The failure of the Antimonopoly Committee of Ukraine is clear to all in a nation where billionaire oligarchs and others dominate some sectors and exclude competitors. Ukraine will start over by replacing the committee’s entire staff in the next few months.
An agreement between Ukraine and the International Monetary Fund stipulates that the current staff of the Antimonopoly Committee of Ukraine must be replaced in the first half of 2015, Economic Minister Aivaras Abromavicius said on March 6.
Many hope that the appointment of a new committee chairman will revitalize reforms and ensure that stakeholders are actually subject to the committee’s regulations. There are also expectations that the shakeup in staff will bring the committee into line with anti-monopoly regulatory agencies in developed countries by creating greater accountability and responsibility on the part of its officials.
The Antimonopoly Committee of Ukraine is a central executive authority with a special status, responsible for the enforcement of competition in the marketplace. One of its main interests is to protect consumers by preventing monopolies or breaking up existing ones. Ukraine’s president has authority over the committee, which also reports to parliament.
Mykola Barash, acting chairman of the committee, replaced Vasyl Tsushko at the end of March 2014.
Mykyta Nota, a legal expert at Avellum law firm, says there should be more effective cooperation between the committee and market players, including public access to the committee’s decisions. Also, the procedure for challenging decisions in court should be more transparent, he says.
The Antimonopoly Committee of Ukraine has said that it has no objection to publishing its rulings, but the problem is that some of the information is confidential. “In 2014, AMCU rendered nearly 1,950 decisions in cases regarding the protection of economic competition, almost eight decisions per one working day, most of which contained confidential information,” the committee reported.
According to experts, the committee often imposes substantial fines for violations. Sergiy Shklyar of the Arzinger law firm says that his clients have been taken aback by the heavy penalties. “They thought someone was trying to destroy their business,” he says.
The committee imposed an Hr 210 million fine in 2013 on the KLO-Karta and Avtoruh gasoline chains for violations. However the deal that regulators were investigating involved only Hr 130,000, making the fine seem excessive.
“Although the parties were not our clients, clearly, that fine was not proportionate, even though it did not exceed 10 percent of the companies’ turnover in a prior year,” says Shklyar.
Meanwhile, the Antimonopoly Committee believes their procedure for rendering fines corresponds to European Union standards. The average fine in 2014 was Hr 60,000.
To meet its current obligations under the association agreement with the EU, the committee is now preparing a document that explains its mechanism for defining the size of the fines.
“The law marginally changed during the last 13 years, while the economic situation and European legislation on economic competition changed fundamentally,” the committee reported. “The committee’s practice has also encountered significant changes.”
According to committee statistics, violators do not pay fines in 80 percent of the cases, finding ways to bypass them.
To solve this problem, Arzinger’s Shklyar proposes obliging companies to make prepayments that will be deposited pending a court decision.
“Obviously, it is impossible to pull Hr 100-200 million out of a company’s turnover,” he says. “However, funneling assets will not be an option while you are in court. The committee should initiate this and parliament should duly implement it.”
Interaction between the committee and market players has yet to be fine-tuned. Graham Conlon of CMS Cameron McKenna and Shklyar of Arzinger agree that effective dialogue with the Antimonopoly Committee is not yet possible, though it did exist prior to the 2010 presidential elections that put Viktor Yanukovych in power.
“Now, there is obviously no adequate dialogue, probably because the personnel remained unchanged,” Shklyar says.
