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8 February 2019

Significant advancement in competition law proceedings adopted by the Ukrainian Parliament

On 7 February 2019, the Ukrainian Parliament adopted Law No. 6746 (the “Law“), amending the Laws of Ukraine “On Antimonopoly Committee of Ukraine” and “On Protection of Economic Competition”[1].

The Law harmonizes the procedural rules for investigations of competition law violations with provisions of EU Regulations No. 1/2003 and No. 773/2004.

The Law aims to extend the procedural rights of the parties involved in violation of competition laws investigated by the bodies of the Antimonopoly Committee of Ukraine (the “AMC“), as well as to increase the AMC’s neutrality and impartiality during case consideration.

Some of the amendments reflect practices already applied by the AMC, in particular, by ensuring:

  • the parties’ right to know the legal provision that they are alleged by the AMC to have violated;
  • the parties’ right to use translator services and raise questions to experts and other parties involved in the case;
  • the parties’ right to sufficient time to prepare defence statements (the AMC’s regulations provide for 10 days to submit comments and objections to the AMC’s allegations. Although as a rule the AMC always provides enough time to provide responses, the amendments establish legal certainty in this respect);
  • the possibility to refer to information already provided to the AMC in the course of the preceding year, instead of requiring re-submission of such data upon request, unless the information has changed;
  • the parties’ right to take copies of the case materials during their investigation;
  • there is a formal procedure for meetings to be held between the AMC and the parties during the investigation.

Other changes introduced by the Law are vitally important to procure the principles of procedural fairness and rights of defence. The most crucial of them are the following:

  • time limits, during which consideration of cases concerning the violation of competition laws must be completed, are now fixed at six months for cases related to misleading information and five years for cartel cases;
  • the parties are granted the right to challenge AMC officials investigating the case, including Commissioners, as well as the right to challenge experts in the case;
  • the parties have a right to raise questions to and receive well-founded responses from the AMC;
  • the cartel leniency program now provides for a reduction of fines for those undertakings which reported on their participation in the cartel after the initial whistleblower cartelist or after a case was launched. The Law stipulates that the fine imposed on the first undertaking to report the cartel shall be reduced by 50%, second – 30%, others – 20%;
  • the penalty for failure to pay a fine imposed by the AMC within two months from receipt of its decision has been abolished;
  • the principle that the AMC’s decisions cannot be based on evidence which the party had no opportunity to study or evidence received in violation of the law or third parties’ rights, has been introduced;
  • a settlement procedure between the AMC and defendants in cases on cartels, similar to that established pursuant to Commission Regulation (EC) No 622/2008, has been implemented. The procedure establishes the defendant’s right to receive a fine reduction (10% in EU and 20% in Ukraine) in return for waiving the right to challenge the AMC’s decision on grounds set out in a settlement agreement with the AMC approved by a commercial court.

At the same time, the Law does not resolve the problem of the AMC’s sole control over investigative and decision-making functions. The initial draft of the Law contained provisions focused on a partial implementation of Article 6 of The European Convention on Human Rights that envisaged a role for hearing officers similar to that in the EU, but the Ukrainian parliament failed to uphold these amendments. However, the Law does provide that, going forward, the Commissioner who conducted or organized the investigation in the case loses their right to vote when the AMC’s decision in the case is adopted.

The Law enters into force three months after the date of its publication, except for the settlement procedure, which still requires amendments related to settlement agreement approval to be introduced into the Commercial Procedural Code of Ukraine and will thus enter into effect on 1 January 2020.

Please contact Vladimir Sayenko, Maksym Nazarenko, or Oleksandr Nagorny for any further questions and clarifications.

 

[1] This alert is prepared based upon the latest version of the Law prepared for the second reading and verbatim records of the Parliament’s hearing.

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