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23 вересня 2015

Antimonopoly & Unilateral Conduct - Ukraine


Автор: Олександр Вознюк, Тетяна Вовк
Джерело: GCR Know-How. – вересень 2015

Статтю можна прочитати нижче мовою оригіналу.

Antimonopoly & Unilateral Conduct - Ukraine

1. What is the legal framework governing unilateral conduct by companies with market power?

The primary law governing unilateral conduct by companies with market power is the Law on Protection of Economic Competition (the Competition Law). In particular, the Competition Law defines which unilateral practices may be regarded as harmful to the market and consumers, sets criteria for establishing whether a particular undertaking holds a dominant position, and outlines rules on investigation of infringements and application of sanctions.

2. What body or bodies have the power to investigate and sanction abuses of market power?

The state regulatory authority primarily responsible for ensuring compliance with competition rules by the companies with market power is the Antimonopoly Committee of Ukraine (AMC).

In particular, the AMC has exclusive powers to define the boundaries of the relevant markets, establish whether companies hold dominant (or monopolist) positions on the market, investigate potential infringements, negotiate remedies and monitor their implementation, as well as impose sanctions.  

3. What role does market definition play in market power assessment?

Definition of the relevant product and geographical aspects of the relevant market on which a suspicious conduct has been detected is at the outset of any authority's investigation process. In advance of any analysis of whether a particular conduct may be abusive, the AMC will ascertain whether the undertaking engaging in such conduct is dominant on the relevant market.  

4. What is the approach to market definition?

A product market is defined as goods (or services) for which demand and supply exist within certain period and on a given territory. So, in order to define the relevant market the authority will analyse three dimensions: product, geographical, and time.

Product-wise, the relevant market will include all products that are substitutable to the extent that a customer, in usual circumstances, shall be able to easily switch from one to another. There is a number of factors that are relevant for the product substitutability analysis. The authority would usually look for similarities in consumer qualities, terms of use, physical, technical, operational qualities and characteristics, and check whether the products in question are within comparable price range.

Geographically, the relevant market is limited to the territory beyond which a customer would find purchase of relevant (substitutable) goods impractical or even impossible. In particular, the authority may take account of transportation costs and barriers, trading and warehousing capacities, availability of after-sales and warranty service, trademarks, location of specific customer groups, etc. for this purpose. The AMC would normally agree to consider a national or sub-national (regional) market. In exceptional cases its analysis may be based on a broader, eg, global, market.

Also, for a market to exist there must be stable, for a certain period in time, demand and supply for the relevant product(s).  

5. How is market power or monopoly power defined?

Essentially, the market does not pose sufficient competitive constraint if an undertaking is able to prevent, eliminate or restrict competition using its market power; in particular, to limit competitiveness of other undertakings or achieve gains to the detriment of the consumers.

An undertaking is likely to have market power if it is able to impose its terms of goods sales or purchase; limit production or supplies to gain certain benefits in a situation where its competitors will not be able to compensate the products deficit, or keep the prices above the competitive level. To determine whether an undertaking enjoys market (monopoly) power, the authority will analyse whether the undertaking in question has competitors on the market, their position, market shares, access to raw materials and distribution channels, the market entry barriers, etc.

6. What is the test for finding of monopoly power?

Pursuant to the Competition Law, an undertaking is considered to hold a dominant position if it:

  • has no competitors on the relevant market; or
  • does not face significant competition on the relevant market because, for instance, other market players may have limited access to raw materials or distribution channels, or due to entry barriers, privileges, or other circumstances.

7. Is this test set out in statute or case law?

The dominance test is set out in the Competition Law, which also provides for a market share threshold which in most cases is the primary indicator of market power in the authority's practice. Criteria on finding dominance are further detailed in the Methodology on definition of monopoly (dominant) position of undertakings on the market (the Dominance Methodology).

