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10 September 2013

Competition Litigation 2014. Ukraine


Author: Oleksandr Voznyuk, Anastasia Usova
Source: The International Comparative Legal Guide. – 2014

1 General

1.1   Please identify the scope of claims that may be brought in Ukraine for breach of competition law.

In the context of private enforcement in respect of competition law infringements, the following types of claims may be brought before the courts:

a) Claims seeking cease-and-desist orders. Most often these claims are used in relation to unfair competition offences, such as free-riding on a claimant's reputation and goodwill, defamation, etc. Also this type of claims is sometimes used to force a dominant undertaking to contract or to vary a non-negotiable or otherwise onerous agreement. However, these claims are relatively rare in practice since the burden of proof rests with the claimant; this poses significant difficulties in proving the fact of violation of competition laws, especially in cases of abuse of dominance or anticompetitive concerted practices.

b) Claims for damages suffered as a result of an anticompetitive conduct. These actions may be brought either separately or as a part of other claims. Both pecuniary damages (including the actual losses and loss of profits) and non-pecuniary (moral) damages can be claimed.

In practical terms it is usually more efficient to submit such damages claims as follow on claims after seeking a favourable decision of the Antimonopoly Committee of Ukraine (the "AMC") on violation of competition laws. Therefore, the claimants would normally first apply to the AMC in order to have the fact of violation established by the AMC's decision and afterwards bring actions for damages before the court. The AMC decision would release the claimant from a need to prove the fact of violation. Furthermore, the AMC's findings (e.g. duration of the violation, or degree of unjustified price increase) may be helpful for the claimant in calculating the amount of damages incurred. In Ukraine such damages claims are not very common mainly because (i) AMC decisions finding a competition offence mostly concern cases where the aggrieved parties are the end consumers for whom potential recovery of damages would not necessarily cover legal costs incurred throughout the court proceedings, and (ii) there are practical difficulties in calculating the amount of damages incurred.

c) Claims for annulment of the AMC's acts in cases of violation of competition laws and decisions approving/prohibiting concentrations and agreements (potentially anticompetitive concerted practices).

These types of claims are further discussed in questions 1.6 and 3.1.

1.2   What is the legal basis for bringing an action for breach of competition law?

The Law on Protection of Economic Competition of 2001 (the "Competition Law") and the Civil Code of Ukraine of 2003 form the legal basis for competition law claims of both legal entities and individuals whose rights have been violated through:

a) anticompetitive concerted practices;

b) abuse of dominance;

c) implementation of a notifiable merger without clearance;

d) unfair competition;

e) unilateral   discriminatory   or  restrictive  practices of undertakings and associations; and

f) anticompetitive practices of public authorities.

Given that the AMC may reject a complaint regarding a violation of competition law if such violation does not have an appreciable effect on competition (i.e., where a private rather than public interest is at stake), an aggrieved party can seek protection of its rights in courts. When it comes to damages, the AMC enforcement powers naturally do not extend to damages claims, although the fact that the AMC has found an offender to be in violation of competition laws is usually precedential for the courts and significantly contributes to the chances of the claimant to succeed with the damages suit.

1.3   Is the legal basis for competition law claims derived from international, national or regional law?

The legal basis for competition law claims derives from national law.

1.4   Are there specialist courts in Ukraine to which competition law cases are assigned?

There are no specialist courts to which competition law cases are assigned.

Under the Competition Law, actions for damages and appeals of the AMC decisions should be brought before commercial courts. Therefore, in practice the majority of competition law cases are heard by commercial courts where the judges specialise in competition law cases, especially some judges of the High Commercial Court. However, there is usually no specialisation in administrative or general courts where certain competition law cases may be brought as well.

1.5   Who has standing to bring an action for breach of competition law and what are the available mechanisms for multiple claimants? For instance, is there a possibility of collective claims, class actions, actions by representative bodies or any other form of public interest litigation?

