Публікації | Asters

"У послужному списку команди –
юридичний супровід найзначніших транзакцій"
PLC Which Lawyer?

Публікації

16 березня 2011

PLC Competition Handbook 2011. Питання й відповіді. Україна


Автор: Ігор Свечкар, Татяна Вовк
Джерело: PLC Competition Handbook 2011

Статтю можна прочитати нижче мовою оригіналу.

Cross-border Competition Handbook 2011

Practical Law Company.

Ukraine

MERGER CONTROL

1. Are mergers and acquisitions subject to merger control in your jurisdiction? If so, please describe briefly the regulatory framework and authorities.

Mergers and acquisitions, as well as establishment of an under­taking and appointments to corporate positions under certain cir­cumstances, are subject to merger control in Ukraine.

The Antimonopoly Committee of Ukraine (AMC) is the primary state authority entrusted with ensuring protection of competi­tion. In particular, it has powers to investigate and grant or refuse clearance for mergers (concentrations). If the AMC refuses to ap­prove a concentration, the Cabinet of Ministers of Ukraine (CMU) may overrule that decision (see Question 7).

Applicable laws and regulations include the:

· Law of Ukraine on Protection of Economic Competition of 2001 (Competition Law).

· Law on the Antimonopoly Committee of Ukraine of 1993 (Law on the AMC).

· Commercial Code of Ukraine of 2003.

· AMC Resolution Approving the Regulation on the Procedure for Filing Applications with the Antimonopoly

· Committee of Ukraine for Obtaining its Prior Approval of the Concentra­tion of Undertakings of 2002

· (Concentrations Regulation).

· AMC Methodology for Establishment of the Monopoly (Dominant) Position of the Undertakings on the

· Market of 2002 (Monopoly Methodology).

Triggering events/thresholds

2. What are the relevant jurisdictional triggering events/thresholds?

Triggering events

The Competition Law sets out the exhaustive list of transactions/ events that are considered concentrations and may require prior merger clearance:

· Merger of previously independent undertakings or the takeo­ver of one undertaking by another.

· Acquisition of direct or indirect control over an undertaking (including through the acquisition of a significant part of the assets of an undertaking, appointment of its managers and so on).

· Establishment by two or more undertakings of a new un­dertaking that will independently pursue business activity on a lasting basis and its establishment will not result in co-ordination of competitive behaviour of either:

o its parents;

o the new undertaking, on the one hand, and its parents, on the other.

· Direct or indirect acquisition(s) of control over participa­tion interests whereby certain thresholds (25% or 50% of the votes in the highest governing body of the undertaking concerned) are reached or exceeded.

Thresholds

A concentration is notifiable and requires prior approval of the AMC if all of the following thresholds are exceeded (Competition Law):

· The combined worldwide asset value or turnover of the participants of the concentration (for the purposes of this chapter, participants of the concentration are considered as part of their corporate group) in the financial year preceding the year of the transaction exceeded EUR12 million (as at 1 November 2010, US$1 was about EUR0.7).

· Each of the parties to the concentration had worldwide as­set value or turnover in the financial year preceding the year of the transaction in excess of EUR1 million.

· The value of assets located in Ukraine or Ukrainian turnover of either of the parties to the concentration in the financial year preceding the year of the transaction exceeded EUR1 million.

There is also a market share test, which applies independently. The AMC clearance is required if either the individual or com­bined market share of the parties in the market concerned or the adjacent market exceeds 35%.

Notification

3. Please give a broad overview of notification requirements. In particular:

· Is notification mandatory or voluntary?

· When should a transaction be notified?

· Is it possible to obtain formal or informal guidance before notification?

· Who should notify?

· To which authority should notification be made?

· What form of notification is used?

· Is there a filing fee? If so, how much?

· Is there an obligation to suspend the transaction pending the outcome of an investigation?

Mandatory or voluntary

The parties to the concentration must obtain the AMC approval of the notifiable concentration before closing (see Question 2).

Timing

The law does not set any specific deadlines for filing a notifiable concentration, the only requirement being that the AMC approval be obtained before the implementation of the concentration (for example, transfer of the title to shares, acquisition of control or registration of a new entity).

Formal/informal guidance

Parties to a transaction may refer to the AMC for formal guidance on whether the concentration is notifiable, or whether the clear­ance is likely to be granted or refused. Such guidance is issued in the form of a non-binding preliminary opinion. Informal discus­sions with the AMC’s officers are usually possible, although the law does not expressly provide for it.

Responsibility for notification

The parties to the transaction are jointly responsible for notifying. However, the AMC may agree to accept a notification filed by one of the parties in the following circumstances:

· During a hostile takeover.

· If there is a lack of co-operation between the parties to a concentration in relation to filing the notification in Ukraine.

Relevant authority

The AMC is the relevant authority. However, if the AMC prohibits the concentration the CMU may still approve it (see Question 7).

Form of notification

The parties must submit a written notification in the form and with the contents and annexes required under the Concentrations Regulation. The AMC intends to introduce a system of electronic filings.