8. What role do market shares play in the assessment of monopoly power?

In most cases market shares have decisive influence on the authority's perception of the undertaking's position on the market. Market structure, other competitors' strengths, barriers and other factors are secondary by definition and, in borderline cases, it would normally take enormous effort and evidence from a company to persuade the authority that it does not hold a dominant position.

9. Are there defined market share thresholds for a presumption of monopoly power?

Pursuant to the Competition Law, an undertaking will be presumed to hold a dominant position if its market share on the relevant market exceeds 35 per cent, unless such undertaking proves that it faces significant competition from its rivals.

In rather rare cases a company with a smaller market share may be found dominant, if such undertaking does not face significant competition from other market players, for instance, due to competitors' considerably smaller market shares.

10. How easily are presumptions rebutted?

It is usually rather difficult to rebut presumption of dominance once the threshold is met. The authority regards other factors influencing the company's position and behaviour on the market, such as market structure, other participants' capacities, barriers, etc only as secondary.

11. Are there cases where companies with high shares have been found not to exercise monopoly power?

When deciding on whether an undertaking with 35 per cent or higher market share is capable of exercising monopoly power, the authority is very likely to presume dominance. Cases where companies exceed the dominance threshold, but successfully prove that they do not have monopoly power, are exceptional. In particular, in a telecommunications case the AMC concluded that two largest mobile operators each holding a 35–45 per cent market share do not have monopoly power because each of them faced significant competition from one another and also from a third, smaller, mobile operator with a 10–15 per cent market share.

12. What are the lowest shares with which companies have been found to exercise monopoly power?

There is no publicly available register of AMC decisions, so it is impossible to ascertain the lowest shares that, from the AMC perspective, allowed companies to exercise monopoly power. However, there have been several noticeable AMC investigations concerning abusive conduct by companies with shares that were lower than the presumed dominance threshold. For instance, in 2008 the AMC imposed incomparably high fines at that time on two companies with a 30–35 per cent and 18–22 per cent market share, respectively, for abuse of dominance in the form of setting excessive prices for bottled sunflower oil. The AMC held that these companies were collectively dominant on the market (see question 20 for definition of collective dominance).

13. How important are barriers to entry and expansion for the assessment of monopoly power?

Barriers to entry are important primarily in the assessment of mergers and concerted practices.

As regards dominance cases, although the AMC does analyse barriers to entry among other factors that contribute to finding whether an undertaking has monopoly power, such barriers do not have decisive influence on the authority’s conclusion on the substance. In practice, the AMC would rather take account of the actual decrease of a dominant company’s market share that was caused, inter alia, by the new players' entry. However, the AMC may still consider such dominant company to have monopoly power – irrespective of the changes to the market structure – for as long as its market share does not fall below the presumed dominance level of 35 per cent.

14. Can the lack of entry barriers negate a finding of monopoly power?

The AMC normally does not regard the absence of barriers to enter the market as sufficient evidence to exclude potential monopoly power of an analysed undertaking. The authority would usually analyse whether there exists an actual (rather than purely hypothetical) possibility to enter the market. In particular, the AMC may directly contact potential market entrants asking if they plan to start operating on the market, how soon, etc. Further, the AMC will analyse, inter alia, whether such new players would be capable of compensating the hypothetical price increase by the dominant company and satisfy the relevant demand for products.  

15. What kind of barriers to entry are typically considered in the analysis?

Types of barriers to be analysed will depend on the market and product specifics; the following are typically considered:

  • administrative barriers – for instance, whether a potential entrant will need to obtain licences or other regulatory approvals, what time will be required for that, etc; ecological or other requirements and limitations;
  • economical barriers – these in the first place concern high market entry expenditures and related sunk costs, significant market saturation, and so on; and
  • organisational barriers – insufficient market infrastructure (lack of warehousing capacities, poorly organised logistics, lack of post-sales servicing, etc), ineffective distribution system or limited access to existing distribution channels in the absence of adequate alternatives, limited access to raw materials or other essential resources.