Any undertaking or individual that has been affected as a result of an infringement of competition law (competitor, purchaser, supplier, consumer) has standing to bring an action for breach of competition law. A causation link between the competition law offence and the infringement upon claimant's rights is indispensable for the claimant to succeed with the claim.

Given that it is a violation of individual rights that serves ground for bringing an action, only the persons whose rights have been violated are able to bring claims. There are no collective claims or class actions in Ukraine. However, consumer associations may submit claims in order to bring a competition law violation to the end in the interests of undefined consumers. However, consumer associations cannot bring claims for damages in view of the individual nature of such claims.

The court may consolidate several actions if the claims are sufficiently homogenous, i.e. linked to the extent that there is no rationale for the court to hear them separately. It is more likely to apply in cases concerning an indefinite number of persons. However, consolidation of claims that root to competition law offences is quite rare in practice.

1.6   What jurisdictional factors will determine whether a court is entitled to take on a competition law claim?

Ukrainian competition law applies extra-territorially to the extent that there is, or may be, an impact on economic competition in Ukraine (except for the cases involving unfair competition offences).

The cases are allocated to the courts according to the status of the claimant (individual or legal entity) and legal nature of the matter concerned (administrative, commercial or civil relations), in particular:

a) commercial courts have jurisdiction over claims of undertakings or individual entrepreneurs against other undertakings, associations or the AMC;

b) general courts have jurisdiction over claims of individuals (except individual entrepreneurs) and consumer associations against undertakings or associations; and

c) administrative courts have (more generally) jurisdiction over claims of undertakings against public authorities, including the AMC.

It should be noted that there is legal uncertainty as to which court -commercial or administrative - has jurisdiction over claims challenging the validity of the AMC's decisions. It has been the prevailing practice to use commercial courts as stipulated in the Competition Law. However, due to a legal ambiguity, administrative courts also adjudicate in such claims.

Also, inconsistency in allocation of cases may be explicated by the fact that the territorial jurisdiction of administrative courts is determined by the area where the claimant has its registered address while the one of the commercial court - by the area where the defendant has its registered address. Furthermore, in the administrative courts the burden of proof rests with the AMC while in commercial courts it lies with the plaintiff.

1.7   Does Ukraine have a reputation for attracting claimants or, on the contrary, defendant applications to seize jurisdiction and if so, why?

It is often more efficient for an aggrieved party to protect its rights via filing complaints with the AMC than by initiating a court proceeding. Since the review of competition law cases by courts has not yet become a common practice, the courts lack experience in the application of competition laws and remain reluctant to make their own assessment, especially in finding an abuse of dominance, definition of product markets, etc.

This makes Ukraine generally more attractive for defendants since the burden of proof in commercial and civil proceeding lies with the claimant, which inter alia, creates significant hurdles in proving the amount of the damage sustained and the causation between competition offence and the damages.

1.8   Is the judicial process adversarial or inquisitorial?

The judicial process is adversarial.

2 Interim Remedies

2.1   Are interim remedies available in competition law cases?

Interim remedies are available and may be awarded by courts both upon the request of a party and on its own initiative (except for civil claims) if an omission to order interim measures could complicate the execution of the court's final decision or make such execution impossible.

In civil proceedings the party injured by unjustified interim measures may request recovery of the damages so incurred.

2.2   What interim remedies are available and under what conditions will a court grant them?

The following interim remedies may be granted by general and commercial courts:

  • attachment of respondent's property or seizure of monetary funds;
  • prohibition on the defendant to perform certain actions;
  • prohibition for other parties to perform certain actions with regard to the subject matter of the relevant proceedings.

Furthermore, a general court may also request a defendant to perform certain actions upon the request of the plaintiff.

As regards the administrative proceedings for the annulment of public authority's acts the court may suspend the effect of such act in whole or in part prior to rendering a final decision if: (a) the enforcement of the court decision could be hindered or made impossible in the absence of suspension; (b) there is an imminent danger for a breach of the plaintiff's legitimate rights; or (c) the violation on the part of a state body is manifest.

