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Ukrainian Leniency Rules to be Detailed

October 2011 - Corporate & Commercial. Legal Developments by Asters.

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On 30 September 2011 the Antimonopoly Committee of Ukraine (the AMC) published draft Regulation detailing rules and procedures applicable to leniency applications in cartel cases (the Regulation). Beyond all doubt, the document is an important step towards better prevention, detection, and fighting cartels.

The possibility to apply for leniency has been in place in Ukraine since 2002, first introduced by the Law on Protection of Economic Competition (the Competition Act). However, the absence of clear and adequate procedural rules hindered its effective implementation. The long-awaited Regulation clarifies requirements to immunity applicants, details the information and evidence an undertaking should provide in order for its application to be successful, review procedure, etc. It also introduces several new concepts to the existing leniency regime: in particular, for the first time the term 'cartel' is defined in Ukrainian antitrust legislation; the document also introduces the marker system (equivalent to that existing in the EU), the possibility to benefit from partial (20-50%) fine reduction, etc.

Major innovations of the Regulation
I. Cartel Definition
A 'cartel' is defined as anticompetitive concerted practices concerning (exclusively): fixing of prices (tariffs) of purchase or sale of goods;
•     limitation (including termination) of production, purchase or sale of goods;
•     dividing markets or sources of supply by territory, type of goods, sale or purchase volumes, or classes of sellers, purchasers or consumers or otherwise;
•     distortion of the results of auctions, contests, tenders.

The concept of a cartel is significantly narrower than that of the anticompetitive concerted practices (as defined in the Competition Act). Pursuant to general leniency rules of the Competition Act the participants of any anticompetitive concerted practices may apply for immunity, while the Regulation appears to apply to cartels only.
II. Immunity Requirements
Applicable requirements have been detailed to clarify: that only the first-to-apply (i.e., before anyone else has applied and before the AMC has initiated its investigation into the same violation) can benefit from full immunity;
•     which information will be necessary and sufficient to qualify for full immunity;
•     that the applicant will not be considered in breach of the immunity requirements if it did not cease to participate in the anticompetitive concerted practices with a view to obtain necessary evidence (upon the AMC approval);
•     that an applicant exercising coercion upon other undertakings with a view of their participation in a cartel cannot benefit from immunity.

III. Procedure
The Regulation introduces detailed procedural rules: the AMC will appoint an authorized person to accept and deal with leniency applications. Importantly, an application can be made to the authorized person verbally and will then be reflected in the minutes, a copy of which shall be provided to the applicant;
•     the identity of the applicant and the fact that an application has been filed will be kept confidential;
•     the application shall include information concerning: details of the applicant, information regarding all participants of the alleged cartel, detailed description of the activities of the alleged cartel (i.e., type of the cartel, product and geographical markets involved, duration of the cartel, role of each participant, etc.), all available evidence, and the applicant's role in the alleged cartel;
•     types of admissible evidence are listed;
•     a marker system is introduced, i.e., an undertaking can apply based on limited information for a marker-letter securing it the 1st place on the immunity applicants' list, provided it is in a position to obtain and submit sufficient information later on;
•     after receiving an immunity application (or an application for a marker-letter and subsequent completed immunity application) the AMC will decide whether the information is sufficient to grant immunity; in case it is not, an applicant may still qualify for a reduced fine;
•     in case of doubt a potential applicant may request a preliminary conclusion of the AMC regarding its chances to be granted immunity (such request should be supported by available information presented in generalized (hypothetical) form).

IV. Reduction of fines
To maximize the information inflow, the Regulation encourages other participants (besides the first immunity applicant) to a cartel to submit additional available information in exchange for a partial (20-50%) fine reduction, etc. Evidence provided in such subsequent applications should have added value and the AMC has full discretion to decide whether such additional data is sufficient for the purpose. It appears that subsequent applicants may qualify for a partial fine reduction even after the AMC investigation has already been initiated.
The timing of adoption of the Regulation is not clear. Though, it appears to be one of the authority's top policy priorities and we expect its enactment in early 2012.

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For further information please contact
[ mailto:tetiana.vovk@asterslaw.com ]Tetiana Vovk, Associate


www.asterslaw.com