In practice, the AMC is likely to consider barriers as significant if within one to two years the new entrant cannot compensate its market entry expenditures and act effectively on the market.  

16. Can countervailing buyer power negate a finding of monopoly power?

The authority may consider buyer power among other factors that have influence on the market structure. However, on a stand-alone basis, buyer power is unlikely to play significant role in the AMC analysis. For instance, the AMC would unlikely have incentives to analyse buyer power if competition at the level where such buyer operates is not sufficient to prevent the buyer from passing on downwards the harm of upstream abusive conduct.

17. What if consumers can easily switch between suppliers?

Similarly to the above, the AMC may take this into account among other things. However, taken alone this will not be sufficient to negate a finding of monopoly power if the relevant company’s market share allows presumption of dominance.  

18. Are there any other factors that the regulator considers in its assessment of monopoly power

When analysing whether an undertaking under investigation may hold monopoly power on the market, the AMC will first look at the market structure (which works as the basis for presumption of dominance) and then at behavioural aspects. Market behaviour would normally matter only to re-confirm that an undertaking does not exercise monopoly power. In practice, the AMC would often limit its own analysis to the structural aspect (since the burden of proof as regards the behavioural aspects rests with the market players), while the companies' claims that they face significant competition and in fact do not have monopoly power irrespective of the market share rarely have decisive influence on the authority's conclusions.

Still, there were cases where the AMC also considered the following:

  • the level of market asymmetry;
  • market share dynamics;
  • vertical integration of the company and how it influences the company's market behaviour;
  • the company's investments into innovations, modernisation of production, as well as its marketing activity;
  • the level of market saturation;
  • product life cycle.

Under certain circumstances the AMC may also be inclined to consider the above or similar factors to define the relevant product or geographical market more narrowly. This usually leads to analysis of a market that has fewer market players with higher market shares which eventually often results in the authority's conclusion – based solely on the market structure – that the market is highly concentrated (possibly oligopolistic).

Finally, AMC decisions in dominance cases are not published. Only very limited examples of the AMC's practical approach to market power assessment may be found in the public domain, usually in cases on appeal.

19. Are any entities or sectors exempt from the antimonopoly regime?

Natural monopolies have special status and regulation.

20. Can companies be deemed to hold collective monopoly power?

Several undertakings may be regarded as collectively holding a dominant position on the market (collective dominance) if either (i) the combined market share of three or fewer undertakings with highest shares exceeds 50 per cent or (ii) the combined market share of five or fewer undertakings with highest shares exceeds 70 per cent, unless these undertakings prove that effective competition exist among them.

21. Can the exercise of joint monopoly power or tacit oligopolistic collusion be treated as an infringement?

Collective abusive conduct is also caught by the general prohibition under the Competition Law. The cases of joint monopoly power or tacit oligopolistic collusion are often difficult to investigate due to the lack of relevant expertise. Furthermore, past AMC enforcement practice (although not very broad) shows that the authority would rather assess such cases from the angle of illegitimate parallel market behaviour than collective abusive conduct.  

22. Has the national competition authority published guidance on how it defines markets and assesses market power?

In 2002 the AMC approved the Dominance Methodology. The document sets out detailed rules and steps the AMC will take to define the relevant market, in particular, showing the AMC's approach to product substitutability. It also stipulates for criteria that need to be taken into account for the assessment of whether an undertaking under investigation has market power. For instance, whether an undertaking is capable of limiting production or increasing the prices above the competitive level without losing customers, or ousting competitors from the market by limiting their access to raw materials or other essential resources, important distribution channels or the like.

23. Is there a general definition for what constitutes abusive conduct? What does it entail?

Any unilateral conduct (actions or failure or refraining to take certain actions) of a dominant (or monopolist) undertaking that resulted or may result in prevention, elimination or restriction of competition or harm to the interests of other undertakings or consumers may be regarded as abuse of dominant (or monopolist) position on the market. In order to be found abusive, such conduct should not be possible in a highly competitive environment.

