Information Exchange

Last verified on Friday 5th April 2019

Ukraine

Timur Bondaryev, Lana Sinichkina, Sergii Shkliar and Oleksander Dyakulych
Arzinger
  1. 1.

    Describe the principal competition rules governing information exchange in your jurisdiction.

  2. There is no dedicated legal and regulatory framework in Ukraine, aimed at regulation of information exchange, apart from the general provisions of the Law of Ukraine “On protection of economic competition” (the Law), Typical requirements to concerted actions for business entities, Typical requirements to establishment of business associations and the relevant practice of the local agency – the Antimonopoly Committee of Ukraine (the AMCU) and the courts. Respective case law is still under development in this area.

    The information exchange constituting the infringement of competition legislation is governed by the Law. To be more specific, article 6 of the Law is applied in case information exchange results or may result in prevention, elimination or restriction of competition, so the article determines which concerted practices should be qualified as the anticompetitive ones. Simultaneously, article 6 does not provide for the exhaustive list of infringements (anticompetitive concerted practices) that may be caused by information exchange as well as types of information exchange that may be caught by the competition rules. In this regard, see question 3 for more details.

  3. 2.

    Which bodies are responsible for enforcing competition rules on information exchange in your jurisdiction?

  4. The AMCU is the principal antitrust enforcement agency, including for enforcing cases related to information exchange.

  5. 3.

    Describe the types of information exchanges that may be caught under the competition rules in your jurisdiction.

  6. While exercising their business activities, companies should be very well informed about the market and competitive environment, which includes certain level of awareness about relevant facts, figures and events, for instance, the market dynamics, consumer trends and needs, alternative offers from competitors, etc. Only if the company in possession of this information does not pursue anticompetitive objections and does not trigger restriction of competition, is it not deemed as a competition law infringement. 

    As mentioned above, the information exchange per se is not regulated at the legislative level. Having said this, there are certain provisions envisaged in the typical requirements to establishment of business associations concerning information exchange in the course of assessment of anticompetitive risks during the establishment of business associations. Namely, the document sets up the parameters in which the information exchange does not require AMCU approval for concerted actions. In particular, these typical requirements provide for the exhaustive list of data, which can be gathered by an association on its members. To be more precise, the following information with regard to the members of an association is considered to be legally collected and exchanged between the latter:

    • data on production and production facilities;
    • problems arising when the association's members are carrying out activity to find the best solution; and
    • technical information and information about education of association members.

    The information can only be disseminated on a no-name basis not earlier than a month after its receipt. This information should not contain data on the essential terms of conduct of business activity, prices and commercial strategies in carrying out of business activity.

    Furthermore, on 21 February 2019, the AMCU provided recommendatory clarifications for vertical relationships in the pharma industry. In particular, the AMCU established competition risks mitigating terms for reporting practice, suggesting, inter alia: (i) rational and adequate volume of information to be reported, (ii) rational and adequate frequency of reporting and (iii) avoiding sharing of price policy advice.

  7. 4.

    Are some information exchanges regarded as more serious breaches of the competition rules than others?

  8. The information exchange is assessed by the AMCU in each particular case. According to the most recent court practice, to establish the fact of anticompetitive concerted actions it is enough to prove the fact of exchange of competition sensitive information between competitors, so, the illegal nature of the information exchange between the competitors is assumed and the contrary should be proven. Exchange of information constitutes competition infringement on anticompetitive concerted actions if this exchange leads to informing two or more cartel participants about further conduct on the market, in particular: change of terms or size of fees for facilitators, and other details to be agreed between business entities.

    Thus, it cannot be expressly asserted that some kinds of information exchange are more serious than others, as the results of information exchange may have different effect on competition on the market.

    Under the typical requirements to concerted actions of business entities, the permissions on concerted actions do not cover actions regarding:

    • establishment of prices (tariffs) of sales and purchase of products;
    • allocation of market or sources of supply according to territorial principle, range of products, scope of sales or purchase, range of sellers, buyers or consumers or other features;
    • restriction, including termination, of products production, sales or purchase; and
    • bid rigging.

    It should be noted that the most common forms of the outcome of the information exchange, which infringe the competition law, are as follows:

    • the coordination and establishment of prices for goods and services;
    • market allocation;
    • removal of some business entities from the market; and
    • restriction for some business entities to entry into the market.

    Moreover, the form of information exchange (conducted directly between business entities or indirectly through the marketing agency) is not relevant. 

  9. 5.

    To what extent is it necessary for an information exchange to have a negative effect on competition to prove a competition infringement in your jurisdiction?

  10. To prove a negative effect on competition and, consequently, the fact of competition law infringement the parameters and nature of information exchange should be considered. In case the information exchange directed on the use of it in companies' commercial practices, gaining advantages in competition compared to other market players, then it may negatively impact on competition and constitute infringement.

