Those seeking reasons to be optimistic about Ukraine’s judicial system can rejoice: Justice prevailed, or so ruled the High Commercial Court of Ukraine, the likely final arbiter in a dispute between the state Antimonopoly Committee of Ukraine and ACNielsen Ukraine, a market research firm.
Those whose view of Ukraine’s judicial system is grounded in starker realities, however, will also have many reasons to confirm their opinions:
This case lasted six years, starting during ousted President Viktor Yanukovych’s tenure and living on – Frankenstein-style – into the Petro Poroshenko era, until the final court ruling on March 2; No credible evidence was presented to support the state’s allegations; Heavy fines were threatened with the prospect of tougher sanctions if the accused fought the charges in court; and Even for the winning side, thousands of dollars in legal fees and hundreds of work hours were expended.
In the end, after making two trips up and down Ukraine’s tortuous court system, High Commercial Court judges ruled against the Antimonopoly Committee, which claimed in 2011 that 18 major retailers colluded to fix prices to gouge consumers.
Cases go on
The ruling should effectively end the civil lawsuit against against ACNielsen Ukraine, a local division of the global firm that specializes in market research, information and analysis. But no one knows for sure, said Alexey Pustovit, an Asters law firm partner who represented AC Nielsen Ukraine.
Several of the other retailers accused of price-fixing collusion must still defend themselves in court unless they reach a settlement with the state. But their cases will be bolstered by the High Commercial Court of Ukraine decision.
The defendants in the case are a who’s who of famous brands where Ukrainians shop for food and other products every day: Metro Cash & Carry, Fora, Fozzy, Auchan, Billa, Furshet, ATB and 11 others.
But the accused took their own separate paths.
According to a status update provided by Asters:
ATB, Fora and Auchan won their cases; The cases against Fozzy, Metro Cash & Carry, Novus Ukraine, Foodmarket, Billa and two entities of Furshet are pending; and Adventis, Krai‑2, Travers Market, Mepromag, SPAR-Center, Food-Center, X5 Retail Group and EKO either did not appeal the fines imposed – ranging from Hr 100,000 to Hr 4.6 million – or they lost.
How it started
The allegations started in 2011 from a Yanukovych-era head of the Antimonopoly Committee.
Mykola Barash was the acting head of the Antimonopoly Committee of Ukraine from 2012–2015, leading the case in its early stages as director of its investigative department from 2011–2012. He is now a lawyer with Sergii Koziakov and Partners in Kyiv. Parliament voted on March 25, 2014 to fire his predecessor, Vasyl Tsushko, who had headed the agency since 2010.
The current head of the state agency is Yuriy Terentyev.
One of the more prominent businesses accused, Metro Cash & Carry Ukraine, was ordered to pay a €100 million fine. In an interview with the Kyiv Post two years ago, country CEO Martin Schumacher called the allegations “a farce” and the case “a fabrication.” He vowed to fight to the end in court.
The case is similar to so many others during the Yanukovych kleptocracy from 2010–2014: A state body launches an investigation, criminal charges or a civil lawsuit are filed or threatened while an exorbitant fine is demanded from the besieged businesses. In the end, usually a lower fine got negotiated and paid. Part of the money ended up in the pockets of state officials as kickbacks.
“This is how it looked from the beginning,” Pustovit told the Kyiv Post. “We spoke to all the retailers, we spoke to the authorities. Actually, we had a good working relationship with the authorities at that time. Nobody could explain why this case evolved into such a massive thing.”
Pustovit said his client, ACNielsen Ukraine, was accused after state investigators learned that the firm supplied market data to some of the accused retailers – that is, after all, the firm’s job. But Pustovit said that the firm had no professional contact with at least half of the defendants.
No collusion proved
“Authorities could not prove collusion,” Pustovit said. “Not all the respondents in the case cooperated with Nielsen. This did not stop the authorities.”
Pustovit said that the faulty premise was that, since food prices were rising, monopolies must have been to blame. Every economist “would say that to establish a cartel among” so many players “is practically impossible,” Pustovit said. But publicity about the case struck a popular chord with consumers paying the higher prices.
“During the case investigation, the authorities ignored all the defendents’ submitted respondents,” Pustovit said. “Whatever you submitted, their response was: ‘This is not persuasive, let’s just ignore it.’ Nielsen and most of the responsdents were not heard. The authorities behaved in an absolute matter.”
In December 2014, the state agency concluded its investigation and said it would decide. Pustovit said he questioned the nine board members about whether they had read the material submitted by the accused. He was greeted with silence.
In April 2015, the Antimonopoly Committee issued its ruling against ACNielsen Ukraine, triggering the court hearings that culminated with the March 2 vindication. In the committee’s ruling, Pustovit said the authorities ordered ACNielsen to discontinue illegal practices without specifying. “How can you discontinue illegal operations if you don’t have in the decision of the authorities what is legal and what is illegal?” Pustovit asked.
He thinks the authorities are trapped into continuing the cases against the others because so much time and resources have gone into the accusations. But he doubts the state will prevail, especially if they defend their interests vigorously. And that may be one of the most important lessons of the case: Fight back if you’re right and have the resources to do so.
The authorities “did not expect most of defendants would go to court,” Pustovit said.