Filing fee

The filing fee is UAH 5,100 (as at 1 November 2010, US$1 was about UAH7.9).

Obligation to suspend

The parties must suspend the transaction until the AMC clear­ance is granted. In addition, they must refrain from any actions that may restrict competition and render it impossible to restore the initial position (pre-clearance gun-jumping).

Procedure and timetable

4. Please set out the procedure and timetable.

The merger review procedure includes the following steps:

· Preview period. The AMC considers the notification and decides whether it is complete and can be passed for the review on the substance. If the AMC considers the notifi­cation to be incomplete, the notification is rejected and should be resubmitted. The AMC has 15 calendar days to make a decision.

· Phase I review. This stage involves an assessment by the AMC of whether the concentration can be approved or whether there are grounds to prohibit the concentration, in which case an in-depth investigation is required. The as­sessment must be completed within 30 calendar days of the AMC's decision that the notification is complete.

· Phase II review. Phase II review involves a close analysis of competition concerns raised by the concentration, examina­tion of expert opinions and other additional information, and so on. Although the review period is limited to three months from the AMC's decision to initiate a Phase II review, in practice it may take longer if additional documents, infor­mation and/or expert evidence are required.

For an overview of the notification process, see flowchart, Ukraine: merger notifications.

Confidentiality

5. In relation to merger inquiries:

· How much publicity is given?

· At what stage of the procedure is information released?

· Is certain information automatically kept confidential?

· Can the parties request that certain information be kept confidential?

Publicity

The AMC can disclose certain general information on the transac­tion and the parties, the nature of the transaction, the relevant markets, and so on. The authority can also publish (usually on its website) other information regarding the transaction to the extent it was not marked confidential by the parties.

Procedural stage

The AMC can disclose on:

· The receipt of the merger notification: general information on the transaction and the parties involved if:

o the authority believes that third parties may object to the transaction; or

o Phase II review is initiated.

· Clearance: information regarding the AMC decision (includ­ing general information on the transaction) within the scope agreed with the parties to the concentration.

Automatic confidentiality

Automatic confidentiality does not apply to any information.

Confidentiality on request

Merger filings submitted with relevant confidentiality marks are treated by the AMC as confidential and cannot be disclosed to the public except with the express written consent of the parties to the concentration or as outlined above.

Rights of third parties

6. Can third parties be involved in the procedure and, if so, how? What rights do they have to

make representations, ac­cess documents or be heard?

Third parties (for example, competitors) can be involved during the Phase II review if the notified transaction may significantly af­fect their rights and interests. The decision on their involvement is made by the AMC at its discretion. Third parties can submit their observations relating to, among other things, the notified transaction and its impact on the market. The AMC must take these observations into account when deciding on the case.

Substantive test

7. What is the substantive test?

The AMC approves the concentration if it does not lead to monop­olisation or substantial restriction of competition on the Ukrain­ian market or a significant part of it.

Even if the AMC prohibits the concentration, the CMU may still permit it if its positive effects for the public interest outweigh the negative impact of the restriction of competition, unless such restriction:

o Is not necessary for achieving the purpose of the concentra­tion.

o Jeopardises the market economy system.

Remedies, penalties and appeal

8. What remedies can be imposed as conditions of clearance to address competition concerns?

At what stage of the proce­dure can they be offered and accepted?

The AMC clearance decision can be made conditional on the par­ties' undertaking to perform, or refrain from performing, certain actions. The undertakings aim at removing or mitigating the neg­ative impact of the concentration on the market competition and may be either structural (for example, divestitures) or behavioural (for example, restrictions on the use or management of certain assets or price increases).

Remedies, divestments and relevant procedures are not compre­hensively regulated by the Ukrainian laws and are usually negoti­ated with the AMC on a case-by-case basis. Although remedies may be offered at any time after the submission of the merger notification, in practice, remedies are usually offered and dis­cussed during Phase II review (see Question 4). Remedies cannot be accepted to prevent the initiation of a Phase II review and to obtain a conditional Phase I clearance. Once the AMC identifies competition concerns, procedurally it has no other options than to initiate a Phase II review.

9. What are the penalties for:

o Failure to notify correctly?

o Implementation before approval or after prohibition of the merger?

o Failure to observe a decision of the regulator (including any remedial undertakings)?

o Failure to notify correctly

There are no penalties for failure to notify. However, the following may lead to a fine for the company of up to 1% of its turnover in the year immediately preceding the year when the fine is im­posed:

o Failure to provide requested information within the period specified by the AMC.

o Provision of incomplete information.

o Submission of false information to the AMC.

The Chief Executive Officer (CEO) (or a top manager) of the com­pany may incur a nominal administrative fine if he (on behalf of the company):

o Fails to provide information to the AMC.

o Does not provide information to the AMC on time.

o Provides knowingly false information to the AMC.

