Ukraine: Antimonopoly Committee of Ukraine
Ukraine
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Ukraine: Antimonopoly Committee of Ukraine

Ukraine: Antimonopoly Committee of Ukraine

Ukraine

Ukraine: from the enforcer

Address: 45, LypkivskohoVasyliaMytropolyta str, 03035 Kyiv, Ukraine
Tel: +38 44 251 6262
Fax: +38 44 520 0325
Email: [email protected]
Web: www.amcu.gov.ua

How long is the head of the agency’s term of Office?

The term of Office of the Сhair of the AMCU is seven years, according to article 9 (2) of the Law on Antimonopoly Committee of Ukraine (AMCU Law).

When is he or she due for reappointment?

The Сhair of the AMCU may be reappointed upon the expiry of the seven-year term of Office. However, the Chair shall not be appointed for more than two consecutive terms (article 9 (2) of the AMCU Law).

Which posts within the organisation are political appointments?

The positions of the Chair, the First Deputy Chair, the Deputy Chair and State Commissioners are political appointments.

The Ukrainian Parliament appoints the Chair upon the submission of the Prime Minister. The President sets deputies and state commissioners at the recommendation of the Prime Minister who is submitted upon the proposal made by the AMCU Chair.

What is the agency’s annual budget?

According to Annex 3 of the Law of Ukraine on the State Budget of Ukraine for 2021 the AMCU, as the main administrator of budget funds, implements two budget programmes, namely: KPKVK 6011010 "Management in the field of competition policy, control over compliance with economic competition legislation" with expenditures on the general fund in the amount of UAH 301,423,100 (US$11,506,217) on the special fund – UAH 7,548,000 (US$288,129) and KPKVK 6011020 "Scientific activity in the field of competition policy" on the general fund - UAH 1,441,200 (US$55,303), for a special fund – UAH 10,000 (US$381) .

Do any industry-specific regulators have competition powers? If so, how do these relate to your agency's role?

No. Although there is a law regulating natural monopolies. It is AMCU that monitors the compliance of the natural monopolies’ activities with the legislation on protection of economic competition. 

May politicians overrule or disregard authority's decisions? If they have ever exercised this right, describe the most recent example.

In general, there is no such possibility. At the same time, the Cabinet of Ministers of Ukraine may authorisemergers (article 25(2) of the Law on Protection of Economic Competition (LPEC)) or concerted actions (article 10(3) LPEC) that were prohibited by the AMCU (due to a threat of monopolisation or substantial restriction of competition) if the participants of such concentrations or concerted actions prove that a positive effect of the merger (concerted actions) in question on the public interests outweighs their anticompetitive effects.

However, there have been no such cases recently.

Does the law allow non-competition aims to be considered when your agency takes decisions?

Yes, the AMCU can take into account such aims when authorising concerted actions. In particular, concerted actions may be authorised by the AMCU if their participants prove that the concerted actions in question facilitate efficiencies:

  • the improvement of the production, purchase or sale of a product;
  • technical, technological and economic development;
  •  the development of small- or medium-sized enterprises;
  •  the optimisation of the export or import of products;
  • the elaboration and application of unified technical conditions or standards for products; and
  • the rationalisation of production.

Beside this, as mentioned above, mergers or concerted actions that are capable of leading to monopolisation or significant restriction of competition and on this ground were not authorised by the AMCU, may nevertheless be authorised by the Cabinet of Ministers of Ukraine if positive effects of the concentration (concerted actions) on the public interests outweighs its anticompetitive effects.

Which body hears appeals against the agency's decisions? Is there any form of judicial review beyond that mentioned above? If so, which body conducts this? Has any competition decision by the agency been overturned?

The Commercial Court considers most appeals against the AMCU’s decisions. Decisions of the AMCU have been overturned in numerous cases.

One of the main problems in this context is a judiciary’s limited expertise in the field of competition law and economics basics that prevents courts from making well-founded decisions in cases.

The judicial system of Ukraine consists of local courts (courts of first instance); appellate courts (courts of the second instance); and the Supreme Court (its Cassation Commercial Court, the court of the third instance).At the Supreme Court, the cases related to antimonopoly and competition laws are considered by the specialist panel of the Cassation Commercial Court.