It should be noted that the appeal of the AMC decision on violation of the competition laws automatically suspends it unless the AMC has expressly stated otherwise in its decision driven by public interest concerns. However, even if the AMC has stated that the appeal does not automatically suspend the decision, the court may anyway rule on suspension of the AMC decision.

3 Final Remedies

3.1   Please identify the final remedies which may be available and describe in each case the tests which a court will apply in deciding whether to grant such a remedy.

A. The courts may impose remedies only within the limits of what is sought by the plaintiff. However, based on the petition of the plaintiff, commercial courts may go beyond the initial claims, though it is quite rare for the claimants to use this right.

It is for the claimant to determine the scope of remedies that would be sufficient to restore its rights, which have been violated as a result of a competition law infringement.

B. In particular, the following remedies may be available:

  • to order that a defendant put an end to an unlawful practice violating a claimant's rights;
  • to force the defendant to perform certain actions;
  • to restore the claimant's standing that would have existed should the infringement not have occurred;
  • to invalidate the agreement;
  • to invalidate a government agency's decision; and
  • to award damages to the injured party.

C. In order to have the claim satisfied the claimant should prove that:

  • the defendant's conduct (action/inaction) amounts to a violation of competition laws;
  • the rights of the claimant have been violated; and
  • there is a direct causation between the violation of the claimant's right and the defendant's conduct.

In order to have pecuniary or non-pecuniary (moral) damages awarded the claimant should prove that:

  • the defendant's conduct (action/inactivity) amounts to a violation of competition laws;
  • the claimant has incurred measurable pecuniary damages or moral damages; and
  • there is a direct causation between the violation of competition laws and the damages sustained.

D. In practical terms it would be almost indispensable for the claimant to seek a favourable AMC decision on violation of the competition laws for the success of the follow-on damages claim in court. Ukrainian courts strongly prefer to refer this issue to the competition authority and are generally reluctant to make their own assessment in this regard (and are even more reluctant to conclude contrary to the findings of the authority). As a rule, a favourable AMC decision on violation of the competition laws serves as one of the decisive factors for awarding damages by the court. Cases where the court awarded damages based on a violation of competition laws established by the court itself are extremely rare.

It should be noted that in administrative proceedings the burden of proof lies with the AMC, which is beneficial for the claimant, while it may result in longer duration of the proceedings.

3.2 If damages are an available remedy, on what bases can a court determine the amount of the award? Are exemplary damages available?

Both pecuniary and non-pecuniary (moral) damages may be awarded by the court. The amount of pecuniary damages should cover the actual losses incurred by the claimant over the infringement, the loss of profit as well as legal costs and any other expenses incurred by the claimant for recovery of the standing that would have existed should the infringement not have occurred.

The Competition Law provides for the award of exemplary double damages for the following types of competition law violations:

  • anticompetitive concerted practices;
  • abuse of dominance;
  • implementation of a notifiable transaction without merger clearance;
  • implementation of the conditionally approved concentration or concerted practices without fulfillment of the conditions imposed by the AMC; and
  • imposition of restrictions on business activity of an undertaking following its application to the AMC with a complaint regarding an alleged competition law offence.

As regards moral damages, which may be awarded to individuals only, the court determines the amount of the award taking into account: the nature of violation; physical or psychological suffering; degradation or loss of reputation, credit and social position; time and effort required for the recovery of initial standing; as well as a degree of guilt of the defendant (except for the claims against public authorities where the guilt on their part is presumed).

Moral damages are awarded irrespectively of pecuniary damages and their amount awarded alongside.

3.3 Are fines imposed by competition authorities taken into account by the court when calculating the award?

The court usually does not take into account fines imposed by the AMC when calculating the award.

4 Evidence

4.1 What is the standard of proof?

Ukrainian laws do not establish an objective standard of proof, leaving a great discretion to the court, which establishes the facts in the proceedings based on the evidence produced by the parties. The court should assess the evidence with a comprehensive, complete and objective consideration of all the circumstances in the case in its entirety.