Mere holding of a dominant position is not prohibited. However, achieving dominance through mergers may be prohibited by the authority, unless the merger filing applicants prove that the transaction will not bring about negative consequences for the market or offer sufficient remedies to alleviate competition concerns of a merger.

24. What are the general conditions for finding an abuse?

When investigating a potentially abusive conduct, the AMC must first assess whether the undertakings concerned are dominant on the relevant market. For that purpose the AMC will primarily define the relevant product and geographical market (see question 4 for the market definition) and calculate the market share of the undertakings concerned on that market.  

25. Is there a list of categories of abusive or anti-competitive conduct in the applicable national legislation?

The following unilateral conduct is considered abuse of dominant position, in particular:

  • setting of prices or other conditions of purchase or sale of products that could not have been set in a highly competitive environment;
  • applying dissimilar prices or other conditions to equivalent transactions without valid justification;
  • making the conclusion of contracts subject to acceptance of supplementary obligations which, by their nature, or according to commercial usage, have no connection with the subject of such contracts;
  • limiting of production, markets or technical development that harmed or may harm other undertakings or customers;
  • refusing, in part or in full, to purchase or sell goods in the absence of alternative sources or distribution channels;
  • significant limiting of competitiveness of other undertakings without valid justification; and
  • creating barriers for market entry (exit).

26. Is this list open or closed?

The list is indicative; it only outlines the authority's approach to assessment of unilateral conduct in the context of dominance. Any other type of harmful restrictive behaviour of an undertaking with market power may be found to be abusive.

27. Has the national competition authority published any guidance on what constitutes abusive conduct?

Besides the exemplary non-exhaustive list of abusive practices (see question 25), there is no official guidance on what constitutes abusive conduct.  

28. Is certain conduct per se abusive (without the need to prove effects) and under what conditions?

Yes, pursuant to the Competition Law certain unilateral conduct is abusive per se (see the list in question 25). Negative implications of such conduct are presumed and do not need to be established in each case.  

29. To the extent that anti-competitive effects need to be shown what is the standard to demonstrate these effects?

In cases where certain conduct is potentially harmful but is not covered by the list of presumably abusive practices, anti-competitive effects will need to be shown. The investigated conduct should be capable of harming competition or consumers. However, in practice the AMC usually tries to allocate the investigated conduct to either of presumed violations along the established list.

30. Does the abusive conduct need to harm consumers?

In most dominance cases harm to consumers is presumed. For the same reasons as in question 29, the AMC may need to prove (at least potential) harm to consumers. Though, in practice the AMC would simply refer to the list of presumed abuses.  

31. What defences are there to allegations of abuses of monopoly power?

Generally, the most effective and adequate defence to allegations of abuses of monopoly power is to show that the investigated conduct is fair and reasonable and would still make economic sense for an undertaking if the market were competitive.

However, this may be hard to prove in practice. For instance, a great deal of violations punished by the AMC occurs on the regulated markets that usually have social significance that overweighs the economic rationale as far as the regulation is concerned (eg, in utilities or passenger transportation spheres). These are usually the cases where companies are also non-compliant with the industry standards and requirements.  

32. Can abusive conduct be objectively justified?

There are no exceptions or group exemptions that would justify abusive conduct.

However, objective justifications play important role in establishment of whether a suspicious conduct is in fact abusive. Any unilateral conduct is analysed through the prism of whether such conduct would have been possible on a highly competitive market. Further, in order to be proven the majority of presumed unilateral violations need to have 'lack of justification' element. For instance, application of different payment terms in distribution contracts may be abusive, unless such difference is objectively justified by, for example, delivery specifics. Therefore, once it is found that a particular type of unilateral conduct is not caused solely by the undertaking's strong market position or – in certain cases – has proper objective justification, such conduct should not be caught by the rules on dominance.