Has the authority ever blocked a proposed merger? If yes, please provide the most recent instances.

There have not been any recent cases where the AMCU has blocked a proposed merger.

Has the authority ever imposed conditions on a proposed merger? If yes, please provide the most recent instances.

For the past few years, there have been no cases of mergers/concerted action in the AMCU imposing conditions on enterprises

Has the authority conducted a Phase II investigation in any of its merger filings? If yes, please provide the most recent instances.

In 2021, the AMCU completed consideration of the Phase II investigation of the acquisition by “Datagroup Holding Limited” (Nicosia, Cyprus) (Horizon Capital Group) of stocks/shares in “Oisiw Limited” (Limassol, Cyprus), LLC “TELESVIT” (Kyiv, Ukraine) and LLC "KYYIVSKI TELEKOMUNIKATSIYNI MEREZHI" (Kyiv, Ukraine) (Objects of Acquisition) (Oisiw Group).

Oisiw Group and Horizon Capital Group are telecommunications operators and provide services for: access to TV packages; provision of internet access services, server hosting (provision of data centre services).

 Considering the case, the AMCU examined the impact of the merger on the markets of access to the Internet for legal entities, access to the Internet for individuals, access to TV packages for legal entities and access to TV packages for individuals.

The AMCU conducted a survey of telecommunications market participants and the National Commission for State Regulation of Communications and Informatization.

As a result of case consideration, the AMCU concluded that:

  • the total shares of merger participants in the involved markets do not exceed 25–30 per cent;
  • regional markets of internet access to individuals are extremely competitive;
  • the networks of participants of the merger intersect only in large cities, where both national and local players are present;
  • competitors of the merging parties operating in the markets for internet access to legal entities and individuals reported that the markets are highly competitive given that supply exceeds demand for both individuals and legal entities;
  • most of the competitors of the merged parties interviewed by the AMCU and the Regional offices did not express any concerns or objections to the mergers, except for the LLC "MEREZHA LANET", which expressed concern that a market participant created via merger will be able to put pressure on telecommunications operators and providers: to oust them from the market, to influence the prices of services of other operators and providers to end users. However, according to the applicants and other surveyed competitors, the markets involved are highly competitive, the number of operators and providers of telecommunications services is constantly increasing and these markets are open for entry of potential participants. The participants of the merger consider it impossible to influence other operators and telecommunications providers taking into account these factors, low share in the cost of internet access of internet service providers, the possibility of reconnection (automatic reconnection) of the operator and provider to the traffic of other suppliers;
  • there are no significant economic barriers in the involved markets; however, only in the market of providing access to TV packages there is an administrative barrier – licensing of these activities, which does not create significant obstacles for entities that intend to operate in this market. New players can enter the market in a short time and at no significant cost;
  • the consumer of telecommunications services has the ability and wide opportunities to switch to other service providers in case of dissatisfaction with their provider, even after receiving discounts for switching to another provider, which indicates the balancing power of the buyer; and
  • in the markets involved, especially in the context of the coronavirus pandemic, the permeation of the internet into all sectors of the economy, the constant introduction of innovation and digitalisation, a trend of constant technology and increasing the speed of internet connection, all of these factors affect the development and saturation of telecommunications markets.

In view of the above, the stated merger will not have a significant impact on the commodity markets of Ukraine.

Therefore, given that the merger does not lead to monopolization or significant restriction of competition in the commodity markets of Ukraine, the AMCU granted permission for this merger.

Information on merger thresholds.

Mergers may be carried out only with the prior permission of the AMCU or the administrative board of the AMCU in the cases provided for in part two of Article 22 of the Law of Ukraine on Protection of Economic Competition and other regulations, if:

