Ukraine Has Taken an Important Step Toward Competition Law Reform

In brief

On 12 September 2023, the President of Ukraine signed Law No. 5431 "On Amendments to Certain Legislative Acts of Ukraine to Improve the Activities of the Antimonopoly Committee of Ukraine" ("Law"), which launches a reform of Ukrainian competition law. The Law will enter into force on 1 January 2024.

The Law was developed together with competition law experts from the EU in line with the European Union-Ukraine Association Agreement. Adopting and implementing the Law is the first stage of the competition law reform, aimed at strengthening the powers of the Antimonopoly Committee of Ukraine ("AMC") and bringing Ukrainian competition law and the AMC's activities closer to the legal system of the European Union.

Key takeaways

The Law introduces a number of amendments to Ukrainian competition law, among which the following should be singled out:

1. Changes to obtaining the AMC's approval for concentration and concerted actions
2. Introduction of a detailed procedure of inspections by the AMC
3. Introduction of settlement procedures and improvements to the leniency procedure
4. Introduction of joint and subsidiary liability for the payment of fines imposed by the AMC
5. Strengthening of the institutional powers of the AMC
6. Establishment of a maximum term for reviewing competition law infringement cases (within three years of the date of the resolution initiating the competition law infringement case, along with the possibility of an extension for no more than two years)
7. Introduction of a state register of legal entities that were held liable for anticompetitive concerted actions related to distorting the results of tenders, auctions and bids

A significant number of the Law's provisions were developed in line with the provisions of European Union Directive 2019/1,¹particularly the provisions on the inspection procedure.

In more detail

1. Changes to obtaining the AMC's approval for concentration and concerted actions

​Calculation of financial indicators

Under certain circumstances, when calculating the financial indicators of the participants in the concentration, the excess of which requires a merger filing for the AMC's approval (particularly for the value of assets and turnover), the seller's financial indicators are not to be taken into account if the control relations between the seller and the target cease as a result of a concentration.

Filing fee

The filing fee for merger control filings will be increased to UAH 42,500² or approximately EUR 1,070 (the current fee is UAH 20,400). For concerted action filings, the filing fee will be increased to UAH 25,500³ (the current fee is UAH 10,200).

Other important amendments

Separate transactions performed within two years between the same legal entities will be considered as one single concentration.

If the AMC identifies grounds for prohibiting mergers or concerted actions as a result of the respective phase II investigation, the parties will have the right to familiarize themselves with the investigation materials, and make extracts and copies thereof.

According to the amendments introduced by the Law, a bank's acquisition of assets in the form of a property complex or shares (participatory interests) of a legal entity as a result of foreclosure on the object of collateral (mortgage) or other security encumbrances would not qualify as a concentration and, thus, would not require the AMC's approval for concentration. However, such an exception is only applied if the following circumstances are applicable:

• The bank and the legal entities related to it by control do not exercise voting rights in the highest or other governing bodies of the respective legal entity.
• The respective assets in the form of a property complex will not be used for the purposes of carrying out business activities during the entire period of owning the object of collateral (mortgage) or other security encumbrance.
• Disposal of the respective object of collateral (mortgage) or other security encumbrance shall be performed by the respective bank in favor of a third-party business entity not related to it by control relations within one year from the date of its acquisition.

2. Introduction of a detailed procedure of inspections

The Law strengthens the AMC's authority to conduct inspections and defines it in more detail.

In particular, the Law establishes the following:

• The basis for conducting inspections shall be a decision from a commercial court.
• The maximum term of an inspection may not exceed 30 calendar days, unless otherwise established by the decision of a commercial court. At the same time, the term of the inspection may also be extended by a court decision at the AMC's request.
• Places and objects for which inspections can be conducted, the powers of the AMC's employees, as well as the requirements for gathering evidence, etc.
• The non-appearance of a lawyer or a representative of an entity authorized to participate in the inspection within three hours does not prevent the inspection from being carried out.

3. Settlement and leniency procedures

The Law introduces settlement procedures in cases on anti-competitive concerted actions (except for the distortion of the results of trade, auctions, contests, tenders, etc.) and the abuse of a monopoly (dominant) position. The Law envisages the following essential terms of a settlement agreement:

• The defendant's recognition of the fact that an infringement has been committed
• The circumstances of infringement, recognized by the defendant
• The termination of the competition law infringement
• Offers and guarantees from the defendant regarding eliminating causes of such infringements and conditions contributing to their occurrence (if available) and regarding eliminating the consequences of the infringement (if available)
• A 15% reduction of the fine compared to the amount that should have been imposed in the case of a settlement procedure not being applied

To apply a settlement procedure, the defendant shall submit a corresponding application to the AMC before the AMC sends preliminary conclusions.

The Law improves the leniency procedure for participants of anti-competitive concerted actions, which was prescribed in accordance with EU Directive No. 2019/1; specifies requirements on the applicant regarding the leniency procedure; establishes cases when the legal entity cannot be exempted from liability; introduces a partial exemption from liability in addition to a full exemption from liability; and determines the procedure for compensating damage caused by the legal entity that is being exempted from liability.

4. Strengthening of the institutional powers of the AMC

The Law provides for the AMC's access to automated registers, data banks (databases) and other systems for collecting, storing, processing and searching for information and data.

The AMC will have the right not to consider an application for infringement of competition law if the applicant does not prove that the actions or inaction containing signs of infringement has or had a direct and negative impact on its rights and/or activities.

If the AMC's decision is not executed, the head of the AMC or the territorial branch of the AMC will issue an order on the enforcement of the decision, which is an executive document.

1] Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the member states to be more effective enforcers and to ensure the proper functioning of the internal market.

[2] Approximately EUR 1,070 or USD 1,140.

[3] Approximately EUR 640 or USD 690.