You’re welcome to appeal
"Hefty fines are almost always appealed in courts, and the results are not always in favor of the Anti-Monopoly Committee of Ukraine" SERGEY DENISENKO, ADVISOR AT AEQUO LAW FIRM, SAYS
— What markets are currently in the focus of the Anti-Monopoly Committee of Ukraine (AMCU)? Have the tools used in the investigations changed recently?
— Traditionally, there are several markets on which the AMCU has focused for many years. They are the agricultural, pharmaceutical markets, petrol market, food market, electricity and telecommunication services market. It is unlikely that the Committee's emphasis will shift significantly in the near future. Among promising markets that have been left lagging behind by the AMCU, I would mention e-commerce as a worldwide trend, which, we hope, will soon become apparent in our country.
Significant progress is observed in terms of economic argumentation in cases involving the Aequo law firm. There is also great progress in the structure of the Committee's decisions. Unfortunately, there is still much work to be done. I want to believe that the wording familiar to many people since the command economy, for example, reduction of tariffs and prices to an economically feasible level and the interpretation of similar actions in a form, which has been observed in recent years, will be lost in the practice of today's AMCU.
— How successful is the AMCU at standing its ground in courts?
— According to the Committee’s own statistics, appeals were brought against about 16% of its decisions. At first glance, the Committee is very strong in defending its position in courts: only about 15% of court decisions were made in favor of complainants. The statistics are even more indicative in the same cases, when the Committee appealed to courts, for example, to ensure the timely payment of fines imposed. AMCU claims were rejected in just 0.9% of cases.
However, if we take into account the number of AMCU decisions per annum, it seems that the statistics of appeals against really major investigations and AMCU decisions are not so unambiguous in contrast to the general figures given in the Committee's report. For example, hefty fines are almost always appealed in courts, and the results are not always in favor of the Committee. A case in point is a high-profile case involving trading networks with more than one decision of higher courts that overturned the AMCU decision, for both causes of violation attributed to the fault, namely: regarding the exchange of information and the practice of interaction with suppliers.
— Give your opinion of the situation with real recovery of fines.
— At present, the largest sum of a fine voluntarily (within two months after the AMCU decision) paid to the budget is 300 million hryvnias, which was voluntarily paid by TEDIS LLC. According to various estimates, the average level of AMCU collection of fines is up to 10% of the total fines imposed by the Committee.
In addition, if an entity actively resists recovering a fine applied by the AMCU, the actual procedure may last for two or more years from the time of the decision on imposing a fine, to its actual payment. If you delve into the data, then I'm sure you can come across cases when this procedure has a history of five or even ten years. Certainly, while the relevant decision of the Committee is being appealed and enforced, the violating company uses the time and does its best to remove assets, so that by the end of the corresponding process, there would no longer be any interest.
In this connection, an effective way out of this could be to give the AMCU decision the force of an enforcement document. This is, for example, recommended by the Organization for Economic Co-operation and Development in its review of legislation and policy in respect of Ukrainian competition law. It is also desirable to implement the procedure of settlement. This procedure allows the party to the case, who pleaded guilty to the committed violation, to reduce the amount of the fine imposed, and the regulator to receive its guaranteed payment. As a consequence, it is impossible, in according with the settlement results, to move to the stage of litigation and enforcement.
— Can we talk about the influence of position of courts on the law-enforcement practice of the AMCU?
— The previous practice of the Committee did not, to put it mildly, always take into account the position of the courts. This problem was especially noticeable at the level of decisions of the territorial divisions of the AMCU, which did not pay much attention to the practice of courts, even if such practice indicated the reversal of AMCU decisions in similar cases.
Today, significant changes in this regard have not been noticed yet. Time is needed so that changes in this respect would become really noticeable. The practice of our courts in AMCU-involving cases is not always unambiguous, especially at the level of courts of first instances where, frankly, judges have no specialization and no time to think through antitrust matters.
— How active is business in using the opportunities of preliminary appeals to the AMCU for explanations? How are the latest AMCU recommendations being implemented?
— In view of the Committee's continuing penal practice with regard to distribution issues in the pharmaceutical market, the institution of explanations (findings on the qualification of actions) will come up. Sooner or later, there will be a distribution model that will not cause allergic responses among the Committee's officials and will also be effective for market players.
Other industries cast a wary eye at what is happening and are reluctant to discuss these issues with the Committee. At the same time, the existence of standard requirements that contain the basic principles of the AMCU's evaluation of vertical concerted actions, seriously facilitate life, albeit at the level of consultations given by legal advisors.
— What should business be prepared for in view of introduction of the state aid control system and other innovations? What industries do such innovations focus on?
— On August 2, 2017, the state aid system began to operate in our country. The law provides that any form of state aid or support that exceeds a certain financial threshold shall be agreed with the AMCU for its admissibility and absence of detriment to competition. A certain amount of work is expected to be done, which, according to our estimates, will not initially be large, but it will grow as state bodies and business get acquainted with the law. So far, it's beginning to feel like not all interested persons understand what the essence of the issue is, and what exactly has changed. There are still very few practices, but the potential range of state aid activities is wide: starting from determining whether government support for business entities in the form of subsidies, government grants, tax breaks or loan guarantees meets the state aid criteria, and whether it necessitates obtaining appropriate approvals right up to appealing against decisions on the return of state aid.