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Вертикальні угоди 2010, Україна

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Antitrust law

1 What are the legal sources that set out the antitrust law applicable to vertical restraints?

he main legal source is the Law of Ukraine on Protection of Economic Competition of 2001 (the Competition Law), available in English at www.globalcompetitionforum.org/regions/europe/Ukraine/LEGISLATION.pdf. Other sources applicable to antitrust aspects of vertical restraints include:

• the Law of Ukraine on the State Regulation on Technology Transfer Activities of 2006 (the Technology Transfer Law);

• the Law of Ukraine on the Antimonopoly Committee of Ukraine of 1993;

• the Resolution of the Antimonopoly Committee of Ukraine (the AMC) on the Procedure for Filing Applications with the AMC for Obtaining its Approval of the Concerted Practices of the Undertakings of 2002 (the Authorisation Regulation); and • the Resolution of the AMC on the Standard Requirements to Concerted Practices of the Undertakings for their General Exemption from the Requirement to Obtain Prior AMC Clearance of 2002 (the General Exemption Regulation).

Types of vertical restraint

2 List and describe the types of vertical restraints that are subject to antitrust law. Is the concept of vertical restraint defined in the antitrust law?

The Competition Law generally prohibits any agreements, decisions of associations, as well as any other concerted behaviour (including acts and failure to act) of the undertakings which resulted or may result in the prevention, elimination or restriction of competition (anti-competitive concerted practices). Further, the General Exemption Regulation defines the concept of 'vertical concerted practices'. These are: any agreements or other concerted practices entered into between the undertakings, decisions of associations, incorporation of an undertaking (or association) aiming at or resulting in coordination of competitive behaviour (of the parent undertakings or of those and the incorporated entity) or entry into the association as a member in the situation where the participants to such concerted practices do not and cannot compete under the actual conditions in the same product market, having at least potentially the purchase-and-sale relations in the relevant product market(s).

Therefore, vertical restraints are those that may relate to the described vertical concerted practices. The Competition Law and the Technology Transfer Law contain non-exhaustive lists of prohibited concerted practices (which may contain vertical restraints), including:

• fixing of prices or other conditions of purchase or sale of goods;

• limitation of 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 or otherwise;

• ousting of other undertakings, buyers, sellers from the market or limitation of their access into (or exit from) the market;

• application of different conditions to equivalent agreements concluded with other undertakings, which results in the creation of competitive disadvantages for these undertakings;

• entering into agreements on the condition that the other party will assume additional obligations which are not related to the subject-matter of the agreement in terms of customs in trade and other fair business practices;

• substantial limitation of competitiveness of other undertakings on the market without objectively justifiable reasons; and • export limitations (in case of technology transfer).

Legal objective

3 Is the only objective pursued by the law on vertical restraints economic, or does it also seek to promote or protect other interests?

The objective is predominantly economic: protection of competition and consumer welfare. In addition, other objectives may overwhelm the economic purpose of protection of competition (exempted individually under the Authorisation Regulation): promotion of technical and technological development, improvement of the production and distribution processes, development and application of uniform standards, etc.

Responsible authorities

4 Which authority is responsible for enforcing prohibitions on anticompetitive vertical restraints? Where there are multiple responsible authorities, how are cases allocated? Do governments or ministers have a role?

The AMC, as a state authority with special status, is responsible for the protection of economic competition. The AMC and its regional divisions (which are involved in supervision of compliance as well as investigation of violations of competition laws on the regional product markets) form the system of the AMC bodies responsible for ensuring compliance with the competition laws and, in particular, enforcement of prohibitions on anti-competitive vertical restraints.

