Antimonopoly Committee: Control over Concerted Actions and Concentrations during Martial Law

During the wartime,  the Antimonopoly Committee of Ukraine  (hereinafter – the AMCU, the Committee) continues to monitor agreements, actions of business entities to prevent monopolization, abuse of a monopoly (dominant) position, restriction of competition in commodity markets.

On March 30, 2022, the AMCU provided recommendatory clarifications on the procedure for consideration of applications for a concentration permit and concerted actions during martial law, as well as on fines for failure to obtain a permit.

So, a concentration is recognized as an action as a result of which one or more related individuals or legal entities have the opportunity to exercise decisive influence on the economic activities of other entities, which may lead to a monopoly position in the market (the list of such actions is provided in part 2 of Art. 22 of the Law of Ukraine “On Protection of Economic Competition”).

In their turn, concerted actions are the conclusion of agreements by business entities or the adoption of decisions by associations of legal entities and/or individuals in any form, as well as any other agreed competitive behavior of business entities.

The list of prohibited anticompetitive concerted actions is provided in part 2 of Art. 6 of the Law of Ukraine “On Protection of Economic Competition” and includes actions related to setting prices or other conditions for the purchase or sale of goods, distribution of markets or sources of supply, distortion of tenders, auctions, competitions, tenders, etc.

In order to eliminate legal uncertainty regarding compliance with competition law during martial law, the Committee established that participants in concentrations and/or concerted actions shall NOT be exempted from the obligation to obtain a permit from the AMCU, if it is required by Ukrainian law.

At the same time, the recommendative clarifications determine the simplified procedure for the preparation and submission of applications for the AMCU permit, provide for a special procedure for their consideration, as well as establish new approaches to the application of penalties.

Main provisions:

1) Requirements for applications

During martial law, the Committee allows to submit a shortened list of documents to be attached to applications for concentration or concerted actions.

Minimum list of information and documents to be submitted in a simplified manner:

– description of the content of the concentration or concerted action;

– information on the ultimate beneficial owners;

– data on the absence of sanctioned entities or entities of the aggressor state in the ownership structure;

– scheme of relations of control of participants of the concentration and/or concerted actions, scheme of change of relations of control owing to the concentration, description of the basic types of activity of participants;

– receipt of payment of the fee;

– power of attorney to confirm the authority of the applicants.

2) Procedure for submitting applications

Participants in the concentration and/or concerted actions are given the opportunity to submit documents in one of the following ways:

– in writing to the correspondence address of the AMCU, which is relevant at the time of sending the documents. It is currently the Committee’s new office at: 79005, Lviv, Kopernyka str.,  4;

– in electronic form to the Committee’s e-mail: amcu.in@ukr.net, with a qualified electronic signature.

The application and the documents attached to it shall be submitted at least 15 calendar days before the concentration or concerted action.

3) Procedure for consideration of applications

Consideration of applications of participants of the concentration and/or concerted actions shall be suspended until the abolition or termination of martial law due to limited access to materials and databases, lack of access to state registers required to analyze the information contained in the applications.

At the same time, within three months after the abolition or termination of martial law, applicants shall supplement the application with missing documents or information in accordance with the Regulation on Concentration and Regulation on Concerted Actions approved by the AMCU, i.e., submit a complete list of required documents.

If additions are submitted within the specified period, the AMCU shall resume consideration of the application received during the martial law and consider it, taking into account the additions.

Otherwise, the AMCU shall resume consideration of the application after the expiration of three months from the date of the termination of martial law and consider it on the basis of available information.

However, please note that on certain grounds such a statement may be left without action or, in the presence of errors (failure to provide information, non-submission of complete information), business entities may be fined up to 1% of income (revenue) from sales of products (goods, works, services) for the last reporting year.

4) Liability

Due to the force majeure, the Committee has developed new approaches to determining the amount of penalties for violating the requirements of the legislation on protection of economic competition, namely:

– in the case of a concentration without a permit, provided that the application for such permit was submitted in accordance with the rules set out in the recommendative clarifications, and such concentration does not lead to monopolization or significant restriction of competition in the market, the fine shall not exceed UAH 51,000;

– in the case of a concerted action without a permit, provided that the application for such permit was submitted in accordance with the rules set out in the recommendative clarifications, and there are no grounds for prohibiting the concerted action, the fine shall not exceed UAH 51,000;

– in the case of a concentration or concerted actions without obtaining a permit in the absence of grounds for prohibiting such concentration and/or concerted actions, if the requirements for applying to the AMCU for a permit were not met, the fine is set at up to UAH 340,000;

– in the case of a concentration or concerted actions without a permit, if the ultimate beneficial owner(s) of one of the participants in the concentration is the Russian Federation or citizens of the Russian Federation who supported the military aggression against Ukraine, or if the AMCU has reasonable suspicions that the concentration is the withdrawal of assets from international sanctions, the fine is determined in the maximum amount stipulated by law (up to 5% of the income of the group of business entities from the sale of products for the last reporting year).

The reduced amount of fines shall not apply if:

– the concentration and/or concerted actions lead to monopolization, restriction of competition in Ukrainian markets;

– the concentration is prohibited in accordance with the Law of Ukraine “On Sanctions”;

– the applicants submitted inaccurate information to the AMCU.

Conclusively, the analysis of the above-mentioned recommendative clarifications allows to draw the following conclusions:

1. A) the Antimonopoly Committee of Ukraine took into account the difficulties in gathering information, drafting and submitting relevant applications to the Committee in connection with the consequences of hostilities, which has led to the simplification of requirements for applications of participants in the concentration and/or concerted actions and their submission;
2. B) the Committee took note of the fact that, due to the expected delays in the processing of applications, the AMCU permits may be issued after the agreed concerted actions or concentrations have been committed by the business entities. In view of this, the Committee has significantly reduced the amount of penalties for actions that do not adversely affect competition in Ukraine and for which the participants have applied for a permit in advance;
3. C) the regime of control over concentrations and concerted actions remains in force, and to avoid the application of any penalties, it is necessary to: 1) timely submit an application for a permit from the AMCU, if possible, immediately with a full package of documents; 2) refrain from carrying out the declared actions until the moment of obtaining the Committee’s permit to carry them out.

Lawyers and consultants of the “Prime” Law Firm will be happy to provide you with legal assistance and advice on antitrust law, as well as carry out comprehensive legal support.

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