Ukrainian competition agency's groundbreaking decision

On 14 November 2017, the Antimonopoly Committee of Ukraine (the "AMC") adopted a fining decision against a pharmaceutical producer and two of its Ukrainian distributors, which fundamentally changes the approaches to defining lawful market behavior in vertical relations. The decision unquestionably requires immediate attention of compliance officers of major international and Ukrainian companies.

By adopting its decision, the AMC established a precedent expanding competition law prohibitions on the market behavior previously considered as lawful. In particular, the AMC’s decision changes approaches to definition of the market power, qualification of misappropriate conduct within distribution agreements and discount systems. In particular, the following, formerly legal, practices may now fall under scrutiny of the AMC:

  • Distribution channel structured via single entity importing into Ukraine
  • Prohibition of re-exports in distribution agreements
  • Exchange of non-pricing information with distributors
  • Application of retrospective discounts, including volume-based ones, irrespectively of undertaking’s market position, etc.

Notably, markets with insignificant presence of an undertaking were assessed by the AMC in the same manner as those on which such undertaking presumably had a market power.

For any questions, please contact Vladimir Sayenko, Maksym Nazarenko or Oleksandr Nagorny