Welcoming Vertical Concerted Practices Regulation in Ukraine

On 5 December 2017, the Typical Requirements for Vertical Concerted Practices of Economic Entities (the "Regulation") entered into force. By adopting this regulatory act, the Antimonopoly Committee of Ukraine (the "AMC") aimed to harmonize national treatment of vertical agreements with EU Commission Regulation 330/2010 ("VBER"), as well as to improve the existing regulations of agreements on supply, distribution, and use of products.

The Regulation introduces a number of novelties, including brand new legal definitions, outlines types of vertical agreements falling under the exemption from the AMC’s approvals, as well as defines hardcore and excluded restrictions of vertical concerted actions. Among ample developments conveyed through the Regulation, the following provisions were implemented:

  • Introduction of new definitions, in particular "activeand "passive sales" that can influence the analysis depending on the type of the market involved.
  • Transparency in calculation of market shares depending on heterogeneous and homogeneous goods involved.
  • In the past, the AMC’s approval for all types of vertical concerted practices was required if total annual turnover of the parties exceeded EUR 12 million worldwide and at least one party exceeded EUR 1 million turnover in Ukraine. Pursuant to the Regulation, the turnover threshold is applicable only with respect to associations and the AMC's approval is now required if any member of the association exceeds EUR 25 million turnover in Ukraine.
  • The AMC’s approval was not required for vertical agreements between undertakings enjoying aggregate market share less than 20 per cent. Now, this threshold is extended to 30 per cent market share and applied to each of the parties.
  • Dominant entities can now benefit from the exemptions stipulated by the Regulation.
  • The general exemption from the need to obtain the AMC's approval, i.e. when the market share of the parties is below 5 per cent, is no longer applicable to vertical hardcore restrictions (e.g. fixed or minimal resale prices, restriction according to the territory or buyers).

Notably, according to the Regulation agreements containing suppliers’ restrictions of sales to end users for retailers within selective distribution system or restriction of spare parts’ sales to end-users or repairers are exempted from the approval requirement. At the same time, pursuant to VBER, such restrictions are hardcore, falling beyond the safe harbor.

For any questions on the Regulation, please contact Vladimir Sayenko, Maksym Nazarenko or Oleksandr Nagorny.