Also, prohibitions on anti-competitive vertical restraints may be enforced through litigation. However, it is disputable which of the administrative and economic courts have jurisdiction over the cases regarding violations of competition laws. The Cabinet of Ministers of Ukraine is not directly involved in the enforcement of prohibitions on anti-competitive vertical restraints. However, it may authorise certain concerted practices which were prohibited by the AMC if the practices have an overwhelming positive effect on competition. When deciding on a case the Cabinet of Ministers of Ukraine may involve any relevant governmental authorities (industry-specific ministries, national agencies, etc) as well as independent experts.

Jurisdiction

5 What is the test for determining whether a vertical restraint will be subject to antitrust law in your jurisdiction? Has the law in your jurisdiction regarding vertical restraints been applied extraterritorially? Has it been applied in a pure internet context and if so what factors were deemed relevant when considering jurisdiction?

The Competition Law applies to relations that have or may have an impact on economic competition in Ukraine irrespective of the parties' domicile, place of conclusion of an agreement, etc. This provision can be reasonably interpreted as an effects-doctrine equivalent to concerted practices in general and vertical restraints in particular. In practice, however, considering that the AMC has exclusive competence to decide on whether certain concerted practices have or may have an impact on economic competition in Ukraine, there is very little room for self-assessment.

There is no public record of extraterritorial application of the Ukrainian competition law regarding vertical restraints. However, the AMC regularly acts extraterritorially on other issues (eg, foreign-to-foreign mergers) and theoretically may do so with respect to vertical restraints that are imposed by non-Ukrainian undertakings and which concern Ukrainian product markets. We should note, however, that extraterritorial enforcement of the AMC decision appears hardly practicable due to a number of legal uncertainties and technical complications associated with cross-border reciprocal recognition of court judgments (through which the AMC decisions are forcibly enforced). There is also no public record of the Ukrainian competition rules regarding vertical restraints being applied in a pure internet context.

Agreements concluded by public entities

6 To what extent does antitrust law apply to vertical restraints in agreements concluded by public entities?

The Competition Law and other applicable regulations apply with respect to vertical restraints to both private and public entities irrespective of their legal form and type of ownership if they are 'undertakings' in the meaning of the Competition Law. The Competition Law expressly provides that state bodies, local self-administration authorities, bodies of administrative and economic management and control are considered undertakings for these purposes, including in the context of vertical restraints, in that part of their activities concern manufacture, sale and purchase of goods or other commercial activity.

Sector-specific rules

7 Do particular laws or regulations apply to the assessment of vertical restraints in specific sectors of industry (motor cars, insurance, etc)?

Please identify the rules and the sectors they cover.

The Competition Law provides for a general exemption of concerted practices involving the transfer of intellectual property rights or the use of intellectual property. Also, the list of prohibited restraints contained in the Technology Transfer Law should be taken into account when considering technology transfer agreements.

General exceptions

8 Are there any general exceptions from antitrust law for certain types of vertical restraints? If so, please describe.

The General Exemption Regulation provides for a general exception in the following cases:

• de-minimis exemption - where the aggregate market share of the parties (including their respective groups) in any of the product markets concerned is less than 5 per cent; and

• market share based exemption - applicable to vertical restraints between non-monopolists (or absent exclusive privileged rights) if the aggregate market share of the parties (including their respective groups) in any of the product markets concerned is less than 20 per cent, provided (alternative conditions):

• the aggregate worldwide turnover or assets value of the parties (including their respective groups) did not exceed €12 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 €1 million in the preceding financial year; or

• the aggregate turnover or assets value in Ukraine of at least one undertaking which belongs to either party's group did not exceed €1 million in the preceding financial year.

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

• price fixing;

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

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

Agreements

9 Is there a definition of 'agreement' - or its equivalent - in the antitrust law of your jurisdiction? When assessing vertical restraints under antitrust law does the authority take into account that some agreements may form part of a larger network of agreements or is each agreement assessed in isolation?