33. What objective justifications have been successful

Subject to the above discussion regarding the context in which objective justifications may apply, the efficiencies arguments usually prove to be successful. The AMC would normally accept arguments regarding modernisation of production cycle, improvement of distribution/sales channels, creation of work places, better availability of product to the customer, after-sales guarantee and services or similar.

34. How is the burden of proof distributed in an abuse analysis?

The AMC has exclusive competence to define the relevant market and establish whether the company holds dominant position on this market, be that analysis based on the company's market share or other grounds. As regards the substantive assessment of a potential abuse, it is the AMC's role to establish whether the conduct in question falls within one of the presumably abusive categories or otherwise has anti-competitive effects and harms the consumers, while the company will try to persuade the authority that its practices have proper justification and shall not be regarded as abusive.

35. What are the legal conditions to establish an abusive tie?

Tying may be considered abusive if it is not objectively justified by the nature of products (or services) or if such products, given their commercial usage or fair practice standards, are not inseparably linked to one another. There is no available enforcement practice showing the AMC's approach to analysis of such links among products. In practice, the abusive tie cases usually concern exploitative conduct of natural monopolies which use their market power to tie in products (or services) on adjacent markets. For instance, if an electricity supplying company imposes services on development of technical specifications for connection to the network.

36. What are the legal conditions to establish a refusal to supply or refusal to license?

Refusal to supply may be regarded as abusive conduct if the purchaser does not have access to alternative sources of supply. Importantly, an alternative source should be capable of providing comparable supply volumes. However, even in the absence of such alternative source, a dominant undertaking may refuse to supply for a valid reason, for example, insufficient capacities to produce additional volumes, purchaser's failure to pay for already supplied products (provided that the payment terms are reasonable and apply on a non-discriminatory basis) and so on. Unjustified refusal to provide access to an essential facility is also usually considered abusive by the AMC.

Publicly available AMC decisions are not conclusive of the authority's approach to refusal to license. However, considering that both the IP legislation and judicial practice vigorously protect the IP owners' rights, refusal to license appears difficult to prove as abusive.

37. Do these abuses require an essential facility?

The notion of essential facility as such is not developed either in the legislation or in the AMC enforcement practice. However, the concept is familiar to practitioners dealing with natural monopolies. In most cases the AMC is likely to regard as abusive any restriction of access to (or refusal of the right to use) certain infrastructure that is indispensable to pursue certain commercial activity. In practice this is usually the case when access to local electricity networks, gas pipelines, railway or port infrastructure, telecommunications, etc is restricted. Though, if access is sought to a facility that is not a natural monopoly, it will be rather difficult to prove that such facility shall be regarded as essential for entering the market (and even more difficult – to argue that such facility is essential for a company that is already present on the market to compete effectively).

Further, any unilateral conduct of a dominant company that harms the customers and would not have been possible in a highly competitive environment may be considered abusive. Thus, any refusal to supply products or provide services, as well as refusal to license or grant access (ie, not only with respect to an essential facility) by a dominant company, including refusal to deal with a final consumer may be found abusive by the AMC.

38. What is the test for an essential facility?

In the AMC practice products and services provided by natural monopolies are usually regarded as essential facility. Another important element to satisfy the test is the absence of alternative source of supply. As noted, an alternative source should be capable of offering products or services at comparable terms and in comparable volume so that the potential restriction of competition caused by refusal to supply is alleviated.

39. What is the test for exclusivity arrangements?

The AMC usually analyses exclusivity in the context of restrictive vertical agreements. Exclusivity is not on the list on presumed abusive practices, and there is no available practice on exclusivity as a unilateral conduct. Rather, the AMC would look at these arrangements more broadly – any conduct by a dominant company with respect to its purchasers or sellers that may hinder competitors' access to the market (exclusivity included) may be regarded as abusive. For instance, foreclosure of an important distribution channel in the result of the distributor's refusal to purchase goods from a dominant company's competitor that was directly or indirectly caused by implementation of loyalty or other discounts may be regarded by the AMC as abuse of dominance in the form of exclusivity. This may be the case even if the distributor continues to purchase small quantities from other suppliers. In the absence of a contractual arrangement the authority will assess whether a de facto exclusivity is in place.