  • the total cost of assets or the total product sales of the participants in the merger, with relations of control being taken into account, in the past financial year, including those abroad, exceed the sum equivalent to €30 million, defined in accordance with the official exchange rate to be established by the National Bank of Ukraine and to be effective on the last day of the financial year while the assets (total assets) or sales (total sales) of products in Ukraine, of at least two participants in the merger, with relations of control being taken into account, exceed the sum equivalent to €4 million, defined in accordance with the exchange rate to be established by the National Bank of Ukraine and to be effective on the last day of the financial year; or
  • the equivalent to €8 million must not be exceeded by total cost of assets or the total product sales of market participant in Ukraine, for which control is acquired, or the participants whose assets (stocks, shares) are caught in the property or control or received in use, or minimum one of the founders of producing subject, with relations of power being taken into account, in the past financial year. These include those abroad, defined in accordance with the official exchange rate to be established by the National Bank of Ukraine. They must be effective on the last day of the financial year. Meanwhile, the assets (total assets) or sales (total sales) of products, including those abroad, from at least one of the other participants of in the merger, with relationship of control being taken into account, in the last financial year exceed the equivalent of €150 million. This is defined in accordance with the exchange rate to be established by the National Bank of Ukraine and is to be effective on the last day of the financial year.

In 2020, the AMCU completed consideration of the Phase II investigation of acquisition by the joint-stock company "NATSIONALNA AKTSIONERNA KOMPANIIA "NAFTOHAZ UKRAYINY" (hereinafter – NAK “Naftogaz Ukrayiny”) of a share in the authorised capital of LLC “NADRA YUZIVSKA”.

LLC “NADRA YUZIVSKA” is a party to the Agreement dated 24 January 2013 on the distribution of hydrocarbons to be extracted within the Yuzivska section.

NAK “Naftogaz Ukrainy” taking into account the control relations (hereinafter, the Group of NAK “Naftogaz Ukrainy”), carries out activities, in particular, in:

  • exploration and development of deposits;
  • oil and gas production;
  • operational and exploratory drilling;
  • transportation and storage of oil;
  • supply of natural and liquefied gas to consumers;
  • electricity production;
  • electricity supply;
  • production, transportation and supply of thermal energy.

During the consideration of the case the AMCU found that the relevant involved markets, in the sense of the legislation on protection of economic competition for this merger, are natural gas and oil markets and conducted an investigation on the impact of merger on the affected markets.

As a result of the case, the AMCU concluded regarding oil markets that the increase in oil production by the Group of NAK “Naftogaz Ukrainy” in the Yuzivska section will have a negligible impact on the domestic oil market and related to the lower level oil markets in Ukraine due to:

  • settlement in accordance with the Law of Ukraine on Oil and Gas of the issue of sale of JSC "Ukrnafta" oil and gas condensate of its own production at exchange auctions; and
  • a significant level of imports of oil products and a large amount of unused oil refining capacity in Ukraine; and

The AMCU concluded regarding natural gas markets that the legal basis for the functioning of the natural gas market of Ukraine is based on the principles of: free and fair competition, except the activities of natural monopolies; proper protection of consumer rights and security of natural gas supply; and is determined by the Law of Ukraine on the Natural Gas Market.

Activities in the natural gas market are subject to licensing.

Given the vertically integrated structure of control relations of NAK “Naftogaz Ukrayiny” in the markets of raw materials (production and sale of natural gas) and final products, a significant share of natural gas sales in total market consumption, there is a risk of strengthening market power of NAK “Naftogaz Ukrainy” in the market natural gas.

At the same time, such a risk of potentially negative impact on the involved market can be completely offset by the provision of behavioral conditions (remedies) to the Group of NAK “Naftogaz Ukrayiny”.

Has the authority ever pursued a company based outside your jurisdiction for a cartel offence? If yes, please provide the most recent instances.

The AMCU has recently passed a decision in a bid-rigging case involving two foreign respondents, UK and Seychelles companies. The respondents rigged bids at the 2015 tender of a Ukrainian state enterprise UkrGasVydobuvannya for the purchase of a block-modular complex of a coiled tubing installation. Both companies were fined for this infringement (and now are effectively barred for three years from participating in other public procurement tenders).

Do you operate an immunity and leniency programme? Whom should potential applicants contact? What discounts are available to companies that cooperate with cartel investigations?

Under article 6(5) LPEC, if a person who has committed anticompetitive concerted actions, but voluntarily informed the Antimonopoly Committee of Ukraine or its territorial office of the fact before the remaining participants in the actions, and submitted essential information to taking a decision on the case must be relieved ofliability for committing anticompetitive concerted practices as provided for by article 52 of the present law. The LPEC obliges the AMCU to ensure the confidentiality of all information about such individual.

