LAW FIRM DIRECTORY

Competition

TIMUR BONDAREV,

He was born in 1976 in Luhansk. He graduated in 1998 from the Institute of International Relations of Taras Shevchenko National University of Kyiv, as well as Vienna University of Economics and Business (Austria) and Bournemouth Business School International (Great Britain). Prior to his founding of Arzinger JSC in 2002, he headed the legal department of the State Property Fund and was also the manager of the legal department at the Ukrainskiy Alyuminiy company. Specialty: transaction support in the sphere of real estate and construction, M&A, antitrust law and privatization. He is advisor to the mayor of Lviv in attracting foreign investments and public-private partnership, lecturer in Ukrainian law at the Chamber of Commerce of Austria. He is a member of the International Bar Association (IBA), as well as other professional public organizations.

 

In antitrust we trust

"To be ‘antitrust compliant’ is becoming fashionable, as it finally allows business to save image and money"
— Timur Bondaryev, Managing Partner at Arzinger, shares his observations

— How can you estimate the antitrust year that has passed?

— 2016 can easily be called one of the most productive and revolutionary in the sphere of national antitrust. While the transient period continued in 2015 and new management evaluated the situation and delved into the specifics, performing an enormous scope of "invisible" work, then in 2016 we could feel the real results of its work both in the sphere of rule-making and law-enforcement. We are pleasantly surprised with the changes in business behavior; more and more companies from different industries want to work according to the rules of fair play and are investing serious resources into re-development of inner business processes. To be "antitrust compliant" is becoming fashionable, as it finally allows business to save image and money. 

— Which tendencies in the work of the Antimonopoly Committee of Ukraine determined the vector of movement for business?

— The AMCU’s openness and readiness for dialog come to one’s attention first of all. The AMCU’s openness in terms of communication of its approaches, the problems it faces in practice, active involvement of business, publicity, specialists in different spheres and other regulators for discussing and solving issues in this or that market is the most considerable. The "horizon" of the authority has broadened sufficiently. More and more markets and industries are becoming objects of the AMCU deliberate attention. Recent examples are: the tobacco product market, Big Boxes market, the electronics import and distribution market. TheAMCUis activelydemonstrating thatitisnotafraidtobringlongstandinginvestigationstoalogicalend: decisionsontheresultsofinvestigationsinthepharmaceuticalmarketlastingformorethanfiveyearshavebeenmaderecently. The "petrol pump" case ended with a fine. It should be immediately pointed out that the market does not always perceive appropriate fines and their rationale and we have already witnessed long-lasting legal proceedings concerning the grounds for the appropriate fines and investigations in general.

We are also witnesses of proficient changes in the authority's approaches to justification during antitrust investigations. The authority is going from quantity to quality. The regulator is gradually moving away from mass cases with a low intellectual component and is focusing on significant cases of really fundamental importance for the economy in general. We can see more and more economics in the AMCU’s decisions and, obviously, the regulator is making maximum efforts to see deeper into the economic essence of this or that commercial practice. Without a deep understanding of the economic component, antitrust investigation in any market is self-defeating, and the consequences of such "cut" law-enforcement can be tragic both for an individual industry and the economy in general.

 

— Talking of quantitative values, do you mean that the AMCU has been more reserved in imposing big fine penalties recently?

— It is more correct to say that the AMCU approaches issues on discovering facts of violation and determination of the amounts of fines more prudently and thoughtfully. The AMCU’s clarifications related to calculation of the amounts of fines have already been in effect for more than a year. The principles and methods declared by the authority allow business to reckon on transparent and equal approaches, but by no means has this implied that the amounts of fines shall decrease. Fines will rise, but they will be justified economically, which complies with world practice. The AMCU has the right to impose a fine up to 10% of company income (profit) for the financial year and the business shall always remember this.

The market should realize that the national authority is only at the beginning stage of its work and the most sensational investigations are ahead of us. Let's take the freshest examples of fines imposed for cartels applied in the EU in 2016: 2,926,499,000 EUR (price cartel of truck manufacturers) and 137,789,000 EUR (price cartel of car spare parts manufacturers). These figures should not be perceived by business as something far-out and having no relation to Ukrainian realities. We recommend looking at them closer and get ready so that, in a short time, similar fines can appear on the Ukrainian market, taking into consideration of course the scope and condition of the Ukrainian economy.

 

— What tools can you recommend for business in the sphere of antitrust compliance?

— After the AMCU practice became available for market players and the AMCU began an open dialog, business obtained extended opportunities to review its behavior and prevent  possible antitrust risks. On another point, it is absolutely wrong to excessively apply the regulator's position as set out by it in a specific decision or document: it is important to understand that often under different conditions the same commercial practice can be both pro-competitive and anti-competitive. On this count, the experience of lawyers practicing in the sphere of competitive law and possessing wide experience of expertise in different industries can help.

Arzinger’s longstanding experience in this sphere allows me to state that timely use of antitrust analysis of one or another commercial practice, business model prior to its actual implementation taking into consideration the features of the functions of this or that  industry is critically important in respect to risk mitigation. Topical training sessions and introduction of internal documents for company employees making business decisions are effective mechanisms for the mitigation of antitrust risks. Implementation of commercial policies of interaction with counterparties enables the establishing of work with counter-parties, order in commercial conditions, partner selection procedures and, at the same time, the setting of a certain tone for communication with the authority.

It is worth the business sector paying special attention to the issue of pricing. At the same time, we mean not only the economics of expenses and expected profitability; any tools for sales promotion such as discounts, bonuses, compensations, and payment for marketing services are considered by the authority as pricing tools which can be of an anti-competitive nature.

— What forecasts can you make in the area of development of AMCU practice, and what should business expect?

— Business should get ready for a further activation in the authority’s work, including work in those markets which were not in its sights earlier; in this respect, the AMCU also follows foreign practice carefully and pays attention to the industries studied in the EU.

It would do no harm to remind companies about the broad powers of the AMCU in the course of investigation, the authority’s almost unlimited right to  access to commercial and banking secrets and tools for exercising this right. The AMCU possesses many different tools for obtaining access to information, particularly unscheduled audits.

We can see a clear trend in the growth of the regulator's attention in the entire  goods distribution chain: from their manufacturer to the end consumer. But interest in horizontal relations between competitors will grow further. More and more attention is being paid to the relations between manufacturers, distributors and retailers, analysis of contractual provisions and their influence on competition and pricing. Business should pay attention to the issues of exclusive partnership, establishing of resale prices (recommended, fixed prices, minimum and maximum prices) and influence on the market.

After the sensational retailers case, one can forecast that the AMCU will continue to study relations between members of other markets and organizations which collect, process and disseminate market information among companies.

We also forecast a rise in work by the AMCU in the sphere of development and agreement of codes of conduct or rules of professional conduct rules in individual markets.