The Ukrainian competition law and regulations applicable to vertical restraints do not define 'agreement' and thus, the more general civil law notion should be considered. In particular, the Civil Code of Ukraine of 2003 defines the term 'arrangement or transaction' (which was accepted as a substitute for 'agreement' in the course of the civil law reform) as actions aimed at establishment, alteration or termination of civil rights and obligations. The term 'agreement' is similarly defined in the Methodology on Determination of Control Relationships of 2002.

The AMC may assess agreements in aggregate, in particular in cases where competition is substantially restricted on the whole market or a significant part thereof, or the restriction of competition constitutes a threat to the system of the market economy.

Parent- and related-company agreements

10 In what circumstances do the vertical restraints rules apply to agreements between a parent company and a related company (or between related companies of the same parent company)?

The vertical restraints rules apply with respect to undertakings. Pursuant to the Competition Law, when defining composition of an undertaking all controlling and controlled persons or entities of a separate undertaking in question should be included (ie, a group of undertakings is considered an undertaking itself). Thus, prohibition of anti-competitive concerted practices, including anti-competitive vertical restraints, does not apply to agreements concluded between separate undertakings belonging to the same group of undertakings, since they occur within the same undertaking.

Agent-principal agreements

11 In what circumstances does antitrust law on vertical restraints apply to agent-principal agreements in which an undertaking agrees to perform certain services on a supplier's behalf for a commission payment?

There are no particular circumstances (prerequisites) conditioning the applicability of general rules to agent-principal agreements.

Intellectual property rights

12 Is antitrust law applied differently when the agreement containing the vertical restraint also contains provisions granting intellectual property rights (IPRs)?

The Ukrainian competition law does not apply to agreements concerning the transfer of IPRs or the rights to use the IP where such agreements contain certain allowed limitations on the economic activities of the transferee, in particular, on the volume of transferred rights, the period and the territory of permitted use of the IP, type of activity, application, and the minimal production volume. However, if the provisions on the transfer of IPRs form a part of a broader agreement, general rules apply to the remaining part of the agreement. If an agreement involves technology transfer it should also be analysed against the list of prohibited restraints contained in the Technology Transfer Law.

Analytical framework for assessment

13 Explain the analytical framework that applies when assessing vertical restraints under antitrust law.

There are no specific guidelines regarding assessment of vertical restraints and the AMC practice on the issue is rather limited. The Competition Law generally prohibits any anti-competitive concerted practices, enlisting certain prohibited hard-core arrangements or restrictions (unless exempted individually) (see question 2 for their non-exhaustive list). Parallel behaviour (actions or failure to act) which resulted or may result in the prevention, elimination or restriction of competition is also considered a violation, unless there are objective reasons for such behaviour.

The analytical framework for assessment of vertical restraints may include the following steps:

• define the product markets concerned and the respective market shares of the parties;

• if the aggregate market share of the parties (including their respective groups) in any of the product markets concerned is less than 5 per cent, a vertical restraint is covered by the de-minimis exemption (except for certain hard-core restrictions between competitors);

• if the aggregate market share of the parties (including their respective groups) in any of the product markets concerned is between 5 per cent (inclusive) and 20 per cent (not inclusive), a vertical restraint may be covered by the market share based exemption (except for certain hard-core restrictions between competitors), provided certain turnover or assets thresholds are met (see question 8);

• define whether the restraint may benefit from a block exemption (see question 15); and

• if the vertical restraint is not covered by any applicable general exception or block exemption, it may still be exempt from prohibition by the AMC clearance decision to that effect, if such restraint contributes to:

• rationalisation of production, promotion of technical or economic development, optimisation of export or import processes, development and application of uniform product standards, etc; unless

• it results in substantial restriction of competition on the market or its significant part. In exceptional cases and as a last instance resort, a vertical restraint may be exempt by the decision of the Cabinet of Ministers of Ukraine, unless it is not indispensable to the attainment of the above benefits or the resulting restriction of competition constitutes a threat to the system of the market economy.