Implementation before approval or after prohibition

Once the violation is established, the parties to the concentration can be fined in the amount of up to 5% of their turnover in the year immediately preceding the year when the fine is imposed. The law is silent on whether turnover refers to local or global turnover. The AMC currently interprets this as a reference to the worldwide turnover.

The fine can be imposed on the entire corporate group of the company whose actions or omissions have led to violation of the law (Competition Law). This allows the AMC to fine immediately any local subsidiaries of the parties to the concentration and im­proves the AMC's chances of the successful collection of fines.

The late payment fee is 1.5% per day, but cannot exceed the principal amount of the fine imposed.

In addition to the financial penalties, any or all of the following sanctions may apply:

o Ban on the companies' cross-border activities with Ukraine such as importing/exporting goods, performing under cross-border contracts and so on. This can be imposed by the Ministry of Economy of Ukraine on the AMC's request.

o Third party damages claims (see Question 25).

o Invalidation of the transaction.

Failure to observe

Failure to observe the AMC decision prohibiting a concentration, or only partial compliance with it, may result in a fine of up to 10% of the party's turnover in the year immediately preceding the year when the fine is imposed. Failure to observe the AMC deci­sion that imposes certain obligations on the parties to the con­centration may result in a fine of up to 5% of their turnover in the year immediately preceding the year when the fine is imposed. The fine can be based on the global turnover of the infringing party (see above).

In addition, the CEO (or a top manager) of the infringing party may be subject to a nominal administrative fine for failure to im­plement the AMC decision or its untimely implementation.

10. Is there a right of appeal against any decision and, if so, which decisions, to which body and within which time limits? Are rights of appeal available to third parties or only the par­ties to the decision?

The AMC decision can be appealed by the parties to the decision or third parties within two months following the receipt of the decision. There is a legal uncertainty as to which courts (com­mercial or administrative) have jurisdiction over appeals. It has been prevailing practice to use commercial courts.

Generally, the court can suspend the AMC decision until the final judgment is rendered. However, to protect the public interest or prevent the possible negative impact of the violation(s), the AMC can declare the decision unsuspendable.

Automatic clearance of restrictive provisions

11. If a merger is cleared, are any restrictive provisions in the agreements automatically cleared? If they are not automati­cally cleared, how are they regulated?

Restrictive provisions are not automatically covered by the AMC clearance decision. Therefore, if the restrictive provisions qualify as concerted practices (see Question 13), it should be assessed whether a separate clearance is required.

Specific industries

12. Are any industries specifically regulated?

Generally, no industry is specifically regulated, although some industry-specific requirements may apply (for example, special rules for calculation of thresholds for banks and insurance com­panies).

RESTRICTIVE AGREEMENTS AND PRACTICES

Scope of rules

13. Are restrictive agreements and practices regulated? If so, please give a broad overview of the substantive provisions and regulatory authority.

Restrictive agreements and practices may qualify as anti-compet­itive concerted practices (that is, practices which resulted or may result in prevention, elimination or restriction of competition). The Competition Law generally prohibits any anti-competitive concerted practices, unless exempted individually.

In addition to the Competition Law, the regulatory framework in­cludes the:

o Law on the AMC.

o Monopoly Methodology.

o AMC Resolution on the Procedure for Filing Applications with the AMC for Obtaining its Approval of the Concerted Practices of the Undertakings of 2002 (Concerted Practices Regulation).

o AMC Resolution on the Standard Requirements to Concert­ed Practices of the Undertakings for their General Exemp­tion from the Requirement to Obtain Prior AMC Clearance of 2002 (General Exemption Regulation).

o AMC Resolution on the Standard Requirements to Concert­ed Practices of the Undertakings concerning Specialisation of Production of 2008 (Specialisation Regulation).

Concerted practices are defined as follows (Competition Law):

· Agreements in any form (including verbal arrangements and networks of agreements).

· Decisions of associations of undertakings.

· Any co-ordinated practices (actions or omissions) of the undertakings.

· Establishment of an undertaking or an association (or entry into an association) aiming at, or resulting in, the co-ordina­tion of the competitive behaviour of the:

o undertakings that established a new undertaking or an association; or

o undertakings that established a new undertaking or an association, on the one hand, and the new undertaking, on the other.

Anti-competitive concerted practices include (Competition Law):

· Fixing prices or other purchase or sale conditions.

· Limiting production, markets, technological development or investment, as well as assuming control thereof.

· Dividing markets or sources of supply according to territory, type of goods, sale or purchase volumes, or classes of sell­ers, purchasers or consumers.

· Distorting the results of trading, auctions, competitions or tenders.

· Ousting other companies from the market or limiting their market access.

· Applying different conditions to identical agreements to put a specific company at a disadvantage.

· Executing agreements that are conditional on the contract­ing party's acceptance of additional obligations unrelated to the subject of the agreement (tying).

· Substantially limiting the competitiveness of other compa­nies without justifiable reasons.

Parallel behaviour (actions or omissions) which resulted or may result in the prevention, elimination or restriction of competition is also considered a violation, unless there are objective reasons for this behaviour.