There are no clear criteria for the assessment of exclusivity on the substance. The authority would normally analyse all relevant facts and circumstances (in particular, the reasons for the distributor's refusal to source from alternative suppliers) and apply the general test, ie, whether such an arrangement would have been possible in a highly competitive environment.  

40. What is the test for predatory pricing?

There is no available AMC practice on the issue. In the analysis of other pricing practices – excessive and exploitative pricing – the authority insisted that, normally, the price is justified from the economic perspective if it includes all related costs and adequate, for the analysed market, profit level. Price below cost is likely to be considered predatory if setting of such price would not have been possible in a highly competitive environment. Setting prices at such low level with a view to hinder competitors' access to the market or oust them from the market will increase the likelihood of such conclusion. Though, even if this purpose cannot be verified, the AMC will assess whether the prices applied for the period that was sufficient for the above outcome to realise.  

41. What is the test for a margin squeeze?

There is no available AMC practice on the issue. However, considering the AMC approach in cases regarding excessive pricing, similar exploitative practices, and ousting of competitors, it is likely that in margin squeeze cases the authority will analyse economic justifiability of prices. In case of a vertically integrated company the prices will be analysed both at the upstream and downstream levels, even if such company is dominant only at one of them. Further, the AMC may analyse the cost and other elements of the price in order to verify whether the upstream wholesale price is set too high and/or the downstream price is set too low (below the cost). Also, it is likely that the authority will apply the general test, ie, whether setting of such a price would have been possible in a highly competitive environment.

42. What is the test for exclusionary discounts?

Exclusionary discounts are not specifically addressed in the Competition Law, but they are covered by the general prohibition as being capable of ousting of other suppliers. For instance, the AMC found that application of discounts had a purpose of ousting of competitors from the market in a case where a company offered a discount to sellers of air tickets for the purchase of its software and new booking equipment. In return the sellers had to use primarily the supplied software. This practice was considered to be abusive as representing loyalty discounts.  

43. Are exploitative abuses also considered and what is the test for these abuses?

Exploitative abuses, especially as regards setting of unjustifiably high prices (excessive pricing), are the most typical violations investigated by the AMC. Pursuant to the Competition Law, the general test applies: whether the analysed price would have been possible in a highly competitive environment. In the AMC practice, this usually means that the price shall include only those costs and only such profit level that – in a competitive environment – would give a competitive price. In the absence of relevant data, the AMC may base its assessment of the price elements on the analysis of markets of similar products or on the average industry data.

44. Is there a concept of abusive discrimination and under what conditions does it raise concerns?

Application of different terms in equivalent transactions (eg, different prices, including rebates or discounts, terms of payment, conditions of supply, etc) without valid justification is considered abusive discrimination by the AMC. In practice, both anti-competitive and exploitative discriminatory practices are likely to come under the AMC radar. For instance, the authority may be inclined to investigate the issue of application of different prices to end consumers even if such prices are not above the competitive level.

Furthermore, the Competition Law specifically addresses discrimination of small and medium-sized undertakings. Thus, companies with significantly stronger market position (not necessarily dominant) comparing to their small and medium-sized competitors may not create barriers to market activities of the latter.  

45. Are only companies with monopoly power subject to special obligations under unilateral conduct rules?

Yes, although prohibition of discrimination of small and medium-sized undertakings applies to any companies with market power.

46. Must the monopoly power exist in the same market where the effects of the anti-competitive conduct are felt?

No.