14 To what extent does the authority consider market shares, market structures and other economic factors when assessing the legality of individual restraints? Does it consider the market positions and conduct of other suppliers and buyers in its analysis? Does it analyse whether certain types of agreement or restriction are widely used in the market?

Market shares will be most relevant when considering whether either general exceptions (see question 8) or block exemptions (see question 15 with respect to products supply and use exemption) may apply. The national antitrust legislation does not provide clear guidance regarding the assessment of the legality of individual vertical restraints. However, in cases of hard-core restrictions it is unlikely that the authority will consider their economic background or whether they may be considered an established practice (eg, non-compete clauses), unless the parties specifically apply for an individual AMC clearance under the Authorisation Regulation claiming that the analysed restraint will carry strong efficiencies (ie, better quality of the products, cost efficiencies, etc (see question 13)). In the latter case, the authority would consider the market position of other suppliers and buyers, the general market structure and the resulting changes of the individual restraint.

In practice, the AMC also tends to rely on the EC Commission practice and guidelines on vertical restraints.

Block exemption and safe harbor

15 Is there a block exemption or safe harbour that provides certainty to companies as to the legality of vertical restraints under certain conditions? If so, please explain how this block exemption or safe harbour functions.

The Competition Law provides for block exemption of the vertical restraints concerning the products supply and use and the transfer of IPRs or use of IP.

Products supply and use

The general prohibition does not apply to those restrictions imposed on the other party to the agreement, which 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 according to customs in trade and other fair business practices, are not related to the subject-matter of the relevant agreement (tying); or

• 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 exemption does not apply where such restrictions:

• result in substantial restriction of competition on the market or its significant part, including in the monopolisation of the relevant markets;

• limit other undertakings' access to the market; or

• result in economically unjustified price increases or product shortages.

Currently, the AMC is planning to adopt a separate regulatory act applicable to concerted practices concerning the supply of products in order to simplify the exemption framework.

Transfer of IPRs or use of iP The general prohibition does not apply to those restrictions imposed on the transferee (licensee) which do not exceed the limits of the legitimate rights of the owner of the IP (for the list of permitted restrictions, see question 12).

The safe harbour exemptions are provided by the General Exemption Regulation (see question 8). This exemption was recently amended allowing for a more lenient treatment of vertical restraints within the safe harbour (except for certain hard-core restrictions between competitors).

Types of restraint

16 How is restricting the buyer's ability to determine its resale price assessed under antitrust law?

Generally, fixing of prices or other conditions of purchase or sale of goods is considered an anti-competitive concerted practice and, as such, is prohibited. However, this prohibition does not apply to concerted practices relating to restraints concerning the supply and use of products, which limit the buyer's ability to form prices or establish other contractual terms and conditions with respect to resale of supplied products, unless they:

• result in substantial restriction of competition;

• result in the economically unjustified price increases or product shortages; or

• hinder market access for other businesses.

Ukrainian competition law lacks the proper definition of substantial restriction of competition and a great degree of discretion in this respect is vested with the AMC. However, market share based exemption (see question 8) may apply.

Establishment of maximum and recommended resale prices is generally not viewed as resulting in substantial restriction of competition.

17 Have the authorities considered in their decisions resale price maintenance restrictions that apply for a limited period to the launch of a new product or brand, or to a specific promotion or sales campaign; or specifically to prevent a retailer using a brand as a 'loss leader'?

There is no public record of the AMC practice on the issue and such arrangements are likely to be analysed under the general rules and exemptions applicable to establishment of resale prices (see question 16).

18 Have there been any developments in your jurisdiction in relation to resale price maintenance restrictions in light of the landmark US Supreme Court judgment in Leegin Creative Leather Products Inc v PSKS Inc or the European Commission's review of its Vertical Block Exemption Regulation and associated guidelines?

No. However, the AMC is planning to clarify and simplify the regulatory framework currently applicable to concerted practices concerning the supply of products, which may accommodate a more economic approach, although no outline of such amendment is available.