Current leniency provisions provide an exemption for the first applicant only, with no relief for subsequent applicants. However, the 2019 amendments to LPEC (which were passed by the Ukrainian parliament but have not yet been signed into law by the President), extend the leniency programme to subsequent applicants. They will have significant reductions of a fine (50 per cent, 30 per cent, 20 per cent). The leniency programme amendments are generally based on the EU model.

Is there a criminal enforcement track? If so, who is responsible for it? Does the authority conduct criminal investigations and prosecutions for cartel activity? If not, is there another authority in the country that does?

Ukrainian law provides no criminal liability for violations of competition laws. 

Are there any plans to reform the competition law?

Currently, the AMCU is in the middle of a comprehensive process of numerous reforms. Some of them have been already implemented, while several significant reforms are still ongoing.

Most of the AMCU’s initiatives in the field of future reforms of competition legislation will focus on the following:

  • increasing AMCU discretion in prioritising cases for investigation;
  • introducing a procedure for imposing commitments in dominance abuse cases;
  • clarifying the scope of application of merger rules;
  • clarifying and strengthening AMCU investigation powers (dawn raids, seizure of evidence, among others);
  • improving procedures for handling merger applications;
  • improving and simplifying procedures for enforcement of AMCU decisions;
  • establishing a fully operational EU-model state aid office; and
  • development and refinement of the procedure of leniency.

When did the last review of the law occur?

The draft law No. 5431 on the reform of competition law and its alternatives are currently registered in the Parliament of Ukraine. Since July, the AMCU has been working to improve and strengthen the draft law with European and American counterparts. The goal is to fill the existing gaps in Ukrainian legislation with European practices and to bring the provisions as close as possible to the current needs of the Ukrainian economy and to the best European and American practices.

Draft Law No. 2730 on the reform of competition law and alternatives to it is currently registered in the Parliament. Since March, the Committee has been working to improve and strengthen the bill with European and American counterparts. The goal is to fill the existing gaps in Ukrainian legislation with the European one (established within the framework of the European Twinning project in 2016–2019) and to bring the norms as close as possible to the current needs of the Ukrainian economy and the best European and American practices.

Do you have a separate economics team? If so, please give details.

Yes, the Economic Analysis Department is an autonomous unit. The department consists of nine economists (as of 31 August 2020). The department consists of Economic Analysis unit and Planning and Reporting unit.

The main responsibilities are:

  • economic analysis in antitrust, mergers and state aid cases;
  • economic impact assessment of AMCU’s activities;
  • participation in methodological documents development;
  • analysis and planning of the AMCU’s activity; and
  • the AMCU’s annual reports preparation.

Has the authority conducted a dawn raid?

Yes, to some extent. Under article 7(7) of the AMCU Law, the AMCU has the power to inspect the premises and vehicles of undertakings as well as seize and arrest evidence (assets, documents or other data media).

However, the inspections procedure differs from searches conducted by law enforcement agencies in criminal cases. For example, during AMCU inspections, an undertaking may refuse to grant access or to provide the necessary documents or information. In this case, the AMCU may qualify such actions as creating impediments in the investigation and may only impose a fine (up to 1 per cent of the annual income of the undertaking).

Has the authorityimposed penalties on officers or directors of companies for offences committed by the company? If yes, please provide the most recent instances.

Formally, the LPEC authorises the AMCU to impose administrative fines on officers public authorities for a refusal to provide information upon the AMCU request, comply with the AMCU decision as well as for the creation of impediments in the investigation (in the latter case, such a fine may also be imposed on officers of undertakings). However, numerous inconsistencies with other laws (first of all with the obsolete rules of the Code of Ukraine on Administrative Offences) and the insignificant amounts of these fines render imposition of the penalties either impossible or ineffective.

What are the pre-merger notification thresholds, if any, for the buyer and seller involved in a merger?