    Negative effect of information exchange on competition will depend on the nature of information. For example, it should be considered whether the information is of strategic character, since then it may help to predict the behaviour of competitors and adjust to it instead of entering into competition. The considerable risks of infringement may also arise when the information exchange covers all market or its significant part. The key point during the analysis of the information exchange and its likelihood of infringing the competition law concerns the scope of information, namely whether the exchanged information allows individual data on the companies or some aggregative ones to be obtained. If the business entity obtains information regarding each separate competitor (for instance, with the help of marketing agencies), then it can probably predict the competitor’s behaviour, its planned prices for products and services. Consequently, it is easier to coordinate business activity with other companies.

    In addition to this, it is not compulsory to establish the prevention, elimination or restriction of competition to prove competition infringement. It is sufficient to establish the possibility of occurrence of negative effects as a result of information exchange.

  11. 6.

    What types of information exchanges are not caught by the competition laws in your jurisdiction? For example, are certain types of information exchanges viewed as pro-competitive?

  12. The competition legislation does not provide for such exemptions. Nevertheless, less risk related information exchange concludes information on:

    • non-confidential information of technical nature;
    • quality and safety standards;
    • various aspects of the development of the industry as a whole; and
    • general data on the market dynamics, the state of competition.

    The business entities may obtain from marketing agency certain information of its competitors aggregately regarding several companies or individual information about each company. In such aggregated information it is impossible to determine a competitor, except for the situations where there are only two competitors on the specific market. Having received the aggregated information, the business entity may monitor summarised data about the market dynamics, state of competition, level of demand, etc. This information may be helpful for companies, to improve its business performance, which will further positively influence its services or own-produced products. In such a way, the information exchange may be viewed as pro-competitive.

  13. 7.

    To what extent can public information be caught under the competition rules governing information exchange in your jurisdiction?

  14. The information is considered to be public if it is equally accessible to all competitors and consumers, including parties not involved into the information exchange. The information is not deemed as public if additional efforts are required for information collection, for instance, organisational and financial expenses for some sociological surveys. For the time being, it cannot be precisely determined to what extant public information can be covered by the competition rules, because the national practice in this regard is now being developed. From this perspective, there was a lack of such practice when the AMCU considered the publicly available information that may facilitate business entities in coordinating their activity, which will further negatively impact on competition.

  15. 8.

    Are there any specific competition rules in place for certain types of information exchange or certain sectors?

  16. The competition legislation of Ukraine does not stipulate some specific rules for certain types of information exchange.

  17. 9.

    Have public bodies in your jurisdiction published any guidance on the competition rules governing information exchange?

  18. On 21 February 2019, the AMCU provided Recommendatory clarifications for vertical relationships in pharma industry. In particular, AMCU established competition risks mitigating terms for reporting practice, suggesting, inter alia: (i) rational and adequate volume of information to be reported, (ii) rational and adequate frequency of reporting and (iii) avoiding sharing of price policy advices. As well, some provisions of the Typical requirements to concerted actions of business entities and typical requirements to establishment of business associations may be used for assessment of information exchange as such that may constitute competition infringement.

  19. 10.

    What defences are available for information exchanges caught by the competition laws in your jurisdiction. 

  20. The Ukrainian jurisdiction does not provide for specific defences for information exchange.

    Nevertheless, the Law and the Regulation on the procedure for submission of applications to the AMCU for approval for concerted actions stipulate the permission for concerted actions. Thus, business entities may not infringe competition law if they previously have filed an application to the AMCU for concerted actions and prove their positive social effect. In particular, in order to be permitted such concerted actions shall facilitate the technical, technological, and economic development, the development of small or medium-sized business entities, the optimisation of the export or import of products, etc.

    In addition to this, under article 14 of the Law, business entities have the right to ask the AMCU to obtain the conclusions on qualifications of their actions. In this way, business entities will have an opportunity to be informed whether their potential concerted actions, in particular, information exchange may constitute competition law infringement. Consequently, the AMCU proceeding from information submitted by business entities will provide them with recommendations on conforming (including lawfulness of information exchange) with the competition law provisions. However, the recommendations per se do not exclude the AMCU's right to investigate a case of information exchange.

  21. 11.

    What is the standard of proof and on whom does the burden of proof fall in information exchange cases? Are there any scenarios in which the burden of proof is or could be reversed?

  22. According to the current UA competition law, in information exchange cases as well as in any others, the burden of proof lies with the AMCU. The AMCU gathers evidence of violations of UA competition law and adopts the respective decision in the case of infringement that substantiates the violation committed by the respondent.

    Conversely, when appealing a decision to court, the burden of proving absence of harm to competition while committing a violation in information exchange cases lies with the claimant.

  23. 12.

    What are the sanctions for anticompetitive information exchanges in your jurisdiction?

  24. The basic fine for anticompetitive concerted practices amounts to up to 10 per cent of company’s annual turnover for the last financial year. While determining the fine amount, the AMCU applies Guidelines on fines calculations, based on which the current applicable fine is being adjusted according to a number of mitigating and aggravating events. 

  25. 13.

    Describe any recent cases in the area of information exchange of note in your jurisdiction, how they were decided and which sections they concerned.