19 Have decisions relating to resale price maintenance addressed the possible links between such conduct and other forms of restraint?

There is no public record of such analysis. However, it is likely that in order to assess the degree of impact on the market and possible foreclosure effects, the AMC may consider other restrictive provisions in combination with resale price maintenance restrictions.

20 Have decisions relating to resale price maintenance addressed the efficiencies that can arguably arise out of such restrictions?

There is no publicly available AMC decision with such analysis. The AMC makes assessment of efficiencies which may be brought about by a restrictive provision (including resale price maintenance restrictions) in the course of the review of the parties' application for individual exemption under the Authorisation Regulation (for the list of acceptable efficiencies, see question 13). The burden of proof lies on the parties who should argue that the restriction will contribute to certain economic benefits to the public. It is also likely that the AMC will analyse efficiencies employed by the parties during the investigation of an alleged violation of the Ukrainian competition law.

21 How is restricting the territory into which a buyer may resell contract products assessed? In what circumstances may a supplier require a buyer of its products not to resell the products in certain territories?

Generally, market sharing by the territoriality principle is considered an anti-competitive concerted practice and as such, is prohibited. However, market share based exemption (see question 8) may apply.

22 Explain how restricting the customers to whom a buyer may resell contract products is assessed. In what circumstances may a supplier require a buyer not to resell products to certain resellers or end-consumers?

Generally, division of customers or consumers by the territoriality principle or any other type of customer classification is considered an anti-competitive concerted practice and as such, is prohibited. However, market share based exemption (see question 8) may apply.

23 How is restricting the uses to which a buyer puts the contract products assessed?

Restrictions on the use to which a buyer may put the contract products may come within the prohibition to put into agreements additional obligations which are not related to the subject-matter of the agreement.

However, such restriction may be allowed under block exemptions:

• unconditionally in case of agreements concerning the transfer of IPRs or on granting the right to use the IP; and

• in agreements concerning product supply and use, provided such restriction will not:

• result in substantial restriction of competition on the market or its significant part;

• monopolisation of the market;

• limit other undertakings access to the market; or

• result in economically unjustified price increases or product shortages (see questions 12 and 15).

Also, the market share based exemption (see question 8) may apply.

24 How is restricting the buyer's ability to generate sales via the internet assessed? Have the authorities issued decisions or guidance in relation to restrictions on using the internet for advertising or selling? Has there been antitrust-based litigation resulting in court judgments regarding restrictions on internet sales? If so, what are the key principles encapsulated in such guidelines and judgments?

The antitrust aspect of internet advertising and sales is not specifically regulated by the Ukrainian competition law. There is also no public record of AMC decisions in relation to restrictions on using the internet for advertising or selling, or antitrust-based litigation resulting in court judgments regarding restrictions on internet sales.

25 Briefly explain how agreements establishing 'selective' distribution systems are assessed. Must the criteria for selection be published?

The Ukrainian competition law does not specifically address selective distribution systems and there are no clear guidelines. In theory, selective distribution systems may be justified if the supplier applies clear selective criteria which directly relate to the contract product.

A specific exception is established in the Technology Transfer Law, which prohibits imposition of an obligation on the transferee to sell the products incorporating the transferred technology to the buyers preselected by the transferor.

26 Are selective distribution systems more likely to be lawful where they relate to certain types of product? If so, which types of product and why?

There is no clear legal guidance on the issue. However, it is likely that selective distribution systems relating to certain types of product requiring specific presentation and protection of brand reputation (eg, luxury products, cars) or treatment and personnel (eg, pharmaceuticals) will be justified.

27 Regarding selective distribution systems, what kinds of restrictions on internet sales by approved distributors are permitted and in what circumstances? To what extent must internet sales criteria mirror offline sales criteria?

There is no legal guidance on the issue.

