The Anti-Monopoly Committee (AMCU) on March 17 fined Ukraine’s largest tobacco-distribution company Tedis $9.8 million for non-compliance with the committee’s previous decision.
The previous decision was made in December 2016, when Tedis was obliged to pay a $16 million fine for abusing its monopoly position in 2013–2015, when its market share reached 99.4%. The company was also asked to restore the balance of competition in the tobacco market.
From the AMCU’s announcement, it is unclear if Tedis was fined for not paying the fine or for not restoring the balance of the competition.
Tedis, in its official statement, called the decision “absolutely groundless,” saying that it paid $11.5 million in 2017 and $4.5 million in 2020; the company also said that it “complied with all the other requirements of the committee.”
Tedis plans to appeal the decision.
Both, AMCU and Tedis, declined to comment on details of the decision, asking to use their official statements.
The first time Tedis’s monopoly caught the eye of AMKU was in 2014, when cigarette retailers started to complain about the lack of competition in the tobacco distribution market. The report by the Redcliffe Partners law firm published in January 2020 showed that, by 2015, there were 22 tobacco products distributors on the market, but only one was actually selling them — Tedis.
Officially owned by Ukrainian citizen Borys Kaufman and two British citizens, Richard Duxburyand and Richard Dorian Fenhalls, Tedis is also associated with Russian oligarch Igor Kesayev. It entered Ukraine in 2010, when the market had over 50 distributors of cigarettes. Gradually, Tedis began to acquire other distributors, taking a bigger share of the market. At the time, AMCU approved the acquisitions.
In a few years, Tedis became the king of the market, selling products of four tobacco giants Philip Morris, JTI, Imperial Tobacco and British American Tobacco. “Tobacco Companies, together with Tedis, restricted the access of other potential players to the market of cigarette distribution,” the Redcliffe Partners report reads.
In 2019, AMCU fined Tedis and four tobacco producers $265 million for creating a monopoly — it was one of the biggest fines in Ukraine’s history. Tedis alone had to pay $138 million, which it didn’t do, because two years later, in February 2021, Ukraine’s Supreme Court sided with the tobacco distributor, exempting Tedis from paying the fine.
