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Ukraine: Vertical Block Exemption Regulation to be Adopted Soon

On 3 July 2017 the Antimonopoly Committee of Ukraine (AMC) published draft Vertical Block Exemption Regulation inviting public opinion on the document. Public consultations on the draft at the AMC are scheduled for 7 July 2017.

The draft aims to set clear rules applicable to vertical agreements (primarily distribution) for their block exemption, providing guidance on the circumstances which allow to safely assume the absence of anticompetitive effects. On the technical side, the draft implements Commission Regulation No. 330/2010 fulfilling respective Ukraine's obligations under the Association Agreement.

The main points of the draft Vertical Block Exemption Regulation may be summarized as follows:

vertical agreements are exempt if the market shares of the supplier and the buyer on the market where they, respectively, sell and buy the contract goods or services, do not exceed 30%;

vertical agreements between an association of undertakings and its members or between such an association and its suppliers are exempt if (i) all members of such an association are retailers and (ii) no individual member (taken at its group level) of such an association had annual turnover in Ukraine in excess of EUR25 million in the preceding financial year;

agency and subcontracting arrangements are exempt, subject to conditions;

the following are not covered by the exemption:

 

vertical agreements between competing undertakings (unless the vertical agreement is non-reciprocal);

 

hard core vertical restraints, such as:

 

restrictions on resale price (except for maximum or recommended prices);

 

restrictions by territory or by customers (except for restrictions of active sales into the exclusive territory or to an exclusive customer group; restrictions of sales by the members of a selective distribution system to unauthorized distributors and some other);

 

restrictions of sales to end users by members of a selective distribution system operating at retail level;

 

restrictions of cross-supplies within a selective distribution system;

 

restrictions of the supplier's ability to sell the components as spare parts to end-users or to repairers;

 

non-compete obligations exceeding 5 years (or indefinite), with certain exceptions;

 

obligations causing the buyer, after termination of the agreement, not to manufacture, purchase, sell or resell goods or services, with certain exceptions;

 

obligations causing the members of a selective distribution system not to sell the brands of particular competing suppliers;

the block exemption will not apply if parallel networks of similar vertical restraints cover more than 50% of the market, in which case the AMC will issue a special Resolution to that effect.

The AMC aims to adopt the Vertical Block Exemption Regulation by the end of 2017.

For further information please contact Igor Svechkar, Alexey Pustovit, or Tetiana Vovk.

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