Fact: on 5 September 2019, the Antimonopoly Committee of Ukraine (AMC) ruled on the compulsorily split of Ostchem Group owned by the Ukrainian businessman, Dmytro Firtash, and simultaneously imposed a fine of EUR 3.8 million on one of the companies of Ostchem Group, for an infringement amounting to abuse of dominance on the Ukrainian market of nitrogen fertilizers.
Importance: this is the first AMC decision on compulsory split adopted in 24 years. A similar sanction was applied by the AMC only once, back in 1995 in the case of dominance abuse by dairy factories.
Looking Ahead: this case may signal changes in the AMC’s practice and approach towards dominant position treatment and types of remedies applied in abuse of dominance cases. Furthermore, it cannot be excluded that the AMC may apply the same sanctions in complex merger control proceedings where, to date, behavioral remedies were applied in the vast majority of cases. Most importantly, this precedent may be “the case” that can finally open the door for private damages claims in Ukraine.
Nature of the Violation: The AMC concluded that Ostchem Group (group of major Ukrainian nitrogen fertilizers plants: PrJSC Severodonetsk Azot, PJSC Azot and PrJSC Rivneazot along with related wholesale trading company NF Trading Ukraine LLC), abused its dominant position on the market of nitrogen fertilizer primary sales during the 2014-2017 period. The following violations were identified by the authority:
The AMC has noted that these violations would be impossible if the three principal domestic plants were not united in a single group, and has ordered compulsory separation that must be completed within 9 months from the date when the decision is received. Furthermore, NF Trading Ukraine LLC, which was selling fertilizers, was fined EUR 3.8 million, the maximum possible amount for this type of infringement provided by law.
Next Steps: the decision is more than likely to be appealed. Ostchem Group can file an appeal within 2 months upon receipt of the decision. As to the procedure itself, no legislation governing compulsory separation exists in Ukraine at the moment. The law only provides that the separation model lies within the sole discretion of the dominant entity abusing its position, subject to the condition that the dominant market position shall be eliminated as a result of such partition.