28 Has the authority taken any decisions in relation to actions by suppliers to enforce the terms of selective distribution agreements where such actions are aimed at preventing sales by unauthorized buyers or sales by authorised buyers in an unauthorised manner?

There is no public record of such decisions.

29 Does the relevant authority take into account the possible cumulative restrictive effects of multiple selective distribution systems operating in the same market?

The AMC may consider the market structure as one of the relevant factors for market analysis. Possible cumulative restrictive effects of multiple selective distribution systems may also be taken into account. However, there is no public record of such practice.

30 Has the authority taken decisions dealing with the possible links between selective distribution systems and resale price maintenance policies? If so, what are the key principles in such decisions?

There is no public record of such decisions.

31 How is restricting the buyer's ability to obtain the supplier's products from alternative sources assessed?

Restriction on the buyer's ability to obtain the supplier's products from alternative sources may come within several categories of prohibited practices (eg, as dividing markets or sources of supply, ousting of other suppliers from the market or limitation of their access to the market, or substantial limitation of competitiveness of the buyer without objectively justifiable reasons). However, market share based exemption (see question 8) may apply.

32 How is restricting the buyer's ability to sell non-competing products that the supplier deems 'inappropriate' assessed?

Restriction on the buyer's ability to sell non-competing products that the supplier deems 'inappropriate' may come within several categories of prohibited practices (eg, as dividing markets according to type of goods, entering into agreements on the condition that the buyer will assume additional obligations that are not related to the subject-matter of the agreement, or substantial limitation of competitiveness of the buyer without objectively justifiable reasons).

However, such restriction may be allowed under the 'products supply and use' block exemption, provided such restriction will not result in:

• substantial restriction of competition on the market or its significant part;

• monopolisation of the market;

• limit other undertakings access to the market; or

• result in economically unjustified price increases or product shortages (see question 15).

Also, the market share based exemption (see question 8) may apply.

33 Explain how restricting the buyer's ability to stock products competing with those supplied by the supplier under the agreement is assessed.

Restriction on the buyer's ability to stock products competing with those supplied by the supplier may amount to a non-compete obligation and come within several categories of prohibited practices (eg, ousting of other suppliers from the market or limitation of their access to the market, entering into agreements on the condition that the buyer will assume additional obligations that are not related to the subject-matter of the agreement, or substantial limitation of competitiveness of the buyer or such other suppliers without objectively justifiable reasons).

However, such restriction may be allowed under the 'products supply and use' block exemption, provided such restriction will not result in:

• substantial restriction of competition on the market or its significant part;

• monopolisation of the market;

• limit other undertakings access to the market; or

• result in economically unjustified price increases or product shortages (see question 15).

Also, the market share based exemption (see question 8) may apply.

34 How is requiring the buyer to purchase from the supplier a certain amount or minimum percentage of the contract products or a full range of the supplier's products assessed?

A requirement that the buyer purchases a certain amount, a minimum percentage of the contract products or a full range of the supplier's products may be termed a non-compete obligation and come within several categories of prohibited practices. As such, it will be assessed similarly to restrictions discussed in question 33.

35 Explain how restricting the supplier's ability to supply to other resellers, or sell directly to consumers, is assessed.

Restriction on the supplier's ability to supply to other resellers or sell directly to consumers may amount to market sharing and come within several categories of prohibited practices (eg, as dividing markets by customers or consumers, entering into agreements on the condition that the supplier will assume additional obligations that are not related to the subject-matter of the agreement, or substantial limitation of competitiveness of the supplier on the market without objectively justifiable reasons). However, the market share based exemption (see question 8) may apply.

36 To what extent are franchise agreements incorporating licences of IPRs relating to trademarks or signs and know-how for the use and distribution of products assessed differently from 'simple' distribution agreements?

The Ukrainian competition law does not specifically address franchising agreements. Generally, these are assessed under the general rules applicable to vertical restraints, taking account of the following: • a block exemption may apply to the IPRs-related part of the agreement (see question 12);

According to the plan of the AMC's sub-legislation work for 2010, the authority shall prepare a draft of the standard requirements applicable to concerted practices concerning the supply of products in order to simplify the existing exemption framework.