14. Do the regulations only apply to formal agreements or can they apply to informal practices?

The regulations apply to agreements and other concerted prac­tices irrespective of their form. The following are covered:

· Formal written agreements.

· Informal verbal arrangements.

· Gentlemen's agreements.

· Mutual understandings.

· Other concerted practices, including, in certain circum­stances, parallel behaviour.

Exemptions and exclusions

15. Are there any exemptions? If so, please provide details.

Individual exemption

The AMC may authorise (grant an individual exemption to) certain anti-competitive concerted practices if both (Competition Law):

o The parties can prove that these practices encourage manu­facturing, technological or economic development, or other efficiencies.

o The practices do not lead to a substantial restriction of the market competition.

In exceptional circumstances the CMU can allow concerted prac­tices (unless the restriction of competition poses a threat to the market economy system) that have not been approved by the AMC if the parties can show that the positive effects of these practices for the public interest outweigh the negative consequences of the restriction of competition.

General Exemption Regulation

In addition to the possibility of obtaining an individual exemp­tion from the AMC, the following block exemptions exist (General Exemption Regulation):

· De minimis exemption, applicable where the aggregate market share of the parties (including their respective corporate groups) in any of the product markets concerned is less than 5%.

· Market share-based exemption, applicable to vertical or conglomerate arrangements where the parties' combined market share is below 15%, and to horizontal and mixed arrangements where the parties' combined market share is below 15%, provided:

o neither of the parties is a dominant undertaking (or a monopoly) and has exclusive privilege rights;

o the aggregate worldwide turnover or assets value of the parties (including their respective groups) did not exceed EUR12 million in the preceding financial year;

o the aggregate worldwide turnover or assets value of at least two undertakings which belong to the parties' groups did not exceed EUR1 million in the preceding financial year; and

o the aggregate turnover or assets value in Ukraine of at least one undertaking which belongs to either party's group did not exceed EUR1 million in the preceding financial year.

If the parties are at least potential competitors, the above general exemptions do not apply to horizontal or mixed hard-core restrictions, including:

· price-fixing;

· territorial, customer or supplier and other market shar­ing;

· restrictions on (including imposing an obligation to refrain from) production or distribution of products;

· distortion of the results of trading, auctions, competi­tions or tenders.

Specialisation Regulation

In addition, the Specialisation Regulation provides a block ex­emption for horizontal arrangements contemplating concentra­tion of the undertakings' efforts and resources in the production (distribution) of certain products which result in the improvement (rationalisation) of production, acquisition or distribution of the products, unless one of the following applies:

· Either of the undertakings holds a dominant undertaking (or is a monopoly).

· Their combined market share on any of the markets con­cerned exceeds 25%.

In particular, the following actions are permissible:

· Discontinuing production of identical or similar products.

· An agreement to produce/sell agreed products only jointly.

· Refraining from supplying/acquiring the agreed products to/ from competing undertakings.

· Keeping minimum stock of the agreed products.

16. Are there any exclusions? If so, please provide details.

The prohibition of anti-competitive concerted practices does not apply to the (Competition Law):

· Concerted practices of small or medium-sized undertakings concerning the joint acquisition of products.

· Concerted practices in relation to the supply and use of products that limit:

o use of products supplied by the imposing undertaking or use of products of other suppliers;

o purchase of other products from other suppliers or sale of such other products to other undertakings or consumers;

o purchase of products that, due to their nature or trade custom and other fair business practices, are not related to the subject matter of the relevant agreement (tying); or

o price formation or establishment of other contractual terms and conditions for selling the products supplied by the imposing undertaking to other undertakings or consumers.

However, this exception does not apply if the restrictions:

· result in substantial restriction of competition on the market;

· limit other undertakings' access to the market; or

· result in economically unjustified price increases or product shortages.

Agreements concerning the transfer of intellectual property rights (IPRs) if such agreements contain certain allowed

limitations on the economic activities of the transferee, particularly on the:

· scope of transferred rights;

· period and territory of permitted use of the IP;

· type of activity, application, and the minimal production volume.

For the de minimis exemption see Question 15, General Exemp­tion Regulation.

Notification

17. Please give a broad overview of formal notification require­ments. In particular:

· Is it necessary (or, if not necessary, possible/advisable) to notify to obtain an individual exemption or other clearance?

· Is it possible to obtain informal guidance before, or instead of, formal notification? If there is no formal notification procedure, can any type of informal guidance or opinion be obtained?

· Who should/can notify?

· To which authority should/can notification be made?

· What form of notification is used?

· Is there a filing fee? If so, how much?

Notification

Implementation of an anti-competitive concerted practice which is not covered by a block exemption or other exclusion is prohib­ited, unless the transaction is individually cleared by the AMC before the implementation.

Informal guidance/opinion

Similarly to mergers, the parties to a transaction can refer to the AMC for formal guidance on whether a concerted practice requires an individual AMC clearance or whether the clearance is likely to be granted or refused. Informal discussions with the AMC's officers are also possible, although the law does not ex­pressly provide for it.

