branch of competitive law do lawyers call milestones in 2016? Igor Svechkar recognizes that the year was very busy.

"Firstly, amendments to the Law of Ukraine ‘On Protection of Economic Competition’, connected with oversight over concentration, came into force: thresholds have increased, the simplified procedure for obtaining permits has been introduced, — Mr. Svechkar comments. — It affected the work volumes in the market of the relevant services of outside lawyers and the sizes of standard budgets. At the same time, the Regulation of the Anti-Monopoly Committee of Ukraine on concentration has been revised — new disclosure requirements and standards of justification of the fact that the transaction does not pose a competition threat have been established".

Therefore, according to Igor Svechkar, there was a certain shift of focus from quantity to quality, and the lawyers practicing in anti-monopoly law, as well as their clients, have to adapt to the new requirements. "With the decrease in the volume of ‘concentration’ work in our firm, for example, the professional resource that we could redirect at other types of anti-monopoly projects was released — mainly on anti-monopoly investigations and appeals brought regarding public procurement", — the partner of Asters Law Firm notes.

Secondly, the legal framework for regulation of state aid  developed in leaps and bounds in 2016. Mr. Svechkar notices that the Anti-Monopoly Committee of Ukraine was very active in this area and made significant progress in cooperation with public leaders and other interested persons. "We hope that high-quality regulation of state aid will create work for external advisors once the entire package of the relevant laws and regulations has come into force", — the lawyer expects.

He highlights another milestone event in competition law: it is the formation of practice in the application of recommendations on determining the size of the penalty by the Anti-Monopoly Committee of Ukraine, and "primary accumulation" of some publicly available decisions of the Anti-Monopoly Committee of Ukraine, which help practicing lawyers to understand better approaches of the authority and predict more qualitatively its position in a particular client case.

"The year is not over yet, and we know that the Committee continues to be active in several spheres of competition regulation. We hope that the draft on ‘horizontal’ recommendations will be issued in the near future and transferred for public discussion. In addition, there is some time left to complete the draft on ‘vertical’ recommendations. Therefore, today we cannot put a full stop in the list of regulatory innovations for this year, but merely a comma", — Igor Svechkar says summing up. 

Judicial trends

The courts are not lagging behind the pace of the regulator. However, the statistics show that the number of "competitive cases" in economic courts of the first instance has decreased. However, such decrease doesn't affect the authorities, at least not yet.

"Identical and correct practice of application of competitive legislation by both anti-monopoly authorities and courts, including economic courts, is essential for creating the optimal competitive environment for the activities of business entities, as well as to ensure their interaction under conditions of preventing discrimination of entities", — Bogdan Lvov, the Chairman of the Supreme Economic Court of Ukraine (SECU) says in his comments.

  1. and come to 144 cases (135 cases in 2015).

"The majority of claims were about cancellation of decisions by the Anti-Monopoly Committee of Ukraine, namely: on violation of legislation on protection of economic competition, monopoly abuse, recovery of penalty, — Bogdan Lvov comments on the tendencies of judicial appeal of AMCU decisions and its territorial authorities. — Judgments, which claim was, in particular, to terminate dissemination of misleading information, have been also the subject of appeals".

According to the Chairman of the Supreme Economic Court of Ukraine, an interesting subject in court practice is the correct application of Part 1 of Article 1 of the Law of Ukraine "On Protection Against Unfair Competition", which determines unfair competition as any actions in  competition that contradict trade and other fair practice in economic activities.

"Alongside the regulatory legal act, which had for a long time been considered almost as the sole source and form of law, today custom is fixed as a form of law. However, direct application of practices in economic legal relations is a rather new phenomenon for economic legal proceedings and, therefore, there is no generalization of practice for the consideration of such cases yet", — Bogdan Lvov notes.

According to Mr. Lvov, analysis of the practices of economic courts indicates that there are certain problems in the application of business customs by courts and authorities of the Anti-Monopoly Committee of Ukraine, connected with the solution of such issues: who will be an initiator in the application of such customs, how the legal qualification of such customs is carried out and how to establish their contents and conditions of application.

"The Supreme Economic Court of Ukraine has repeatedly emphasized in its decisions that the AMCU authorities have the right to bring business entities to account for violation of the relevant customs that are not described in regulatory legal acts, however, at the same time, the authorities should determine this custom as a rule of conduct, prove its existence and describe its content, and the economic courts should check the stated information", — the Chairman of the Supreme Economic Court of Ukraine says in conclusion.