Neither the outline nor the more specific timeline of such planned changes to the legislation are available.

• as a type of technology transfer agreement (pursuant to the Technology Transfer Law), the franchising agreement may not contain certain prohibited arrangements (eg, imposition of an obligation on the transferee to buy raw materials, intermediate products, equipment and its components from the transferor if they are not used in the manufacturing process, obligation to sell the products incorporating the transferred technology to the buyers preselected by the transferor, prohibition to use analogous or improved technologies, etc); and

• the Civil Code of Ukraine allows for certain restrictions: exclusive rights for a franchisee within a reserved territory, imposition of a non-compete obligation, exclusive dealing obligation on the franchisee, as well as the obligation to agree location of facilities and their internal and external design with the franchisor. However, price fixing and establishment of minimum or maximum prices are void.

37 Explain how a supplier's warranting to the buyer that it will supply the contract products on the terms applied to the supplier's most-favoured customer or that it will not supply the contract products on more favourable terms to other buyers is assessed. Would the analysis differ where the buyer commits to 'most favoured' terms in favour of the supplier?

The Ukrainian competition law does not address the issue directly. However, these terms may qualify as application of different terms to equivalent agreements concluded with other buyers, which results in creation of competitive disadvantages for such other buyers. Thus, such restrictions are to be assessed under the general rules discussed in question 15.

Notifying agreements

38 Outline any formal procedure for notifying agreements containing vertical restraints to the authority responsible for antitrust enforcement.

The Competition Law provides for a possibility of individual exemptions: agreements containing vertical restraints which are not covered by a block exemption or the market share based exemption or otherwise permitted may not be executed, unless individually exempt in accordance with the procedure prescribed by the Authorisation Regulation. A more reasonable interpretation of this prohibition allows execution of an agreement prior to clearance, provided the parties refrain from its implementation until it is authorised by the AMC.

The notified agreement may be exempt if the parties prove its economic efficiencies, such as:

• rationalisation of production, purchase or sales processes;

• promotion of technical, technological or economic development;

• development of small or medium-sized enterprises;

• optimisation of export or import processes;

• development and application of uniform technical terms and product standards; and

• rationalisation of production processes.

However, the AMC authorisation may not be granted if the agreement results in substantial restriction of competition on the market or its significant part.

The parties seeking individual exemption must submit an application for clearance to the AMC. Upon review of the application, which may last for three and a half months (extendable further), the AMC takes a reasoned decision to authorise, conditionally authorize or prohibit implementation of the notified agreement. The authorisation decision may be issued for an indefinite or definite term (which normally should not exceed five years). The full version of the AMC decision is not published; however, the AMC may disclose certain information regarding the parties, type and contents of the notified concerted practice. Other information may be published only upon the parties' authorisation.

In exceptional cases a prohibited agreement may be exempt by the decision of the Cabinet of Ministers of Ukraine based on the above efficiencies analysis, unless the restrictions contained therein are not indispensable to the attainment of the above efficiencies or the resulting restriction of competition constitutes a threat to the system of the market economy.

Authority guidance

39 If there is no formal procedure for notification, is it possible to obtain guidance from the authority responsible for antitrust enforcement or a declaratory judgment from a court as to the assessment of a particular agreement in certain circumstances?

It is possible to obtain guidance from the AMC. The following procedures are available:

• conclusions in the form of non-binding recommendations on whether the intended actions fall under the general prohibition or may be eligible for an individual exemption (or both); or

• preliminary conclusions of the AMC based on the detailed information regarding the intended action on whether such action may be authorised or prohibited or whether such action requires authorisation of the AMC (or both).

Complaints procedure for private parties

40 Is there a procedure whereby private parties can complain to the authority responsible for antitrust enforcement about alleged unlawful vertical restraints?