4.2   Who bears the evidential burden of proof?

Each party bears the burden of proof of their allegations. In the proceedings against undertakings or associations, the burden of proof lies with the claimant, which needs to prove the fact of competition law infringement, violation of its rights, and a direct causation between these two. In this case the fault of the defendant is presumed, however, it may be rebutted.

Unlike civil and commercial proceedings, in administrative proceedings against public authorities the burden of proof lies with the defendant, which needs to justify its actions being contested. With regard to the claimant, it should prove that the public authority's act violates its rights and evidence the causation between the act and the violation of its rights. In these cases there is no need to prove the fault of the public authority since an irrefutable presumption of fault would apply.

If a party does not possess certain essential pieces of evidence, but knows who might be able to produce such evidence, the party may request the court to retrieve the evidence from such individual, entity, or public authority.

4.3 Are there limitations on the forms of evidence which may be put forward by either side? Is expert evidence accepted by the courts?

There are no particular limitations on the forms of evidence that may be put forward; however, the court has sole discretion to decide whether to admit the provided evidence or not.

The parties may submit any factual data, which enables the court to establish facts or other circumstances in the case. The following forms of evidence can be accepted:

  • explanations of the parties;
  • testimonies of witnesses and other third parties;
  • written evidence, such as documents, letters, acts of public authorities and court's decisions. The parties may submit copies of original documents as written evidence. The documents of foreign public authorities should be duly legalised/apostilled and accompanied with a notarised translation into Ukrainian, except for the documents issued in the CIS countries;
  • physical evidence (including sound and video recordings, emails, electronic files); and
  • expert opinions.

Expert opinions are admissible in the form of written expert reports regarding the questions posed by the court. The parties may suggest questions to be asked and the experts to be appointed by the court.

In commercial proceedings the expert is appointed by the judge while in civil and administrative proceedings the parties may agree to nominate an expert, who should further be appointed by the judge.

4.4 What are the rules on disclosure? What, if any, documents can be obtained: (i) before proceedings have begun; (ii) during proceedings from the other party; and (iii) from third parties (including competition authorities)?

The copy of the claim with all the attachments is provided to the defendant and third parties in the proceedings as soon as it is submitted by the claimant.

The claimant, the defendant and the third parties may familiarise themselves with all the materials of the case from the beginning of its review.

With regard to the complaints on competition law infringement to the AMC, the applicant, the respondents, and the third parties can obtain access to the materials of the case (except confidential data) only following the issue of the statement of objections by the AMC, which means that the materials available to the competition authority may not be obtainable for the parties until the final stage of the authority's investigation.

4.5 Can witnesses be forced to appear? To what extent, if any, is cross-examination of witnesses possible?

Witnesses may be forced to appear and testify before general and administrative courts, unless such testimony is directly related to his or her person and interests, as well as to that of his or her relatives. The witness may be subject to criminal liability for his/her refusal to testify or for providing inaccurate information. In cases where a witness cannot appear before the court due to plausible reasons, the court may arrange for the witness to testify at his/her place of residence.

In commercial proceedings, obtaining evidence via witnesses' testimony is not procedurally provided for. The court may, however,  interrogate employees of the companies, public authorities and organisations or request them to appear before the court.

Courts may impose fines for failure to appear or refusal to testify in any types of proceedings.

Cross-examination of witnesses is expressly provided for in civil and administrative proceedings (please see paras. (b) and (c) in question 1.6).

4.6 Does an infringement decision by a national or international competition authority, or an authority from another country, have probative value as to liability and enable claimants to pursue follow-on claims for damages in the courts?

An infringement decision of the AMC has probative value unless it is overruled by court. In particular, a favourable AMC decision on violation of the competition laws serves as a decisive factor for establishing the fact of abuse of dominance when awarding damages by the court.

Decisions of international and foreign competition authorities on infringement of local competition laws may also be used as supportive evidence. Pursuant to the international treaties on mutual legal assistance in criminal and civil matters to which Ukraine is a party, infringement decisions of international and foreign courts may also have probative value when awarding damages by the Ukrainian courts. However, a decision of a foreign competition authority or court on the violation of foreign competition laws may not serve as proof of unlawful conduct by the Ukrainian company if it does not amount to a violation under Ukrainian competition laws.