47. What sanctions can the national competition authority impose or recommend?

Once the violation is established, the infringing undertaking can be fined in the amount of up to 10 per cent of its group global turnover achieved in the year immediately preceding the year when the fine is imposed.

In addition to fines, there may be the following negative implications:

  • ban on the company's cross-border activities that can be imposed by the Ministry of Economy of Ukraine at the AMC's request if the fine is not paid;
  • third-party damages claims; and
  • reputational issues (information about the imposed fine and identity of the infringing undertaking is published by the AMC on its website).

Further, 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; or
  • there are strong technological links among the undertakings or their units.  

48. How are fines calculated for abuses of monopoly power?

The fine is calculated on the basis of the infringing group's global turnover achieved in the year immediately preceding the year when the fine is imposed.  

49. What is the highest fine imposed for an abuse of monopoly power?

The biggest known fine for an abuse of monopoly power (approximately US$25 million) was imposed in 2012 on the State Concern Ukrspirt for setting excessive prices. Being the only undertaking entitled to sell ethyl alcohol in Ukraine, the company tripled the amount of expenses on its management, which was followed by establishment of 15 per cent commission on sale of ethyl alcohol without economic justification.

50. What is the average fine imposed over the last five years?

Pursuant to available AMC reports on dominance cases, the fines over the past years ranged from several thousand hryvnas to several hundred million hryvnas depending on the gravity of the violation and its geographical scope. In several major cases on setting of unjustified tariffs and application of additional costs in passenger transportation, utility, and energy supply areas (mostly national in scope) the fines reached approximately US$4. 5 million, while in regional cases of similar nature the fines were considerably smaller – within approximately US$40,000. The vast majority of minor regional violations were penalised in the amounts not exceeding US$5,000.

51. Can the national competition authority impose behavioural remedies?

There are no relevant rules or procedure for imposition of behavioural remedies in dominance cases. However, it is usual practice for the authority to issue recommendation letters to companies whose market behaviour raises questions. Pursuant to the Competition Law, the targeted companies are required to 'consider' such recommendations and report to the AMC on the conclusions made thereupon. Although the recommendations are non-binding, they are often indicative of the authority's close interest to the relevant industry. Importantly, the way companies react to such letters may result in the AMC closing the ongoing investigation or refraining from opening a new one. On the contrary, the lack of proper response may prompt the authority to look closer at the companies' activities and investigate further.  

52. Can it impose both negative and positive behavioural obligations?

Yes. Since there are no statutory rules for this, the AMC is not limited in how the behavioural obligations shall be worded.

53. Can the national authority impose structural remedies?

As mentioned in question 47 above, the AMC can request a mandatory division of a dominant undertaking, subject to certain practical limitations. The division must be implemented within the period specified in the AMC decision and such period shall not be shorter than six months. For as long as implementation of such a remedy results in the company's loss of dominant position on the market, the structuring of the divestment remains within the company's discretion.

54. Can companies offer commitments or informal undertakings to settle concerns?

There are no relevant rules or procedure for offering commitments or informal undertakings in dominance cases. However, in practice the authority accepts such commitments and most cases are settled.

55. What proportion of cases have been settled in the last five years?

According to the AMC annual reports, every year the AMC central office and regional divisions put an end to several thousands of violations involving abuses of dominance. The AMC statistics shows that the majority of such cases – 65 per cent on the average in the last five years – have been settled.

56. Have there been any successful actions by private claimants?

There are no known instances of successful actions by private claimants in dominance cases. This is primarily due to the courts' prevailing position that courts shall decide on procedural matters only, while it is the AMC exclusive competence to decide on the dominance issues. Another practical obstacle is that it is usually very difficult for the claimant to collect and present sufficient evidence to the court. At the same time, there have been several successful cases for compensation of damages caused by abuse of dominance established by the AMC.

57. Can a company appeal a finding of abuse?

The AMC decision concerning finding of abuse may be appealed in part or in full within two months as of the receipt of the decision.