Responsibility for notification

The parties are jointly responsible for notifying.

Relevant authority

The AMC is the relevant authority. However, the CMU may ap­prove a concerted practice even if the AMC has refused clearance (see Question 15).

Form of notification

The parties to a concerted practice must submit a written notifi­cation in the form and with the contents and annexes as set out in the Concerted Practices Regulation.

Filing fee

The filing fee is UAH 2,550.

Investigations

18. Can investigations be started by:

· The regulator on its own initiative?

· A third party by making a complaint?

Regulators

The AMC can launch an investigation:

· On its own initiative based on the available information, market research and so on.

· If requested by other businesses or individuals.

· If requested by governmental or local authorities.

Third parties

Third parties can file a complaint with the AMC if they believe that certain arrangements/practices on the market may be anti-competitive. The AMC can start an investigation based on the third party complaint.

19. What rights (if any) does a complainant or other third party have to make representations, access documents or be heard during the course of an investigation?

A complainant and third parties can be involved in the case in­vestigation as third parties if their rights and interests may be significantly affected by the AMC decision on the investigated transaction. The decision on their involvement is made by the AMC at its own discretion. Third parties can:

· Submit their written and oral observations, provide evi­dence, and obtain copies of the AMC decision in relation to the case.

· Access case materials, except for confidential information and any other information the disclosure of which may violate the interests of other parties involved in the investigation.

In relation to third parties' access to documents and the right to be heard during a regular investigation initiated by the AMC on the notification submitted by the parties to a concerted practice, see Question 6.

20. Please set out the stages of the investigation and timetable.

The stages of a regular investigation initiated by the AMC on the notification submitted by the parties to a concerted practice are as follows:

· Preview period. The AMC considers notification and decides whether it is complete and can be passed for the review on the substance. If the AMC considers the notification to be incomplete, the notification is rejected and should be resub­mitted. The AMC has 15 calendar days to make a decision.

· Phase I review. This involves an assessment by the AMC of whether the concerted practice can be approved or whether there are grounds to prohibit the concerted practice, in which case an in-depth investigation is required. The as­sessment must be completed within 30 calendar days of the AMC's decision that the notification is complete.

· Phase II review. This involves a close analysis of competi­tion concerns raised by the concerted practice, examination of expert opinions and other additional information, and so on. Although the review period is limited to three months from the AMC's decision to initiate a Phase II review, in may be extended.

The AMC investigation initiated on a complaint or on its own ini­tiative is limited to 30 calendar days, which can be extended by up to 60 calendar days.

21. In relation to an investigation into a potentially restrictive agreement or practice:

What details (if any) of the investigation are made public?

Is certain information automatically kept confidential?

Can the parties (or third parties) request that certain infor­mation be kept confidential?

Publicity

The AMC can disclose certain general information on the transac­tion and the parties, nature of the transaction, relevant markets and so on. The authority can also publish (usually on its web­site) other information regarding the transaction to the extent it was not marked confidential by the parties. During an investiga­tion the AMC can also disclose its findings and the background analysis (except for confidential information) to all parties of the proceedings.

Automatic confidentiality

See Question 5, Automatic confidentiality.

Confidentiality on request

Filings submitted with relevant confidentiality marks are treated by the AMC as confidential and cannot be disclosed to the public except with the express written consent of the parties to the con­centration or as outlined above.

22. Please summarise any powers that the relevant regulator has to investigate potentially restrictive agreements or practices.

The AMC, when investigating potentially restrictive agreements or practices, can:

· Request information, explanation, materials and other data from the undertakings whose actions are being investigated.

· Request oral and written explanation from the undertakings whose actions are being investigated, third parties, officials and individuals.

· Request expert opinions.

· Seize and retain evidence (for example, documents and objects).

23. Can the regulator reach settlements with the parties without reach­ing an infringement decision (for example, by accepting binding or informal commitments)? If so, please summarise the procedure and the circumstances in which settlements can be reached.

Ukrainian competition laws do not provide for an official proce­dure to reach settlements in an investigation. However, sanctions may be minimised by agreeing on commitments mitigating ad­verse effects of an infringement.

Penalties and enforcement

24. What are the regulator's enforcement powers in relation to a prohibited restrictive agreement or practice? In particular:

What orders can be made?

What fines can be imposed on the participating companies? What are the consequences if they are not paid?

Can personal liability, including fines, attach to individual directors or managers?

Is it possible to obtain immunity/leniency from any fines?

Can an entire agreement be declared void (that is, not only any restrictive provisions)?

Orders

With respect to a prohibited restrictive (anti-competitive) agree­ment or practice the AMC can, in particular:

· Issue an individual clearance decision on the parties' application for approval of the agreement/practice. The decision can be conditional or unconditional, and limited or unlimited in time.

· Prohibit a notified or investigated agreement/practice and impose sanctions (fines).

· Issue an order to bring an infringement to an end.

· Issue an order to eliminate the consequences of an infringement.