  26. Nowadays, as matter of AMCU practice, there are three categories of information exchange cases.

    First category concerns “hub-and-spoke” cartel – information exchange of commercially sensitive information among direct competitors on certain markets through an intermediary. The clearest and for now unique UA example is the Retailers case re exchange of detailed, updated and aggregated information on sufficient conditions of business activities among the largest retailers through research company Nielsen. In 2015, the AMCU fined respondents about US$2.7 million. The second category relates to reporting practice within vertical relations. As result of the past seven years’ pharma investigations, the AMCU determined distributors’ reporting practice as a component of anticompetitive concerted actions, simultaneously concluding that the reporting obligation per se does not constitute separate infringement of UA competition law. Hence, in 2016, in the Alcon case the AMCU fined a producer and its distributors for setting prices about US$63,000. (Please see Alcon case details below in question 16.) In the same 2016 Servier case the AMCU fined an importer and its distributors about US$130,000 for establishment control over markets and market allocation. Notably, in the past year the court of cassation finally supported the AMCU's decision in the Servier case. In 2018, in the Roche case the AMCU fined an importer and its distributors about US$670,000 for setting prices.

    The third category concerns distortion of auction or tender results cases, including information exchange practice. Notably, in this case category reporting practice is deemed to be a distortion-proving instrument rather than competition infringement per se.

    Remarkably, the Furniture case should be considered as the brightest example of this case category including information exchange between direct competitors through industry association.

    In 2012, the AMCU fined the association and its 14 members (producers of unprocessed wood) more than US$15.5 million.

  27. 14.

    Describe any recent changes to legislation in your jurisdiction that may have an impact on information exchanges.

  28. There have been no recent changes to legislation that may have an impact on information exchanges.

  29. 15.

    Are there any proposals to reform the rules governing information exchange in your jurisdiction?

  30. There are no ongoing reforms in this regard.

  31. 16.

    Are there any other noteworthy characteristics or practical examples specific to your jurisdiction?

  32. Another case that should be noted is AMCU vs Alcon Pharmaceuticals Ltd and its distributors on anticompetitive concerted actions re setting prices of Alcon medicines sold in Ukraine. 

    In 2016, the AMCU concluded that distributors reporting to Alcon Pharmaceuticals Ltd was one of the elements of establishment of control over the market, which constituted concerted anticompetitive actions. Under distribution agreements, subject to reporting included detailed information on, in particular: (i) direction of sales, (ii) volumes of sales, (iii) distributors’ counterparties and (iv) pharmacies. Thus, AMCU concluded that provision of this information by distributors was not caused by the objective factors and in the presence of market power was regarded as an integral tool resulting in the overall control of trade flows and saturation of demand and supply.

    Consequently, the AMCU fined companies almost €575,000 for anticompetitive concerted actions re setting pricing of Alcon medicines sold in Ukraine.

    In particular, Alcon Pharmaceuticals Ltd was fined €326,000.

    Moreover, as a result of seven years' pharma investigations at the very beginning of 2019, the AMCU provided recommendatory clarifications for vertical relationships in the pharma industry. In particular, the AMCU established competition risks mitigating terms for reporting practice, suggesting, inter alia: (i) rational and adequate volume of information to be reported, (ii) rational and adequate frequency of reporting and (iii) avoiding sharing of price policy advice.

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Questions

  1. 1.

    Describe the principal competition rules governing information exchange in your jurisdiction.


  2. 2.

    Which bodies are responsible for enforcing competition rules on information exchange in your jurisdiction?


  3. 3.

    Describe the types of information exchanges that may be caught under the competition rules in your jurisdiction.


  4. 4.

    Are some information exchanges regarded as more serious breaches of the competition rules than others?


  5. 5.

    To what extent is it necessary for an information exchange to have a negative effect on competition to prove a competition infringement in your jurisdiction?


  6. 6.

    What types of information exchanges are not caught by the competition laws in your jurisdiction? For example, are certain types of information exchanges viewed as pro-competitive?


  7. 7.

    To what extent can public information be caught under the competition rules governing information exchange in your jurisdiction?


  8. 8.

    Are there any specific competition rules in place for certain types of information exchange or certain sectors?


  9. 9.

    Have public bodies in your jurisdiction published any guidance on the competition rules governing information exchange?


  10. 10.

    What defences are available for information exchanges caught by the competition laws in your jurisdiction. 


  11. 11.

    What is the standard of proof and on whom does the burden of proof fall in information exchange cases? Are there any scenarios in which the burden of proof is or could be reversed?


  12. 12.

    What are the sanctions for anticompetitive information exchanges in your jurisdiction?


  13. 13.

    Describe any recent cases in the area of information exchange of note in your jurisdiction, how they were decided and which sections they concerned.


  14. 14.

    Describe any recent changes to legislation in your jurisdiction that may have an impact on information exchanges.


  15. 15.

    Are there any proposals to reform the rules governing information exchange in your jurisdiction?


  16. 16.

    Are there any other noteworthy characteristics or practical examples specific to your jurisdiction?