Private parties may file complaints to the AMC bodies about the alleged violation of the relevant competition laws. The complainants may either be parties to the relevant restrictive agreement or third parties. The filing and investigation procedure is governed by the Rules for Investigation of Antitrust Violations of 1994.

If not rejected on formal grounds, the complaint shall be reviewed by the AMC within 30 calendar days (extendable further by 60 calendar days if additional information is required). Review of the complaint is finalised by issuance of the resolution to initiate or reject initiation of the investigation of the case on the substance. The time of investigation on the substance is not limited.

Enforcement

41 How frequently is antitrust law applied to vertical restraints by the authority responsible for antitrust enforcement? What are the main enforcement priorities regarding vertical restraints?

There are no publicly available separate statistics with regard to vertical restraints. Available general statistics regarding all types of concerted practices demonstrates that such violations represent less than 5 per cent of the investigated cases (257 out of 6293 during 2003 to 2008), with its number slightly increasing over the years. The vertical restraints portion is likely to be significantly below 5 per cent.

42 What are the consequences of an infringement of antitrust law for the validity or enforceability of a contract containing prohibited vertical restraints?

The Competition Law does not declare agreements containing prohibited vertical restraints void per se. Respective provisions of an agreement and even the entire agreement may be rendered null and void by court if requested by interested parties based on the AMC's decision establishing the violation of the Ukrainian competition law. It is worth noting, however, that recent case law argues that the agreements among shareholders aimed at restriction or elimination of economic competition in the Ukrainian product markets are void. It is not clear whether the courts will extend such approach to cases regarding vertical restraints.

43 May the authority responsible for antitrust enforcement directly impose penalties or must it petition another entity? What sanctions and remedies can the authorities impose? What notable sanctions or remedies have been imposed? Can any trends be identified in this regard?

The AMC is entitled to impose fines for violation of the Ukrainian competition law, including implementation of prohibited concerted practices, as well as impose other obligations on the parties (eg, impose conditions to authorisation of the restrictive agreement or oblige the parties to terminate violation). If the fine is not paid voluntarily, the respective AMC decision may be enforced in court. No separate AMC statistics regarding fines for implementation of prohibited vertical restraints are available. Theoretically, the maximum possible fine may amount up to 10 per cent of the group worldwide turnover of the infringing undertaking in the financial year preceding the year in which the fine is imposed.

Investigative powers of the authority

44 What investigative powers does the authority responsible for antitrust enforcement have when enforcing the prohibition of vertical restraints?

The AMC has rather broad investigative powers, including the power to:

• conduct onsite inspections of business premises and transport facilities;

• request expert opinions;

• retain or seize documents, items or information media that may contain evidence;

• engage police, customs and other enforcement authorities; or

• request information or documents from the parties or other undertakings (or both) (irrespective of their location).

Failure to provide information at the AMC's request or provision of incorrect or incomplete information, as well as prevention of the AMC's inspections and other evidence-collection activities is punishable by a fine of up to 1 per cent of the group worldwide turnover of the infringing undertaking in the financial year preceding the year in which the fine is imposed.

Private enforcement

45 To what extent is private enforcement possible? Can non-parties to agreements containing vertical restraints obtain declaratory judgments or injunctions and bring damages claims? Can the parties to agreements themselves bring damages claims? What remedies are available? How long should a company expect a private enforcement action to take?

An infringing party may be exposed to damage claims by the aggrieved third parties (eg, competitors) and theoretically a party to a prohibited agreement is not precluded from recovering damages from the other parties to the agreement.

Persons that sustained damages as a result of an unauthorized or prohibited transaction may seek damages in court. Damage is recovered in twice its amount. Claims for damages are subject to a general three-year limitation period.

Other issues

46 Is there any unique point relating to the assessment of vertical restraints in your jurisdiction that is not covered above?

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