Repeal its earlier clearance decision if the parties to the agreement/practice impose on certain undertakings such restrictions that generally are not imposed on other under­takings, or apply unequal terms.

Fines

Once the violation is established, the parties to a prohibited agree­ment/practice can be subject to fine up to 10% (5% if the agreement/ practice is implemented before the AMC clearance) of their turnover in the year immediately preceding the year when the fine is imposed. For further details on fines and late payment see Question 9, Fines.

In addition to the financial penalties above, any or all of the fol­lowing sanctions may apply:

· Ban on the companies' cross-border activities with Ukraine (see Question 9, Implementation before approval or after prohibition).

· Third party damages claims (see Question 25).

· Invalidation of the transaction (see below, Impact on agreements).

Personal liability

Currently, only forcing undertakings into anti-competitive con­certed practices by violence or material harm, or threat of such violence or material harm is regarded as a criminal offence. Such crimes are punishable by either:

· Imprisonment of two to five years.

· Imprisonment of three to six years if the crime is committed by an organised group or a person who had previously com­mitted the same offence.

Immunity/leniency

The Competition Law provides a possibility to apply for full im­munity, although the leniency procedure is not detailed. The ap­plicant must meet the following cumulative criteria to benefit from full immunity:

Be the first party to voluntarily inform the AMC of the viola­tion (initiators of anti-competitive practices cannot apply for immunity).

· Provide the AMC with information of essential importance for making the decision on the case.

· Provide all available evidence and/or information concerning the violation.

· Take effective measures to cease its participation in the anti-competitive practices.

Impact on agreements

An anti-competitive agreement may be invalidated by the court on the AMC's initiative. Invalidation of an unauthorised transaction is primarily linked to its adverse effects on the market, but as the AMC can seek invalidation to remove the consequences of an unauthor­ised transaction, any such transaction is potentially invalidated.

Third party damages claims and appeals

25. Can third parties claim damages for losses suffered as a re­sult of a prohibited restrictive agreement or practice? If so, please summarise any special procedures or rules that apply. Are class actions possible?

The parties to a prohibited restrictive agreement or practice may be exposed to damages claims by third parties (for example, com­petitors). Third parties that sustained damages as a result of an unauthorised transaction can seek to recover the damage suf­fered through the court. The amount of compensation can be up to twice the amount of the actual damage sustained.

26. Is there a right of appeal against any decision of the regulator and, if so, which decisions, to which body and within which time limits? Are rights of appeal available to third parties, or only to the parties to the agreement or practice?

This is the same as for mergers (see Question 10).

MONOPOLIES AND ABUSES OF MARKET POWER

Scope of rules

27. Are monopolies and abuses of market power regulated under civil and/or criminal law? If so, please give a broad overview of the substantive provisions and regulatory authority.

Natural monopolies and abuses of market power are regulated under civil law. The principal laws governing these issues are the Competition Law and the Law of Ukraine on Natural Monopolies dated 20 April 2000. The AMC is the state authority primarily responsible for prevention and investigation of the infringements involving companies holding a dominant or monopolistic position.

28. How is dominance/market power determined?

An undertaking holds a dominant position on the market if it (Competition Law):

· Has no competitors on the market.

· Does not face significant competition on the market due to, among other things, the other market players' limited access to raw materials and distribution channels, existence of entry barriers and certain privileges.

An undertaking is presumed to enjoy a dominant market position if it holds a market share of 35% or more, unless it can prove significant competition on the part of the other market players. An undertaking with a smaller market share than 35% may also be considered dominant if there is no significant competition due to the comparatively small market shares of its competitors.

Several undertakings may also be deemed to collectively enjoy a dominant position on the market (collective dominance) if either:

· The combined market share of up to three undertakings exceeds 50%.

· The combined market share of up to five undertakings exceeds 70%.

A detailed procedure of determination of the product and geo­graphical boundaries of the market, as well as calculation of the relevant market shares, is set out in the Monopoly Methodology.

29. Are there any broad categories of behaviour that may consti­tute abusive conduct?

The following practices are regarded as abuses of a dominant market position:

· Setting such prices or conditions which could not have been established in a considerably competitive market environ­ment.

· Applying different prices or conditions to identical agree­ments without justifiable grounds.

· Imposing contractual conditions that have no connection to the subject of the agreement.

· Limiting production, markets or technological development in a manner that may cause harm to other companies or customers.

· Refusing to purchase or sell goods in the absence of other sources or distribution channels.

· Substantially limiting the competitiveness of other compa­nies without justifiable grounds.

· Hindering market access for companies, or ousting them from the market.

The list is not exhaustive; it simply shows the approach to the determination of the abuses of a dominant market position.

Exemptions and exclusions

30. Are there any exclusions or exemptions?

There are no exclusions or exemptions.

Notification

31. Is it necessary (or, if not necessary, possible/advisable) to notify the conduct to obtain clearance or (formal or informal) guidance from the regulator? If so, please set out briefly the procedure.

