Kyiv, 19 May 2015. Following the proposal of the Cabinet of Ministers, earlier today the Ukrainian Parliament voted to appoint Yuriy Terentyev as the Chairman of the Antimonopoly Committee of Ukraine (AMC). Mr. Terentyev has over 18 years of experience as an in-house counsel and compliance officer of Bristol-Myers Squibb, JTI, Metro Cash and Carry, and ArcelorMittal, all of which operate in sectors that are traditionally under very close scrutiny of the competition authority of Ukraine. His appointment follows months of public deliberations and political discussions behind the scenes on how the competition agency should be reorganized and run to ensure its independence and effectiveness in protecting economic competition in the country.
For more than a year after the previous chairman and three AMC commissioners resigned in February 2014, the AMC had been managed by five remaining commissioners, including the acting chairman Mr. Mykola Barash. The refresh of the AMC's leadership is one of the IMF requirements and the appointment of new commissioners is expected to follow shortly.
The AMC remains one of the most powerful and active Ukrainian regulators. Despite political uncertainty and staff reductions, during the last year the AMC became even more active in enforcement of competition laws, including investigations into a collusive behavior of undertakings, abuse of dominance and unfair competition. Last month a fine of over 203.6 million UAH (8.83 million USD) was imposed on 14 retail store chains for anticompetitive concerted practices, which were based on exchange of information between the retailers through ACNielsen. Aggressive investigations in the retail, pharmaceutical and other industries, as well as delays in merger clearance proceedings, provoked a flood of criticism on the AMC.
The new team at the AMC will face a tough challenge to complete the ongoing investigations and clearances smoothly, while the general public and the business community expect quick wins, including the simplification of clearance proceedings, transparency of the decision making process (including with respect to the level of fines), openness of the AMC's staff to consultations with applicants, and zero tolerance to corruption. Moreover, very soon the reduced staff of the AMC will have to deal with additional functions in the sphere of public aid.
To assist with the transformation of the AMC into a modern European competition agency, the lawmakers plan a number of legislative changes that will shape competition policy in Ukraine and will put some restraints on the AMC. Below we provide a three-item shortlist of those legislative initiatives, which will have the most tangible impact on the business environment in Ukraine and on the work of competition lawyers globally. All of these changes are part of the commitments under the EU-Ukraine Association Agreement and have a high chance to be implemented in the nearest future.
Substantial increase of financial thresholds
The most expected change in Ukrainian competition laws is the increase of financial thresholds in merger control. Currently, draft Law No. 3436 amending the Law of Ukraine "On Protection of Economic Competition" provides for the increase of about four times and, more importantly, envisages an improvement of the nexus requirement that will eliminate the need to notify numerous global transactions in which only one party has presence in Ukraine. While this draft is likely to be revised heavily during its review in the Parliament, its core principles are expected to stay.
Publication of decisions
A recently submitted Draft Law No. 2102 aims at making the AMC’s activity more transparent. It obliges the AMC to publish all of its decisions in (1) merger and concerted practices clearances, including those made within an in-depth review similar to Phase II in the EU, (2) cases concerning violations of competition law, and (3) cases on unfair competition. This initiative faces significant opposition because of the concern that some business secrets and other confidential information may be disclosed to the public. These controversies are widely discussed in the legal community and assistance from the new team at the AMC is likely to move the process forward.
Calculation of fines
Another recent initiative is the procedure for determining the amount of fines for violations of Ukrainian competition laws, which should be adopted pursuant to Draft Law No. 2431. Currently, the AMC determines the amount of the fine in each case based on its internal methodology, which is not available to the public. The adoption of the Draft Law No. 2431 should allow the business to make estimates of the fine amounts beforehand and to think over the strategy for mitigation of such amounts in advance.