Ukraine’s major retailers received an extension on a deadline to dispute the accusation from the nation’s anti-trust body that they formed an illegal price-fixing cartel.
The government’s anti-trust watchdog found last month that the retailers were engaged in price-fixing and ordered 18 of them to pay fines amounting to 20 percent of their annual turnover. The retailers were supposed to present their case by the end of last week, but received a two-month extension, according to Karel de Gucht, European Union Commissioner for Trade, who visited Ukraine on Oct. 2 and argued their case to top government officials.
Jan Tombinski, head of the EU delegation in Ukraine, said the issue was raised with President Viktor Yanukovych, Prime Minister Mykola Azarov and other top officials.
If the retailers, including international giants such as German METRO Cash & Carry, French Auchan, Lithuanian Novus, Austrian Billa and Dutch Spar, fail to persuade the Anti-Monopoly Committee that they are not guilty, the fines could amount to Hr 20 billion, according to Forbes Ukraine’s calculations.
The anti-trust regulator claims that in 2010-2011, these and other companies formed a cartel and fixed prices, as well as conditions for the supply of goods.
“In the course of investigation, which was started by the committee in May 2012, it was discovered that the defendants in the case conducted anti-competitive actions, the result of which was, in particular, increase of the price in retail networks in 2010-2011,” the Anti-Monopoly Committee stated on Sept. 17.
“At the same time, the defendants coordinated their format of cooperation with suppliers, which hurt the interests of the latter, and created a cartel, at the center of which is located AC Nielsen Ukraine,” the statement said.
But AC Nielsen Ukraine, a market research company, denies all accusations, saying its brand name is “synonymous with objectivity, expertise and independence as a source of information services” in more than 100 countries. “Nielsen never conspires with anyone and never aids anyone else’s, including the retail networks,” said Olga Khriptulova, marketing and communications leader for Russia and North East Europe.
Most retailers among the list of alleged violators have shied away from the media spotlight. Instead, the international companies have taken their case to their embassies.
Igor Balenko, owner of the Furshet chain of stores, told Forbes Ukraine that retailers are not guilty and portrayed the government action as a desperate attempt to increase revenue. “The retailers simply sold (the goods),” Balenko said, and faced price increases from wholesalers.
Because the committee found two types of violations – price fixing and fixing supply conditions – it doubled the maximum legal fine of 10 percent of annual turnover, enough to bankrupt some retailers, analysts said.
The case quickly became the latest sign internationally of the worsening business climate in Ukraine. Alain Remy, French ambassador to Ukraine, told Den newspaper on Oct. 1 that French and European companies have faced appalling pressure lately. “We’re feeling the worsening of the business climate,” Remy said.
De Gucht has the same impression: “What I hear from business is that (the climate) is rather getting worse than better.”
Kyiv Post deputy chief editor Katya Gorchinskaya can be reached at katya.gorchinskaya@gmail.com.