As abuses of dominant position are anti-competitive and auto­matically prohibited, there is no notification requirement in rela­tion to such conduct. It is, however, possible to obtain guidance from the AMC (in the form of a non-binding recommendation) as to whether certain actions or omissions may qualify as abuse of dominance.

Investigations

32. Where different than for restrictive agreements and practices, please explain how investigations are started, the procedures that apply, the rights of third parties, what details are made public and whether the regulator can accept commitments.

This is the same as for restrictive agreements and practices (see Questions 18 to 21 and Question 23).

33. Please summarise the regulator's powers of investigation.

This is the same as for restrictive agreements and practices (see Question 22).

Penalties and enforcement

34. What are the penalties for abuse of market power and what orders can the regulator make?

In relation to fines, see Question 24, Fines.

Once the violation is established, the AMC can also request a mandatory division of a dominant undertaking unless:

· The division is impossible from an organisational or territo­rial point of view.

· There are strong technological links among the undertakings or their units.

Third party damages claims

35. Can third parties claim damages for losses suffered as a re­sult of abuse of market power? If so, please summarise any special procedures or rules that apply. Are class actions pos­sible?

Third parties that sustained damages as a result of abuse of market power can seek to recover the damage suffered through the court. The amount of compensation can be up to twice the amount of the actual damage sustained.

EU LAW

36. Are there any differences between the powers of the national regulatory authority(ies) and courts in relation to cases dealt with under Article 101 and/or Article 102 of the TFEU, and those dealt with only under national law?

This is not applicable.

JOINT VENTURES

37. Please explain how joint ventures are analysed under compe­tition law.

Under the Competition Law a joint venture may qualify as a con­centration or as a concerted practice.

A joint venture is considered a concentration if it meets the fol­lowing criteria:

· It is established by two or more independent undertakings.

· It can independently pursue business activity on a lasting basis.

· Its establishment does not result in co-ordination of com­petitive behaviour of the joint venture's parents or the joint venture, on one hand, and its parents, on the other.

Establishment of such a joint venture requires prior AMC clear­ance if the thresholds referred to in Question 2 are met.

A joint venture is considered a concerted practice if it is estab­lished with an objective or result to co-ordinate competitive be­haviour of the joint venture's parents or the joint venture, on one hand, and its parents, on the other. Establishment of such a joint venture requires prior AMC clearance if it results or may result in prevention, elimination or restriction of competition.

INTER-AGENCY CO-OPERATION

38. Does the regulatory authority(ies) in your jurisdiction co-operate with regulatory authorities in other jurisdictions in relation to infringements of competition law? If so, what is the legal basis for and extent of co-operation (in particular, in relation to the exchange of information)?

The AMC most actively co-operates with the CIS competition au­thorities within the Interstate Council for Antimonopoly Policy which is currently headed by the AMC's Chairman. The Council functions as a forum for information exchange and co-ordinates reform in the area.

The AMC also co-operates with other competition authorities based on bilateral (for example, with Bulgaria, Hungary and Latvia) and multinational treaties, as well as with the interna­tional organisations (for example, OECD, UNCTAD and the Inter­national Competition Network).

PROPOSALS FOR REFORM

39. Please summarise any proposals for reform.

The main proposals for reform concern the following:

Increase of turnover/assets thresholds in merger cases. A concentration would have to be notified and require prior AMC approval if the following thresholds were met:

· the combined worldwide assets value or turnover of the parties to the concentration exceeded EUR50 million and the value of assets located in Ukraine or Ukrainian turnover of at least two of the parties to the concentra­tion exceeded EUR4 million; or

· the value of assets located in Ukraine or Ukrainian turnover of at least one party to the concentration ex­ceeded EUR50 million and the worldwide assets value or turnover of at least one other party to the concentra­tion exceeded EUR50 million.

The market share-based test is not subject to change. Al­though the draft amendment has been under review by the Ukrainian parliament since 2008 and is now prepared for the second reading, its adoption remains quite uncertain.

· Introduction of criminal liability for cartels. The draft law provides for criminal liability for certain hard-core anti-competitive concerted practices (for example, price-fixing, market allocation and output limitation). Such concerted practices will be punishable by:

· a fine of up to UAH 85,000 or imprisonment of up to six years, and a prohibition to hold certain positions or engage in certain activity for up to three years; or

· imprisonment of three to seven years and a prohibition to hold certain positions or engage in certain activity for up to three years for a repetitive offence.

This draft law has been awaiting the second reading since the end of 2009 and the time frame for its adoption is unpredictable.

· Introduction of R&D Regulation. The draft AMC Resolution on the Standard Requirements to Concerted Practices of the Undertakings concerning their Joint Research and Develop­ment and/or Development and Engineering Works provides for their general exemption from the requirement to obtain prior AMC clearance. The draft regulation was published in mid-December 2010 and is expected to come into effect in 2011.

In addition, the AMC intends to introduce a system of electronic filings. The system is currently being tested and is expected to be introduced in the first half of 2011.