58. Which fora have jurisdiction to hear challenges?

Although it remains uncertain whether administrative or commercial courts have jurisdiction over appeals, commercial courts have historically been a more preferable option.

59. What are the grounds for challenge?

The AMC decisions may be challenged on the following grounds:

  • incomplete investigation of the relevant circumstances of the case;
  • failure to prove the relevant circumstances;
  • lack of correlation between the case circumstances and the conclusions in the case; and
  • violation or incorrect application of the rules of substantive or procedural law.

60. How likely are appeals to succeed?

For the last decade Ukrainian courts have been rather supportive of the AMC decisions and over 90 per cent cases were lost on appeal. Although since recently this trend has started to gradually change, courts still appear to lack sufficient expertise to comprehensively review cases on antitrust matters.

61. Summarise the main abuse cases of the last year in your jurisdiction.

For many years the AMC has been overloaded primarily with minor cases on violations of exploitative nature in regulated and socially important areas, such as utilities, gas and electricity supply, passenger transportation, etc. In many cases such violations base on non-compliance with strict industry rules on calculation of prices and tariffs, provision of services and so on.

The second largest category are the cases of abusive behaviour by natural monopolies on adjacent markets, such as tying, refusal to deal or creation of other barriers hindering their counterparties' access to adjacent markets.

Most notable recent abuse cases concerned excessive pricing and creation of barriers to entry, in particular:

  • 2013 – the AMC fined Kyiv River Port (approximately US$95 thousand) for abuse of market power on the market for specialised port services by transfer of available pontoons to one market player in lease, preventing other entities from entering the market for passenger transportation on the river Dnipro;
  • 2013 – Luhansk energy association LLC was fined (approximately US$4. 5 million) for inclusion of unrelated conditions into contracts with local networks on the energy transfer that resulted in costs increase of such local networks;
  • 2012 – the AMC imposed the biggest fine to date (approximately US$25 million) for abuse of dominance by State Concern Ukrspirt for excessive pricing that had no justification.  

62. What is the hot topic in unilateral conduct cases that antitrust lawyers are excited about in your jurisdiction?

For the last couple of years the AMC showed particular interest to cases where customers provided additional marketing services to their dominant suppliers. The authority is currently investigating several interconnected issues in this context: is there justification for provision of marketing services, is their price proportional, does provision of such services limit access of the dominant company's competitors to a distribution channel, and to what extent is the pay for services reflected in the product price? In particular, the AMC seeks to verify whether the currently implemented mechanism may be interpreted as hidden reward for loyalty and an instrument to hinder the competitors' access to the market.

63. Are there any sectors that the national competition authority is keeping a close eye on?

For many years the AMC has traditionally paid particular attention to areas of public interest, energy supply and telecommunications markets, as well as to natural monopolies and markets that may be regarded as adjacent to natural monopolies. Retail and pharmaceuticals are among the areas of the authority's recent interest.  

64. What future developments can we expect?

The following legislative initiatives are on the Parliament's agenda this year:

  • Publication of AMC decisions – the authority will be required to publish, among others, its decisions in cases on violation of competition (including in dominance cases) in full, save for confidential information. While the law has not yet been adopted, the AMC already started publishing in decisions as of mid-July 2015;
  • Guidelines of fines calculation – another draft law requires the AMC to adopt guidelines on calculation of fines in competition cases. The AMC has already presented draft guidelines for public consultation. Most notable suggestions include:
    • the fine shall be calculated on the basis of Ukrainian, rather than global, turnover (or other benefits) received in connection with the violation for the period of duration of the violation;
    • the ceiling for basic amount of fine shall be established at 15 per cent of Ukrainian turnover (that is within the statutory limit of 10 per cent of group-wide global annual turnover);
    • certain aggravating (repeat offence, its lasting nature, etc) or attenuating (voluntary termination of violation, co-operation throughout the AMC investigation, etc) factors may increase or decrease the fine.


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