According to article 24 of the Law on Protection of Economic Competition, mergers may be carried out only after economic entities have attained a prior authorisation granted by the AMCU if the cost parameters of the participants exceed the following thresholds:

  • the total cost of assets or the total product sales of the participants in the merger, with relations of control being taken into account, in the past financial year, including those abroad, exceed the sum equivalent to €30 million, defined in accordance with the official exchange rate to be established by the National Bank of Ukraine and to be effective on the last day of the financial year while the assets (total assets) or sales (total sales) of products in Ukraine, of at least two participants in the merger, with relations of control being taken into account, exceed the sum equivalent to €4 million, defined in accordance with the exchange rate to be established by the National Bank of Ukraine and to be effective on the last day of the financial year; or
  • the equivalent to €8 million must not be exceeded by:
    total cost of assets or the total product sales of market participant in Ukraine, for which control is acquired, or the participants whose assets (stocks, shares) are caught in the property or control or received in use, or minimum one of the founders of producing subject, with relations of power being taken into account, in the past financial year. These include those abroad, defined in accordance with the official exchange rate to be established by the National Bank of Ukraine. They must be effective on the last day of the financial year. Meanwhile, the assets (total assets) or sales (total sales) of products, including those abroad, from at least one of the other participants of in the merger, with relationship of control being taken into account, in the last financial year exceed the equivalent of €150 million. This is defined in accordance with the exchange rate to be established by the National Bank of Ukraine and is to be effective on the last day of the financial year.          

Are there any restrictions on investments that involve less than a majority stake in the business?

All cases where it is necessary to apply to the AMCU for the authorisation of a merger are defined by articles 22 and 24 LPEC. There are also different ways of acquiring control than the acquisition of a majority stake (for example, the purchase of the right to veto). The LPEC also defines such cases.


Ukraine: from the enforcer's competition economists

Address: 45, LypkivskohoVasyliaMytropolyta str, 03035 Kyiv, Ukraine
Tel: +38 44 251 6262
Fax: +38 44 520 0325
Email: [email protected]
Web: www.amcu.gov.ua

Contacts

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OlhaPishchanska
Chair of the Antimonopoly Committee of Ukraine

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OlhaMuzychenko
First Deputy Chair – State Commissioner

Anzhelika Konoplianko
Deputy Chair – State Commissioner

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Dar'yaCherednichenko
Deputy Chair and State Commissioner

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Natalia Buromenska
Deputy Chair and State Commissioner   

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OlhaNechytailo
State Commissioner 

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Maria Protsyshen
State Commissioner

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Iryna Kopayhora
State Commissioner

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SerhiiTyshchyk
State Commissioner

Bohdan Horobets
State Commissioner

Questions and answers

How many economists do you employ?

The structure of the Antimonopoly Committee of Ukraine (AMCU) consists of the Central Office and six cross-regional offices after a reform of AMCU 2019–2020. As at 13 August 2020, 38 per cent of the total Central Office’s staff and 44 per cent of the total Regional Offices’ staff have bachelors, master’s or PhDs in economics. 

Do you have a separate economics unit?

Yes, the Economic Analysis Departmentis an autonomous unit. The department consists of nine economists (as at 31 August 2020). The department consists of Economic Analysis unit and Planning and Reporting unit.

The main responsibilities are:

  • economic analysis in antitrust, mergers and state aid cases;
  • economic impact assessment of AMCU’s activities;
  • participation in methodological documents development;
  • analysis and planning of the AMCU’s activity; and
  • the AMCU’s annual reports preparation.

 Do you have a chief economist?

Head of Department of Economic Analysis – Vladyslav Kryzhnii

To whom does the chief economist report?

The chief economist directly reports to the chair of AMCU and to the head of staff (on administrative questions).

Does the chief economist have the power to hire his or her own staff?

The appointment of civil servants of the Antimonopoly AMCU of Ukraine is carried out on a competitive basis. The competition is conducted in accordance with the statutory requirements for the professional competence of a candidate for a vacant civil service position based on the assessment of his or her personal achievements, knowledge, skills, morals and business qualities for the proper performance of official duties.

How many of your economists have a PhD in industrial economics? 

The Economic Analysis Department has nine employees with economic education, and three people in the AMCU have a PhD in economics. There are severalPhD students in economics. 

Does the agency include a specialist economist on every case team? If not, why not?

Case teams consider the most notable cases with participation of the Economic Analysis Departmentemployee, an employee of the legal department and the respective industrial or investigations department. Economists can also be involved in the investigation process, committee meetings and court hearings.

Is the economist unit a ‘second pair of eyes’ during cases – is it one of the agency's checks and balances? If not, why not?

Yes, it is.

How much work is outsourced? What type of work is outsourced?

Some market studies are outsourced to the AMCU's Complex Research Centre.

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