CONTRIBUTOR DETAILS

IGOR SVECHKAR

Asters

T +380 44 230 6000

F +380 44 230 6001

E igor.svechkar@asterslaw.com

W www.asterslaw.com

Qualified. Ukraine, 1999

Areas of practice. Competition and anti-trust; M&A; corpo­rate and commercial.

Recent transactions

· Represented Swedbank, Ford, Finmeccanica, Tyco Electronics, Sun, Warburg Pincus, Onex Corporation, Chrysler, Fiat, Telenor ASA, GlaxoSmithKline, Sanofi- Aventis, Merck & Co., and many others in merger cases at the AMC.

· Advised Elopak, Sopharma, Philip Morris, Walt Disney Company, Western Union, L'Oreal Ukraine, Intel and others on various competition compliance matters.

· Acted for Nissan Motor, Heel, Velux, Ansell and others in unfair competition matters.

TETIANA VOVK

Asters

T +380 44 230 6000

F +380 44 230 6001

E tetiana.vovk@asterslaw.com

W www.asterslaw.com

Qualified. Ukraine, 1999

Areas of practice. Competition and anti-trust; M&A.

Recent transactions

· Represented Allianz, Bucyrus, Mitsubishi Chemical, Tel­enor ASA, Novartis, Amcor Limited, Teva, and many others in merger cases at the AMC.

· Advised L'Oreal Ukraine on various competition compliance matters.

Parallel behaviour (actions or omissions) which resulted or may result in the prevention, elimination or restriction of competition is also considered a violation, unless there are objective reasons for this behaviour.

14. Do the regulations only apply to formal agreements or can they apply to informal practices?

The regulations apply to agreements and other concerted prac­tices irrespective of their form. The following are covered:

..Formal written agreements.

..Informal verbal arrangements.

..Gentlemen's agreements.

..Mutual understandings.

..Other concerted practices, including, in certain circum­stances, parallel behaviour.

Exemptions and exclusions

15. Are there any exemptions? If so, please provide details.

Individual exemption

The AMC may authorise (grant an individual exemption to) certain anti-competitive concerted practices if both (Competition Law):

..The parties can prove that these practices encourage manu­facturing, technological or economic development, or other efficiencies.

..The practices do not lead to a substantial restriction of the market competition.

In exceptional circumstances the CMU can allow concerted prac­tices (unless the restriction of competition poses a threat to the market economy system) that have not been approved by the AMC if the parties can show that the positive effects of these practices for the public interest outweigh the negative consequences of the restriction of competition.

General Exemption Regulation

In addition to the possibility of obtaining an individual exemp­tion from the AMC, the following block exemptions exist (General Exemption Regulation):

..De minimis exemption, applicable where the aggregate market share of the parties (including their respective corporate groups) in any of the product markets concerned is less than 5%.

..Market share-based exemption, applicable to vertical or conglomerate arrangements where the parties' combined market share is below 15%, and to horizontal and mixed arrangements where the parties' combined market share is below 15%, provided:

..neither of the parties is a dominant undertaking (or a monopoly) and has exclusive privilege rights;

..the aggregate worldwide turnover or assets value of the parties (including their respective groups) did not exceed EUR12 million in the preceding financial year;

..the aggregate worldwide turnover or assets value of at least two undertakings which belong to the parties' groups did not exceed EUR1 million in the preceding financial year; and

..the aggregate turnover or assets value in Ukraine of at least one undertaking which belongs to either party's group did not exceed EUR1 million in the preceding financial year.

If the parties are at least potential competitors, the above general exemptions do not apply to horizontal or mixed hard-core restrictions, including:

..price-fixing;

..territorial, customer or supplier and other market shar­ing;

..restrictions on (including imposing an obligation to refrain from) production or distribution of products;

..distortion of the results of trading, auctions, competi­tions or tenders.

Specialisation Regulation

In addition, the Specialisation Regulation provides a block ex­emption for horizontal arrangements contemplating concentra­tion of the undertakings' efforts and resources in the production (distribution) of certain products which result in the improvement (rationalisation) of production, acquisition or distribution of the products, unless one of the following applies:

..Either of the undertakings holds a dominant undertaking (or is a monopoly).

..Their combined market share on any of the markets con­cerned exceeds 25%.

In particular, the following actions are permissible:

..Discontinuing production of identical or similar products.

..An agreement to produce/sell agreed products only jointly.

..Refraining from supplying/acquiring the agreed products to/ from competing undertakings.

..Keeping minimum stock of the agreed products.

16. Are there any exclusions? If so, please provide details.

The prohibition of anti-competitive concerted practices does not apply to the (Competition Law):

..Concerted practices of small or medium-sized undertakings concerning the joint acquisition of products.

..Concerted practices in relation to the supply and use of products that limit:

..use of products supplied by the imposing undertaking or use of products of other suppliers;

..purchase of other products from other suppliers or sale of such other products to other undertakings or consumers;

..purchase of products that, due to their nature or trade custom and other fair business practices, are not



Архів новин

Пошук за

Практики:
Індустрії:
Пошук

Архів публікацій