4.7 How would courts deal with issues of commercial confidentiality that may arise in competition proceedings?

Confidential information provided to the court becomes available to other parties to the case and third parties. Therefore, the parties should find the right balance as to the degree of disclosure and probative force when submitting confidential information to the court.

A party submitting confidential information may also request a closed court session for review of such information.

4.8   Is there provision for the national competition authority in Ukraine (and/or the European Commission, in EU Member States) to express its views or analysis in relation to the case? If so, how common is it for the competition authority (or European Commission) to do so?

Courts are required to report to the AMC on disputes that are heard under competition laws. The AMC may step in as an interested third party in such disputes if the public interest is at stake. However, in practice, courts rarely report to the AMC in this respect.

5 Justification / Defences

5.1   Is a defence of justification/public interest available?

Generally, public interest is not available as a defence in competition law violations. However, in view of public interest, certain types of concerted actions are exempted from the blanket prohibition on anticompetitive concerted practices, in particular, agreements between SMEs, agreements on supply and use of products, certain IP-related contracts, agreements on specialisation, establishment of associations, and joint R&D activity.

Furthermore, if concerted practices are not covered by any of the above exemptions, the parties may apply to the AMC for an individual exemption from the prohibition if they manage to demonstrate that the concerted practices:

  • contribute to various efficiencies: improvement and rationalisation of manufacturing; product purchase or sale processes; technical, technological and economic development; development of SMEs; optimisation of export and import processes; development and use of uniform product standards; and
  • do not result in significant restriction of the competition on the market or a substantial part thereof.

However, if none of the above block or individual exemption applies, public interest may not be invoked in defence and the concerted practices will be regarded as a violation.

5.2 Is the "passing on defence" available and do indirect purchasers have legal standing to sue?

The "passing on defence" is available in Ukraine, however, due to the lack of practice in this respect, general uncertainty and difficulties in calculation of damages defendants rarely resort to this type of defence.

Under the Competition Law any person that suffered damages as a result of a competition offence has a legal standing to sue. Thus, indirect purchasers may also bring actions for damages. However, we are not aware of such cases yet, which may be explained by the difficulties to prove the fact of "passing on" from a direct to an indirect purchaser.

6 Timing

6.1 Is there a limitation period for bringing a claim for breach of competition law, and if so how long is it and when does it start to run?

The general limitation period to bring claims for a breach of competition law or claims for damages is three years starting from the date when the aggrieved party became, or could have become, aware of the infringement upon its rights. However, there are some exceptions to this rule:

  • a one-year limitation period applies to claims involving defamation in media;
  • a six-month limitation period applies to claims involving anticompetitive conduct of public authorities; and
  • no limitation period applies to non-pecuniary (moral) damages claims.

With regard to the complaints for breaches of competition law submitted to the AMC, the limitation period of five years applies.

6.2   Broadly speaking, how long does a typical breach of competition law claim take to bring to trial and final judgment? Is it possible to expedite proceedings?

In the first instance of commercial and civil proceedings, consideration of the claims indicated under paras. (a) and (b) of question 1.6 takes two months after bringing a claim to trial. In exceptional cases, proceedings may be extended by another 15 days. The appeal review takes up to two months while the cassation review and review by the Supreme Court of Ukraine lasts up to one month. Taking into account the duration of appeals, it takes about six to eight months, on average, from bringing a case to trial to a final judgment.

In administrative proceedings involving anticompetitive practices by public authorities (para. (c) of question 1.1) the courts should rule within reasonable timelines up to one month in each instance except the appeals instance, where in exceptional cases the review may be extended by another 15 days.

However, it should be noted that under certain circumstances the proceedings may take longer than indicated, e.g. if expert opinion is sought or the case is returned for a new trial in the first instance, etc.

There is no possibility to accelerate the proceedings.

