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Competitors as accomplices

May 2019 - Corporate & Commercial. Legal Developments by DLF attorneys-at-law.

More articles by this firm.

In 2019, it is getting apparent that violations of antitrust law, in particular in the area of ​​anticompetitive concerted actions (for example, price collusion of oil traders or food products wholesalers) not only become dangerous due to the sanctions of the Antimonopoly Committee of Ukraine (hereinafter referred to as the AMCU), but also add a competitive intrigue to the principle – who will be the first who declare to the AMCU.

In this article one of the most interesting novelties would be considered, that was adopted by the Parliament of Ukraine on February 7, 2019 and prescribed by Law of Ukraine No. 6746 On Amendments to Some Laws on Ensuring Principles of Procedural Justice and Increasing the Efficiency of Procedures in the Case of Violations of Legislation on the Protection of Economic Competition. At present, the Law is waiting for the President’s signature.

Consequently, the novelty is based on the following principle – drive a bargain with a competitor and be the first to declare about a violation to the AMCU.

New rules for protecting competition

The Law of Ukraine On the Protection of Economic Competition was supplemented by Article 52-2, which reloads and provides new content to the principle of "notification about violation", introduced by the AMCU more than eighteen years ago. Previously, this principle has not received a proper response in Ukraine and has not gained popularity.

Novelties regulate :

1. 1. detailed actions of the AMCU while receiving a statement of violation;

2. 2. the procedure for exemption from liability and the scale of liability reduction, even if the person declaring the violation was not the first applicant in the case. In particular, the first applicant receives a total exemption from liability; the fine for the second applicant is reduced by 50%; for the third one – by 30%; for other applicants – by 20%. However, it should be emphasized that neither the first nor the second, or any other applicant, can be exempted from the obligation to compensate for the damage. This, in our opinion, is fair, as without this norm, there is an option to gain illegal advantages, unlawful profit, do damage to the competitor.

Application form:

An application should be submitted in an arbitrary form, which must contain information that is essential (sufficient) for the decision in the case. Essential information is sufficient to make an order on the commencement of the case consideration, and to inspect the parties to the conspiracy. The Law does not contain a detailed description or definition of "sufficiency" of information for decision-making, but sets benchmarks for such "sufficiency", namely:

1. 1. The applicant’s full name and all cartel members known to him;

2. 2. Detailed cartel description, in particular:

a. the cartel purpose;

b. the content of the anti-competitive concerted actions;

c. goods (services) in respect of which the behavior is (was) co-ordinated;

d. the geographical boundaries of the cartel;

e. the cartel duration;

f. the market volume covered by the cartel;

g. specific dates, places, forms of contacts between the cartel participants;

h. Name, contact telephone numbers and place of residence of the officials of the business entities, the applicant and other cartel participants, having been in contact for the actions coordination.

3. The applicant may also provide other information known to him and being at his disposal and may be evidence of a concerted competitive behavior, in particular: paper documents or documents in electronic form (including e-mail), letters, notes, recordings (this also applies to audio or video).

The applications are addressed to : AMCU, the AMCU territorial departments, the AMCU State Commissioner. It should be noted that the applicant or his authorized representative must submit a statement of exemption from the responsibility to the AMCU authorized official, responsible for accepting applications for exemption from liability.

What happens if the information provided is not enough?

The applicant may apply for a letter-marker confirming his application primacy to the AMCU.

The AMCU letter-marker, first, confirms the application primacy, and secondly, establishes the necessary list of additional information to be provided to the AMCU for obtaining exemption from liability.

The AMCU decision

Having received an application of exemption from liability or additional information to the letter-marker, the AMCU within 5 days from the date of such an application or information receipt makes a decision on:

1. 1. exemption from liability;

2. 2. a substantiated refusal on exemption from liability in the event that:

a. at the moment of the application receipt, there are circumstances in which such an exemption from liability cannot be provided, or the information provided by the applicant does not meet the requirements established by the Law;

b. the additional information given by the applicant in accordance with the letter-marker, taking into account the information provided previously, does not meet the requirements of the Law.

Exemption from liability is impossible:

1. 1. if at the time of filing an application on receipt of a letter-marker or a statement of exemption from the liability, the AMCU has already adopted an order initiating the case consideration on the same violation;

2. 2. if another person has already filed an application of exemption from the liability (in this case, the scale of liability reduction applies);

3. 3. if the person was the initiator of anticompetitive concerted actions, or has forced other participants to commit them;

4. 4. if the person has not stopped the anticompetitive concerted actions;

5. 5. if the person has not complied with the requirements for cooperation with the AMCU.

Of course, in one article it is quite difficult to highlight all the nuances of applying to the AMCU, namely the details of cooperation with the AMCU in order to obtain the desired exemption from the liability or reduction of liability. This, of course, can only be done by accompanying a specific case or by studying the case presented for analysis. But the mere fact of introducing such a long-awaited procedure and the actual opportunity to receive both exemption from liability and a significant reduction of the liability for violating the anti-cartel rules is of great importance, first of all, for those market participants who are forced to such actions. In addition, this procedure gives a chance to the cartel participants to oppose the cartel and its more powerful competitors in it, protecting both their interests and the ability to further develop on the market.