7 Settlement

7.1   Do parties require the permission of the court to discontinue breach of competition law claims (for example if a settlement is reached)?

A claimant does not need the permission of the court to discontinue the proceedings it has initiated. The court should cease the proceedings upon filing a notice of withdrawal by the claimant. However, the proceedings cannot be ceased by the court if the parties' conduct amounts to a violation that infringes the rights of third parties.

If the parties reach the settlement, the court should approve the settlement and discontinue the proceedings.

The parties may not be precluded from withdrawing the claim or reaching the settlement if the AMC acts as a party in the proceedings where public interest is involved. Should the proceedings be ceased, the AMC may initiate its own investigation on violation of competition laws.

Both in cases of withdrawal of the claim and settlement, the claimant may not bring similar claims to the court in future.

8.1   Can the claimant/defendant recover its legal costs from the unsuccessful party?

As a general rule, the unsuccessful party will be ordered to recover the costs of court duty, court experts' fees, translators' fees, legal costs and other expenses incurred by the winning party. If a claim is awarded in part, the costs are recovered pro rata. In case of settlement, the costs are divided between the parties in equal parts, unless otherwise agreed by the parties in the settlement agreement.

In most cases the amount of recovery is limited under the laws. For example, in administrative and civil proceedings (paras. (b) and (c) of question 1.6) an attorney's hourly fee should not exceed 40 per cent of the minimum monthly wage amounting to EUR 110 (as of the date of preparation of this chapter). It should be noted that in this case the recovery will only cover the time spent by the attorney in court hearings, during familiarisation with case materials and participation in the legal proceedings outside the court, such as examination of evidence. In commercial proceedings (para. (a) of question 1.6) there is no limitation on recovery, however, the commercial courts may reduce the awarded amount of legal costs to reasonable court expenses in the case.

8.2   Are lawyers permitted to act on a contingency fee basis?

Lawyers are not prohibited from acting on a contingency fee basis. However, there may be some practical inconveniences in case of recovery of lawyer's contingency fees by the unsuccessful party. In particular, the court should consider this issue within the same proceedings and only based on provisions of the legal services invoiced by the party. Such requirement imposes an additional burden on the winning party, which is in fact forced to pay for the legal services prior to closing of the court proceedings.

8.3   Is third party funding of competition law claims permitted? If so, has this option been used in many cases to date?

Third party funding of competition law claims is permitted. However, the court duty is required to be paid by the claimant itself or its representative. Furthermore, the recovery may be awarded exclusively regarding the costs incurred by the party in the case and not third parties.

9.1   Can decisions of the court be appealed?

Decisions of commercial, general or administrative courts of the first instance are subject to appeal within 10 days after receiving the court decision. The appellate court is competent to review the case within the same scope as the first instance court.

Decisions of appellate commercial, general or administrative courts may be subject to cassation appeal either on the merits or on procedural grounds by the relevant high court within 20 days after the receipt of the appeal decision.

The decisions of any of the second instance courts may be further reviewed by the Supreme Court in cases of:

(i) different applications of a legal rule by courts in similar cases; or

(ii) judgments by an international court, whose jurisdiction is recognised by Ukraine, which determine that Ukraine has violated its international obligations while considering a court case.

10 Leniency

10.1 Is leniency offered by a national competition authority in Ukraine? If so, is (a) a successful and (b) an unsuccessful applicant for leniency given immunity from civil claims?

The leniency programme, which applies in Ukraine, provides for immunity exclusively from the administrative fine imposed by the AMC. Applicants for leniency are not granted immunity from civil claims, including double recovery of damages sustained as a result of the violation of competition laws.

10.2 Is (a) a successful and (b) an unsuccessful applicant for leniency permitted to withhold evidence disclosed by it when obtaining leniency in any subsequent court proceedings?

There is no prohibition on withholding the evidence disclosed by leniency applicants in subsequent court proceedings.

However, the evidence may be retrieved by the court from the leniency applicant or the AMC. The court may impose fines for failure to provide such evidence.



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